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Large consumers
G R EE N E N ER GY Large consumers A promising but hidden target group for green energy suppliers
The target audience of business consumers is still a blank spot on the marketing
map of green energy suppliers.
There seems to be an enormous potential of companies that are eager to purchase green energy voluntarily,
in
order to improve their environmental record. Only a small part of this potential appears to have been exploited by green energy suppliers. This is the clear conclusion from a major green energy survey carried out recently among European m e d i u m and large enterprises that do and mostly d o not purchase green energy.
Rolf de Vos, green-
prices.corn reports on the findings of the survey. 'Green by Demand', the green energy survey conducted by the Finnish University of Vaasa's Nordic Centre for Expertise in Energy and Utilities Marketing (VaasaEmg), in close cooperation with Greenprices.com, draws a not too optimistic picture of the marketing abilities of green energy suppliers. But before feeling falsely accused, suppliers should be triggered by the enormous potential of the business consumers' market.
Environmental image The University of Vasaa obtained responses from some 1200 businesses throughout Britain, Germany, Sweden, The Netherlands and Finland during 2002. One remarkable conclusion from the enquiry is the fact that over onethird of all businesses say it is quite or very likely that they will purchase green electricity in the near future. Especially larger firms of over 500 employees are interested. Environmental image and action are the main issues here, quite often supported by the board of directors or the CEO himself. Most of the businesses (three-quarters) want to strengthen their environmental image, and green energy is one way to do this. Of course intentions are not a synonym
60
January/Feoruary 2003
~.~.~-:GC.
www.~e-,:ocus.neL
for actions, but this is not just lip service. How come this vast pool of big consumers stays largely untapped? The foremost finding of the enquiry seems to be that there is a common unawareness of the practical impacts of purchasing green energy, one of the instruments to improve environmental image. Surprisingly enough, almost two-thirds of respondents had never received a green energy offer. And over 20% didn't even know about the possibility to purchase green energy at all! It is obvious that there remains a lot of promotion and marketing to be done by suppliers.
Know your audience But how? The starting point of all marketing is getting to know your audience. The University of Vasaa already did some detailed analysis in this respect and defines three types of green energy prospects: • Green intentions: Likely to buy green energy; waiting for an offer. • Confused Positives: Unaware of possibilities; switching to green energy has to be made easy for them. • Sceptical Masses: Pragmatic, commonly neither positive nor negative.
Of course, each group deserves its own approach. Nevertheless there are some important general misunderstandings to be cleared out right away. For instance, when deciding against green energy purchases the higher price of green energy is the most important parameter. But for companies that are already likely to buy green electricity, other things like image, public relations and marketing matters seem often to be far more important than the price issue (though this is not to say that price does not matter to them). A large part of this target group won't be scared off by reasonable price premiums for green energy. For this group the quality of the green energy, transparency, information and easy switching is much more important. The University of Vasaa gives an insight into the important issues for adequate marketing. Here (simplified) are just some: Patience and perseverance. Decisions about purchasing green energy are time consuming and complex. Be there at the right time and hold on.
More aggressive market approach. Too many companies still are unaware of the possibilities of green energy because they haven't been made an offer. Direct personal marketing is essential. Find the right people. First find the right company, for instance one which takes some broadly ethical or environmental stance. Then prepare for a buying process which is complex, with many people involved: the board, PR and marketing people, energy co-ordi-
;4T, 0846/03 ©2003 ZisCvier Science L~o. Aii ri~nus rcsecved.
GREEN
nators, and so on. Don't be satisfied with one contact within the company and realize they may all have different objectives. Act global, be local. Some 15% of all respondents say that one barrier for buying is that their local supplier does not provide green energy. Practicality, local ethics, politics and other issues all feed into the value of locality. Improve labelling & communication. Approximately one third of all businesses do not trust environmental labelling and even more feel that they do not buy green electricity at least partly because of the lack of transparency regarding the quality of available green energy. A standardised labelling of green energy, backed by extensive communication, would take away much of the current confusion on the market. This will take an international effort. Differentiate your products. Companies like to choose their own product - one which suits their preferences, price sensitivity, and reasons for buying green. Like in the Netherlands suppliers will be offering different green
ENERGY
energy brands. Vasaa mentions four broad brands sets (really green, quite green, grey and black), but tailor-made products are also valuable for certain customers. Also: get the price right by pre-identifying those types of businesses that are likely to be more or less price sensitive (the research clearly suggests a number of identifying markers). Be inspiring. Pointing at the benefits of green energy, for example image, marketing and PR purposes, will surely appeal to individual managers, but more real examples are needed (and are available). In many cases a business' green energy purchase is inspired by one or two individuals, normally senior or consultative. Make use of these individuals' psychology. After all, such a purchase does not have to come out of his own pocket ....
Labelling Of course many of these aspects are quite common in marketing. One aspect that is of specific interest to green energy is the labelling matter, which is also very important for the small consumers' retail market. A
labelling standard needs a coherent approach, favourably in an international scene. There are some initiatives in this field, such as the recently launched Eugene label of WWF and other European NGO's. There also have been some national initiatives. A good example are the guidelines for green offerings that the British regulator Ofgem presented last year. Although the stalling of the British green energy market also has other causes, these guidelines apparently didn't provide the transparency that the market was asking for. Meanwhile, green energy in the UK is still a bit clouded. In other countries the situation is much the same. In Germany there are too many labels to obtain transparency and in the Netherlands nowadays there aren't any labels at all. In the latter case the consumers' market still develops rapidly, but that has been mainly caused by low prices. At present, a harmonised label seems to be more than energy suppliers can handle. But maybe the conclusion that this leaves a big market untapped, will drive the competitors together.
o I --
E .9.o
o _,o
o o
(5 c~J c~J
6
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._.9.
?
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er Z
January/Pebrua~ 2003
REFOCUS
www.re-f0cus.net
61
The target audience of business consumers is still a blank spot on the marketing
map of green energy suppliers.
There seems to be an enormous potential of companies that are eager to purchase green energy voluntarily,
in
order to improve their environmental record. Only a small part of this potential appears to have been exploited by green energy suppliers. This is the clear conclusion from a major green energy survey carried out recently among European m e d i u m and large enterprises that do and mostly d o not purchase green energy.
Rolf de Vos, green-
prices.corn reports on the findings of the survey. 'Green by Demand', the green energy survey conducted by the Finnish University of Vaasa's Nordic Centre for Expertise in Energy and Utilities Marketing (VaasaEmg), in close cooperation with Greenprices.com, draws a not too optimistic picture of the marketing abilities of green energy suppliers. But before feeling falsely accused, suppliers should be triggered by the enormous potential of the business consumers' market.
Environmental image The University of Vasaa obtained responses from some 1200 businesses throughout Britain, Germany, Sweden, The Netherlands and Finland during 2002. One remarkable conclusion from the enquiry is the fact that over onethird of all businesses say it is quite or very likely that they will purchase green electricity in the near future. Especially larger firms of over 500 employees are interested. Environmental image and action are the main issues here, quite often supported by the board of directors or the CEO himself. Most of the businesses (three-quarters) want to strengthen their environmental image, and green energy is one way to do this. Of course intentions are not a synonym
60
January/Feoruary 2003
~.~.~-:GC.
www.~e-,:ocus.neL
for actions, but this is not just lip service. How come this vast pool of big consumers stays largely untapped? The foremost finding of the enquiry seems to be that there is a common unawareness of the practical impacts of purchasing green energy, one of the instruments to improve environmental image. Surprisingly enough, almost two-thirds of respondents had never received a green energy offer. And over 20% didn't even know about the possibility to purchase green energy at all! It is obvious that there remains a lot of promotion and marketing to be done by suppliers.
Know your audience But how? The starting point of all marketing is getting to know your audience. The University of Vasaa already did some detailed analysis in this respect and defines three types of green energy prospects: • Green intentions: Likely to buy green energy; waiting for an offer. • Confused Positives: Unaware of possibilities; switching to green energy has to be made easy for them. • Sceptical Masses: Pragmatic, commonly neither positive nor negative.
Of course, each group deserves its own approach. Nevertheless there are some important general misunderstandings to be cleared out right away. For instance, when deciding against green energy purchases the higher price of green energy is the most important parameter. But for companies that are already likely to buy green electricity, other things like image, public relations and marketing matters seem often to be far more important than the price issue (though this is not to say that price does not matter to them). A large part of this target group won't be scared off by reasonable price premiums for green energy. For this group the quality of the green energy, transparency, information and easy switching is much more important. The University of Vasaa gives an insight into the important issues for adequate marketing. Here (simplified) are just some: Patience and perseverance. Decisions about purchasing green energy are time consuming and complex. Be there at the right time and hold on.
More aggressive market approach. Too many companies still are unaware of the possibilities of green energy because they haven't been made an offer. Direct personal marketing is essential. Find the right people. First find the right company, for instance one which takes some broadly ethical or environmental stance. Then prepare for a buying process which is complex, with many people involved: the board, PR and marketing people, energy co-ordi-
;4T, 0846/03 ©2003 ZisCvier Science L~o. Aii ri~nus rcsecved.
GREEN
nators, and so on. Don't be satisfied with one contact within the company and realize they may all have different objectives. Act global, be local. Some 15% of all respondents say that one barrier for buying is that their local supplier does not provide green energy. Practicality, local ethics, politics and other issues all feed into the value of locality. Improve labelling & communication. Approximately one third of all businesses do not trust environmental labelling and even more feel that they do not buy green electricity at least partly because of the lack of transparency regarding the quality of available green energy. A standardised labelling of green energy, backed by extensive communication, would take away much of the current confusion on the market. This will take an international effort. Differentiate your products. Companies like to choose their own product - one which suits their preferences, price sensitivity, and reasons for buying green. Like in the Netherlands suppliers will be offering different green
ENERGY
energy brands. Vasaa mentions four broad brands sets (really green, quite green, grey and black), but tailor-made products are also valuable for certain customers. Also: get the price right by pre-identifying those types of businesses that are likely to be more or less price sensitive (the research clearly suggests a number of identifying markers). Be inspiring. Pointing at the benefits of green energy, for example image, marketing and PR purposes, will surely appeal to individual managers, but more real examples are needed (and are available). In many cases a business' green energy purchase is inspired by one or two individuals, normally senior or consultative. Make use of these individuals' psychology. After all, such a purchase does not have to come out of his own pocket ....
Labelling Of course many of these aspects are quite common in marketing. One aspect that is of specific interest to green energy is the labelling matter, which is also very important for the small consumers' retail market. A
labelling standard needs a coherent approach, favourably in an international scene. There are some initiatives in this field, such as the recently launched Eugene label of WWF and other European NGO's. There also have been some national initiatives. A good example are the guidelines for green offerings that the British regulator Ofgem presented last year. Although the stalling of the British green energy market also has other causes, these guidelines apparently didn't provide the transparency that the market was asking for. Meanwhile, green energy in the UK is still a bit clouded. In other countries the situation is much the same. In Germany there are too many labels to obtain transparency and in the Netherlands nowadays there aren't any labels at all. In the latter case the consumers' market still develops rapidly, but that has been mainly caused by low prices. At present, a harmonised label seems to be more than energy suppliers can handle. But maybe the conclusion that this leaves a big market untapped, will drive the competitors together.
o I --
E .9.o
o _,o
o o
(5 c~J c~J
6
z
._.9.
?
00 Cr eLU "0 (D
er Z
January/Pebrua~ 2003
REFOCUS
www.re-f0cus.net
61