11 Oct How to Acquire, Retain and Win Back Customers in a Deregulated Energy Industry Landscape
By Theresa McEndree
Utility providers face stiff competition in deregulated markets. Recruiting new customers, keeping existing ones and reclaiming those that have left can be tricky, but well-executed incentive programs can help you overcome these challenges. While there is measurable value in offering rewards and incentives to grow your clientele, many businesses aren’t sure where to begin with reward strategy.
Here are a few ways energy providers can urge customers to choose their services over competitors. These ideas also create positive experiences that help retain customers for the long term:
Run reward-based promotions
Many energy providers use discounts to try to close deals, but research has shown that reward-based promotions—those that offer incentives (like gift cards, prepaid cards or points) to encourage certain actions—can actually be more effective. Bill credits have been found to have an unintended negative effect. Once the bill credit is over, it creates a “bad” surprise and disappointment when the customer’s bill perceptively spikes.
Using rewards helps customers feel like they are receiving best-in-market prices, and it also encourages loyalty. Reward-based promotions can generate greater profitability per customer, and businesses that use them report higher year-over-year annual revenue.1 In addition to attracting customers and keeping them engaged with your company, you can use rewards to drive additional revenue-generating and cost-cutting behaviors such as: renewing contracts, referring a friend, opting out of paper billing and adding on additional services like smart home features.
Provide reward choice
One size doesn’t fit all, and consumers value flexibility of choice. Our research1 found 89 percent of respondents feel it’s important to receive the types of rewards they like. Offering numerous choices such as gift cards, egifts, travel, merchandise and more increases the likelihood you will satisfy a varied group of recipients. However, keep in mind that as a whole, consumers favor prepaid and gift cards. Nearly 80 percent of consumers prefer rewards in the form of prepaid cards to other incentives such as discounts and merchandise. These cards can be customized by denomination, retailer, delivery method and more. Plus, they enable recipients to buy exactly what they want where they want since they can be redeemed practically anywhere (brick-and-mortar retailers, online and even via mobile apps). Prepaid and gift cards are great, go-to rewards for utility providers to feature in their reward mix—don’t overlook them.
Make sure digital rewards are in the mix
Digital rewards are a great option that satisfies people who increasingly rely on smartphones, mobile devices and computers in their day-to-day lives. Many consumers appreciate the flexibility and rapid delivery of digital rewards like egifts as they can be used soon after they have been earned. This speedy delivery keeps your company top of mind and immediately reinforces consumers’ decision to choose you over your competitors. As an added bonus, the cost of providing digital rewards is typically lower than providing physical rewards that require printing, shipping, etc. and can widen your profit margins even further.
Incentive programs can be powerful marketing tools in a deregulated energy market that help grow your customer base and drive retention and other desired customer behaviors. Creating positive experiences with smart reward offerings can give your business a leg up on your competition.
Theresa McEndree is Vice President of Marketing at Blackhawk Network