Spreading Your Brand Umbrella:
Moving Beyond Electricity Sales

by Mike Mabey

Utilities are increasing their emphasis on products and services revenue (for this summary, discussion is shortened to focus on products). How to implement and succeed in this arena is a much debated question. We have a recommendation.

Develop a multi-tiered marketing strategy.

  • Tier One focuses on products closely aligned to electricity sales.
  • Tier Two expands this focus to include the second generation of current products and bundles of Tier One products. These products leverage Tier One successes as well as new learning from on-going customer-centered feedback.
  • Tier Three expands into new arenas. Your customers are now introduced to products that they would not previously have accepted from you.

Overview
This is a structured, strategy driven, process to help your customers move beyond their current view of you as a supplier of electricity into seeing you as a trustworthy supplier of a wide range of products. The overall strategy is to allow customers to move along this relationship-expanding continuum at their own speed. Meanwhile, you are segmenting and targeting them for additional products based on where they are on the continuum.

Tier One: Don’t start by trying to reinvent the wheel. Build and expand your base.
Tier One products will be direct extensions of your core expertise and what your customers trust you to do. However, the question to ask is, "what are the characteristics inherent in this product or service that will allow me to use it as a bridge to becoming a provider of second and third tier products?" Focus on these "bridge" products.

You probably already have a set of products in place, although they may need to be reconfigured, repositioned, repriced or reintroduced. But, that is not enough. Look at other utilities, assess what has worked for them, and determine if, and how, that can be translated to your marketplace. Remember, you are focusing on products that are closely related to your core, widely recognized, expertise.

Tier Two: Ok, now start reinventing the wheel, or at least get new tires for the wheel.
Tier Two strategy should focus on product-line extensions, bundles of products, or new products that fall at the edge of what customers expect or want from their utility. These products tend to be descendents from the Tier One, in terms of how customers think about their utility as a supplier or a channel.

This is where serious customer research becomes critical. You must understand customer values, needs, and attitudes towards your efforts to move beyond Tier One products. You will want to identify weaknesses, strengths and holes in your customers’ mindsets. A recent customer-based segmentation will be very important during this process.

Tier Three: Exploring new territory
Now you are definitely outside the box of selling electricity! You are probably (well, almost certainly) dealing with non-traditional products. Therefore, traditional utility marketing and sales strategies may not apply. These may be niche markets, targeted, high margin products, or first iteration products with high potential. Your challenge is to use Tier Two successes and experience as a base to prepare customers to accept you as a supplier of these products.

Warning:
Inappropriate Tier Three products offerings have the potential to elicit a negative response that could be damaging to your company’s brand equity. You must have a clear understanding of your customer needs, and value propositions to avoid this danger.

Questions to ask before introducing a product or service:

  • What is the market potential?
  • Do I currently have the internal capabilities?
  • Can I make a profit?
  • Will it help my brand?
  • How could it hurt my brand?
  • What customer need am I addressing?
  • Do I have the product attributes and pricing right?
  • Does it help my customers expand their awareness of my capabilities?
  • Can I use this channel subset to deliver any other products?

Summary
You are allowing/helping customers to segment themselves on at least three axes:

1. their comfort level with you as a reliable and trustworthy supplier/channel,
2. their awareness of the products you provide, and
3. the types of products they want, and will pay for.

You are also providing customers with a migration path, allowing them to revise their segment membership as their needs change and their willingness to consider you as a supplier grows. This allows you to maximize your revenue, while giving your customers a powerful self-defining segmentation process.

Not only will your customers will be migrating - so will your products. Some Tier Two products will move to Tier One as your customers become comfortable with you as a trustworthy supplier of these Tier Two products. These products will become part of the baseline product mix that customers expect you to offer.

Although this multi-tiered migration strategy is described as a sequential process, we have, in fact, worked with clients to develop suites of products that address all three tiers from the beginning - allowing customers to enter the process at any of the three tiers. Obviously, that will not happen for most products - but when it works, it can be a very powerful way of allowing customers to tell you where they are in terms of needs and when they are ready to take the next step.

Conclusion
In order to succeed with a multi-tiered marketing strategy, you must be willing and able to lead and educate customers into wider comfort and trust zones, where they will more readily consider you as a potential supplier for products.

Building product sales into a significant part of your business will be a challenge. Doing so in the face of low levels of awareness and acceptance of you as a supplier of products will make the task even more difficult.

Energy Market Solutions is a utility-focused marketing strategy and research firm that helps clients develop customer centered, values- and needs-based marketing strategies. Using their combined experience in the utility industry and in competitive industries, Energy Market Solutions helps clients identify what customers value (their value proposition); which customers to target for loyalty, retention and new product/services programs; and how to acquire and/or keep targeted customers. For more informatin contact Dick Wight at 770-455-6994 or rwight@EnergyMarketSolutions.com.
770.455.6994