Energy deregulation is a fairly recent phenomenon in the U.S., with only a handful of states such as Texas, Georgia and Pennsylvania currently allowing consumers the ability to select their power service providers. Given that energy deregulation is still in its infancy, consumer confusion is inevitable — and especially within those jurisdictions where deregulation is new to consumer markets.
“How does deregulation work?”
“Will my new provider have to rip out my meter and wires, and put in a new set?”
“What happens if the power goes out?”
It is only natural that consumer questions abound when a market is newly deregulated. For instance, the state of Texas deregulated in 2002: but by early 2005, less than 15 percent of Texas consumers had elected to switch electricity providers.
Many people in newly deregulated markets incorrectly believe that switching providers is an onerous proposition. Nothing could be further from the truth. Switching energy providers is, by law, a process that is simple and easy.
But because energy is a life-essential service, consumers tread cautiously. Simply viewing a billboard or a 30-second TV commercial may not be enough to allay consumer anxiety. What is needed, particularly in the early years of a state’s deregulation, are customer-facing firms that care enough to take the time to visit with customers in their living rooms, explain the process and assure them they will receive dependable service at a fair price. In essence, the primary role of the retail electric provider in a deregulating landscape is to serve as a customer ombudsman and consumer advocate.
Enter network marketing as a consumer education program.
Several energy companies have realized that network marketing is an optimal way of reaching out to customers in their living rooms. By incentivizing entrepreneurs to explain energy deregulation to consumers within their social circle, network marketing efforts quickly gained momentum in the Texas marketplace. But the key to that momentum is the power of personal relationships.
Network marketers are not unfamiliar salespersons making front porch pitches concerning your energy supplier options. Rather, they are your brother or daughter or best friend — someone with whom you already have a trusting relationship — helping you better understand the nuances of energy deregulation so you can make an informed choice.
In the six years since the country’s longest tenured network marketer of retail energy entered the Texas consumer landscape, over 50 percent of consumers have switched to a new retail provider. The use of network marketing to promote the sale of energy is widely credited with being a primary catalyst of that switch rate, as the face-to-face marketing model helped educate the populace about the benefits of deregulation.
The success and proliferation of network marketing companies in the energy landscape illustrates the ongoing need among energy consumers for retail providers to be more than simply a logo on a bill; energy companies must act as advocates who help consumers get competitive energy rates balanced with quality service and while caring enough to build and sustain relationships with their customers.
Written by Rob Snyder, Stream Energy