02 Apr Wisdom from the Attendees of the Energy Marketing Conference
By Jack Doueck
The 9th Semi-annual Energy Marketing Conference took place in Houston Texas on March 14th 2018 to a capacity crowd of about 600 people. There were five interactive panel discussions and no fewer than eleven executive workshops where new products and services were introduced to the industry.
Along with Larry Leikin, I started the Energy Marketing Conference business with the belief that the speakers and panelists have a lot to impart – but the attendees at the conferences have even more to say. The audience in many cases can be a source of great wisdom and information about what’s really going on in the industry, what people are doing, thinking, what’s working and what’s not. So we make sure that panel moderators and speakers ask the audience their opinion as we know we can learn a lot from them and in fact the audience at these events are a microcosm of the industry at large. This article is a summary of the questions asked the audience at the event and how they responded.
The first panel discussion, entitled “International Expansion” had three polling questions for the audience. When asked “Are you planning on going international?” 28% of the audience said that they are interested but haven’t started planning yet. 25% replied “We are already there!” 19% said that it is highly unlikely for them to go in this direction. 16% said that they are currently in the planning stages of this and 13% answered that they think they will be in international markets in the next 3-5 years. So 41% are already there or are planning it and another 41% see this in their future.
The audience was then asked what they believed the biggest obstacle was in going international. 31% said operational and language challenges. 31% said it was the lack of international retail market knowledge/experience. 16% said it was the lack of bandwidth for their teams, 13% it was a lack of capital to do it and 9% said that the problem is finding the right talent to make it happen.
Finally, the audience was asked which market they are thinking about moving to first, and a full 26% said Japan. Canada and Mexico were tied at 16%, the UK was at 13%, Germany 8% and other EU markets 8% and 11% said elsewhere.
The second panel was entitled “Successful Channel Partnerships”. The audience was asked “What do you think is the most effective form of marketing for customer acquisition?” Surprisingly, Door to Door marketing came out as a whopping 57% of the responses.
Internet marketing and telesales were tied at 16% and direct marketing had 11%.
When asked what they thought was the riskiest form of customer acquisition, Door to Door and telesales tied at 44% of the responses and direct mail and internet marketing tied at 6% each.
The audience was also asked what they thought was the best way to police direct marketing and 42% of respondents answered “independent third party organizations”. 30% said that REPs should do it internally. 21% said it should be left in the hands of regulators and 6% thought it should be the utilities.
The M&A Panel was a big hit at the conference. The panel was stacked with bankers, REPs looking to acquire companies, consultants and M&A experts with lots of experience. Surveys showed that the panel was incredibly informative, but as always, the responses of the audience provided important information.
The audience was asked if they are planning on acquiring companies or looking to be acquired and 35% of the audience answered “We are already working on it”. 24% said that this is happening imminently (within 1-3 years), another 24% said it will happen sometime in the next 3 years, 15% said ‘maybe in the distant future’. Only 3% said ‘never’. So a whopping 83% of the audience are already in the M&A game.
When believe asked “What do you the biggest obstacles will be to M&A?” a full 70% of the audience answered “Valuation issues/difficulties”. 10% said wholesale supply mismatches/issues, 7% said it was chemistry barriers, 3% said operational difficulties and 3% said legal/compliance issues. 2% said “I just don’t know what I don’t know.”
Finally, the audience was asked “If you are considering buying an REP, what kind of companies are you thinking of acquiring?” The most popular answer was “companies with a truly differentiated offering” at 32%. 16% said a company that we can acquire for less than 5x Ebitda. 16% said a company with low churn. And 23% said “all of the above”.
The CEO Round Table is always a popular session and this year’s conference had an experienced group of CEO’s who did an outstanding job. The audience was asked: “Where do you feel your company should be spending their investment dollars?” and 42% of respondents answered on technology. 33% said on sales and marketing, 15% said on hedging and risk management, 6% said on regulatory and 3% said on hiring and training.
Finally, the audience was asked: “Do you believe that the retail energy industry is subject to more regulation than other retail industries?” A whopping 63% of the audience answered “Yes. There is more regulation in the energy industry.” 23% said it is the same across different verticals and 10% said there is actually more regulation in other verticals. 3% answered “none of the above”.
Here are five interesting conclusions of the audience polling:
1) A full 82% of the audience said that they are either going international or planning to do international and the majority said that they want to be in Japan. Since 31% said they think operational issues are the biggest hurdles – it’s a message to providers to create good solutions for retailers looking to expand internationally.
2) Retailers still love the D2D channel, even though they also feel it is the riskiest. They also want third party providers to help them with compliance and enforcement.
3) 83% of the audience said they are either looking to be acquired while looking to acquire another retailer. This means that mergers and acquisitions are alive and well in the industry and companies are continuing to look for partners and ways to grow. The vast majority of attendees feel that valuation issues are most important when it comes to mergers and acquisitions. They want to acquire companies that have a truly differentiated approach to the business and or not simply selling commodity on price alone because that is a race to the bottom.
4) Most of the attendees in the audience feel strongly that capital expenditures should be focused on new technologies and ways to further differentiate their offerings.
5) Finally, 63% of the audience feels strongly that the retail energy industry is too highly regulated and that public service commissions are simply too strict. The winners in this game will be the retailers that are able to navigate through this maze of regulation.
Jack Doueck is co-founder of Energy Marketing Conferences, LED Plus, and Advanced Energy Capital.