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<title>Build Your Energy Marketing Database Now As Competition Increases</title>
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<td width="75%" valign="top"><p ALIGN="left"><font face="Arial" size="6"><b><strong>BUILD
YOUR ENERGY MARKETING DATABASE NOW AS COMPETITION INCREASES</strong></b></font></p>
<p ALIGN="left"><font face="Arial" size="6"><b><strong> </strong></b></font></p>
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<td width="50%"><strong><font face="Arial" size="4">BY MARTY AGIUS<br>
</font><font face="Arial" size="3">Senior Vice President, BUSINESS DEVELOPMENT FOR
MARKETING RESOURCES OF NEW YORK, INC.</font></strong></td>
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</center></div><p><font face="Arial" size="2">(<em>originally published by PMA OnLine
Magazine: 99/02</em>)</font><font SIZE="2"> </font></p>
<p><font SIZE="2"> </p>
</font><p><font face="Arial">As competition unfolds in the energy market, there are
valuable lessons to be learned from other deregulated industries. Unless your organization
has extremely deep pockets, you should attempt, whenever possible, to selectively market
your products and services to the specific segments of your prospect and/or customer
databases that will give you the best return on investment.</font></p>
<p><font face="Arial">The question then becomes how and to whom should you direct your
marketing efforts? Most of the energy marketers with whom we have spoken know little about
the customers and prospects in their database other than name, address and sometimes some
usage data. There is a wealth of data that can be utilized to beef up your efforts, and
often this data can quickly pay for itself in savings realized. Consider this case study:</font></p>
<p><font face="Arial">A Regional Bell Operating Company (RBOC) was facing competition for
local phone service for the first time. Their old ways of marketing were no longer
sufficient to meet the demands of the marketplace or the competitive environment. In
particular, their cost of acquisition was too high in their direct marketing campaigns.
Their marketing database consisted of name, address, usage data, and a third party cluster
code. Their primary targeting strategy had been based upon historical revenue. (Sound
familiar?)</font></p>
<p><font face="Arial">A strategy was devised to gather more complete customer data and
then strategically use that data to drive direct marketing campaigns. Since they had
treated each local access line as an individual account, the first step was to merge
multiple accounts into a common household whenever possible. Next, in order to build a
more robust model of consumer needs, demographic and attitudinal data had to be added to
the usage data that the RBOC already had. Lastly, that information had to be incorporated
into the direct marketing communications.</font></p>
<p><font face="Arial">The communications stream began with a twelve-question survey to
their higher revenue customers. Questions were asked about their household makeup, reasons
for using the telephone, calling habits, likes and dislikes, and how satisfied they were
with their current service. Over fifteen percent responded without even having to offer an
incentive. Combining the survey data with the usage data in addition to a demographic
overlay, models were developed that predicted who was most likely to want particular
services like call waiting, three-way calling, and additional local access lines.
Predictive models of potential responders were also created for people who did not respond
to the survey. Next, this responder model was segmented into groups that included homes
with a presence of teenagers, home-based offices, and computer/Internet users. For each
segment, relevant creative messages were crafted. All of this information was then
incorporated into a campaign that promoted the installation of additional phone lines.</font></p>
<p><font face="Arial">As a result, the very next mailing dramatically lowered the cost of
acquisition of additional lines. The company was able to save a substantial sum of money
by mailing 40% fewer pieces than a previous program. Despite the lower quantities mailed,
the program was able to double the total number of sales. The overall conversion rate of
inquiries to sales was also higher. In particular, they experienced up to a 500% lift in
sales by delivering targeted creative messages to the segments with –you guessed it -
teenagers and Internet access.</font></p>
<p><font face="Arial">How much did all this high tech data cost them? Virtually nothing!
The savings that were realized by mailing less and by mailing smarter allowed them to
recover the additional costs on their very first campaign. </font></p>
<p><font face="Arial">One of the first resources that you should tap into may be the most
valuable… you’re existing customers. It never fails to amaze me how much
information a customer will give you when you ask. Not only can you capture product
preferences, but you can also gauge their attitudes. Just think how successful your next
campaign would be if you could actually address the needs and wants of your customers! The
information is there; all you need to do is ask for it!</font></p>
<p><font face="Arial">Another source of valuable data that can help you as marketers is
the information assembled by the major list compilers. They have gathered a wealth of
data, such as number of people in a household, their ages, household incomes, and how long
they have lived there. This information can become crucial if you have a limited marketing
budget. Just think, whose business would you rather earn, the single apartment dweller, or
the family of six, whose kids leave the lights on, watch TV, keep the house warmer for the
young ones and go through 12 loads of wash, not to mention the 42 long, hot showers per
week? </font></p>
<p><font face="Arial">If small businesses represent a potential market, similar
information is also available for this segment. Type of business, number of employees and
geography are just a few of the selections available to use. We found on a recent gas
campaign that the difference in the title of the person receiving our offer resulted in a
133% lift in response. Taking the time to learn about your current customers will pay
great dividends in the not too distant future.</font></p>
<p><font face="Arial">This brings me to the final point. Even though deregulation will not
affect you for a year or two, you should address the issue of enhancing your database now.
Take advantage of the opportunity to build a powerful marketing engine <u>before</u> you
have to enter the competitive arena. The future energy marketing battlefields will be
reminiscent of the telecommunications wars of the past and present. And, like all wars,
the winners will be those that are best equipped and prepared. Information is power, and a
well-designed database provides actionable marketing information. It can take six months
to a year to build a strong marketing database. It makes real sense to start now. Treat
your database like the corporate asset it is, and it will pay many dividends in the
future.</font> </p>
<hr>
<i><p></i><small>Marty Agius is Senior Vice President of Business Development for
Marketing Resources of New York, Inc., a full service direct marketing agency. He can be
reached at <a href="mailto:[email protected]">[email protected] </a></small></td>
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