17 Jul Rick Barry and Retail Energy Customer Engagement
By: Ty Benefiel
Every energy conference held in the past four years has had at least one panel dedicated to the importance of customer engagement. Powerful keynote speakers from other industries and energy executives themselves unanimously agree that engaging customers must be a core strategy of retail energy providers. So why is retail energy customer engagement still so abysmal? Rick Barry, Wilt Chamberlain, and Malcolm Gladwell may have the answer.
An early episode of Malcolm Gladwell’s critically-acclaimed podcast, Revisionist History, features the story of Wilt Chamberlain’s 100-point NBA game. During this game, Chamberlain hit 88% of his free throws, 71% higher than his career average, by shooting underhand. The unorthodox shot, though highly effective, was quickly dropped by Chamberlain, and he went on to shoot 51% for his career. Rick Barry, a contemporary of Chamberlain’s and fellow NBA Hall of Famer, shot underhand his entire career and hit over 90% of the free throws he attempted. So why did Chamberlain revert to his old form? Why hasn’t every basketball player shot underhanded free throws? And what does this have to do with retail energy?
Gladwell introduces Mark Granovetter’s Threshold Model of Collective Behavior to explain what’s happening. Granovetter’s theory states that your threshold is the number of people that must perform an action in order for you to join in. He goes on to say that everyone’s threshold is different, and people with high thresholds need many others to do something to convince them to participate. A person’s beliefs and actions may even be antithetical if the number of their peers performing the action has not exceeded their threshold.
And this is why the same stat has been presented at every energy conference – the average person spends 6 minutes a year interacting with their energy company. Six minutes is pathetic, and this stat is always presented in the context of a necessity for change – but little has. Few energy companies have been willing to risk stepping out in front of their peers with a truly engaging customer experience. Incremental improvements in bill presentation or convoluted email graphs are not sufficient. You must overhaul your customer experience with brand new web and mobile apps that make your customers love you. If your company has aimed to increase engagement, has it actually improved the amount of time your customers spend interacting with you?
REPs who interact with their customers move the attention span from six minutes to about 22 minutes per month. And just as the innovative leaders of other industries predicted, an engaged customer is much more valuable. In fact, retention rates may improve by about 40% by adopting customer engagement strategies.
In Gladwell’s podcast, he references his conversation with Richard Thaler, an economist at the University of Chicago. Even though the average second and third round draft pick has been proven to be of significantly greater value to their teams than first round picks, NFL owners refuse to implement his advice – to trade early picks for even more later round picks. He posits that because NFL owners are a relatively small group of people who all know each other well and have been doing it for a long time, they won’t change until someone else more radical truly disrupts the status quo. Does this sound familiar?
However, if you must wait for a radical to swoop in and disrupt the industry, whether that’s oft-dreaded Amazon or even a new energy company, it will be too late. Defend the future of your business by adopting an engagement strategy now that will motivate your customers to stay your customers, regardless of who is offering them a slightly better price. Make the decision to lower your company’s threshold for action and commit to being an industry leader in customer engagement.
Ty Benefiel is CEO of Metergenius