Direct marketing can sell more green power, says EPRI study

BOULDER, Colorado, US, 2004-09-01 (Refocus Weekly)

Superior-quality direct marketing by electric utilities is a major factor in the sale of green power in the United States, according to a market study.

More than 500 utilities currently offer some form of green power to their residential customers, but the participation rate in most programs is “disappointingly low,” with an average of 1%, concludes the studt, ‘Designing Direct Marketing Materials to Sell Green Power.’ By contrast, some utilities have participation rates that are more than quadruple that level.

“Of the roughly 500 utilities in 33 U.S. states that have green pricing programs, the top ten account for 90 or 91% of the total market for utility green power,” explains co-author Brian Byrnes of Primen. “Clearly, the good programs out there have something to teach.”

Direct marketing campaigns by seven utilities, using bill inserts or direct mail pieces, achieved response rates up to 5.6%. Utilities should appeal to the emotions of customers to market green power, rather than using rational explanations, and the study examines methods for segmenting and targeting markets, as well as providing guidelines for crafting graphics and text.

“We convened a panel of advertising pros, including both people with green power marketing experience and experts recognized for their understanding of advertising in general, to analyze these ads,” explains Byrnes. “Their insights helped us create straightforward guidelines that any utility can follow to develop more effective green power direct marketing campaigns.”

Two-thirds of utilities have annual marketing budgets of less than $50,000 to promote green power, according to surveys, so testing is important to improve marketing penetration. “If budgets are that restricted, only the best-executed campaigns can be effective,” says Byrnes. “In other industries, once someone comes up with a winning idea, others emulate it within months.”

“Too many utilities have wasted money through multiple mailings of direct marketing pieces that didn't get good response rates the first time around,” he adds. “This needn't be the case, because direct marketing allows testing and retesting of different concepts and techniques. You can then market the winning combinations heavily to maximize response rates.”

Primen is a marketing subsidiary of the Electric Power Research Institute and GTI.

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