The Untapped Potential of SMB Segmentation in Energy Marketing


Small to medium businesses (SMBs) deliver half of private-sector U.S. employment and consume about 20 percent of the energy in America. Because SMBs are a broad and diverse group, they often fall into what the Smart Energy Consumer Collaborative (SECC) calls “a forgotten middle ground between residential and larger commercial and industrial energy customers.” Despite being an immensely large part of our economy, the utility industry knows comparatively little about how to tailor interactions for SMB customers and they are often lumped into marketing programs with larger C&I customers.

Recently, SECC conducted a research study to better understand the SMB sector and to determine the potential value of segmented marketing tactics for SMBs. The SECC report can be downloaded here. The following information will provide insight into their discoveries and conclusions.

Broadly speaking, marketing segmentation is valuable because it allows companies to better cater to their individual consumers based on unique buying motivations and needs. Market segmentation is necessary because, in the majority of cases, businesses are not providing a service or product to one homogenous market group. Segmentation allows providers to efficiently classify customers based on similarities – molding a standardized marketing technique for each group.

Internet platforms combined with big data analytics have allowed digital marketers to track and tailor advertising to each of us as a market segment of one with “psychographic microtargeting.” Other micro-targeting methods involve the use of our digital online signature, including search terms we all use, to tailor ads. These methods are raising privacy and other concerns with end consumers and regulators, but their use will only grow due to their proven effectiveness. Such micro-targeting techniques were deployed in the 2016 U.S. Presidential Election on platforms like Facebook.

While some of the larger utilities are exploring more advanced digital marketing approaches, which often include the integration of smart phones and digital profiles, the vast majority of utilities today deploy a basic segmentation strategy in marketing programs.

Segmentation allows energy providers to efficiently classify and group customers based on similarities in perceived needs and motivators. SECC’s research study report established five major behavioral “sub-segments” within SMBs as summarized below:

The Established and Engaged”: These businesses are already on a path towards energy efficiency and tend to be on the larger side, with an average of 143 employees. They respond best to sector-specific outreach beyond common basics. Because they are already involved in energy efficiency practices, it is crucial to approach these businesses with specific solutions that provide lower costs and reduced environmental impact.

The “Motivated Yet Inactive”: These businesses are interested in increasing energy efficiency, but they need an extra push to take action. They would respond well to general outreach due to their well-established level of interest, specifically in predicting future energy costs and methods to decrease electricity usage.

The Interested if Incentivized: This group does not prioritize energy efficiency, but instead prioritizes profit. If making an effort to engage, it would be productive to present a plan that would ensure between 10 and 30 percent savings. This group largely values trust and credibility in a partner and would be willing to engage if clear, quality steps to integrate new products and ensured savings were outlined and demonstrated. This is the second largest segment, consisting of 27 percent of the industry, and therefore presents a large potential pool of program targets.

The “Saving and Satisfied”: These businesses have already taken the steps they feel necessary and prudent to ensure efficiency and they are not particularly interested in new options. To engage these businesses, energy providers should approach them with personalized and targeted initiatives involving specific, rather than generalized, numbers and plans. The most appealing form of direct outreach tactic for this segment is phone.

The “Decidedly Disengaged”: This is the largest segment, containing 28 percent of SMBs, and includes all the companies that have no particular interest in the idea of energy efficiency. Individuals within this group will likely be unreceptive to phone and in-person contact, but they may be responsive to traditional mail if the savings incentive is above 30 percent. This sector is difficult to pin down and target due to their lack of freedom in regard to facility improvements, considering most of these businesses rent their work space and have an average of only six employees.

As you can see, each of these sectors vary from the others in multiple ways. From interests to ideal outreach, these groups are all seeking something different. When energy companies utilize segmentation, customers are better cared for and energy companies can be sure they’re deploying the most cost effective and readily available approach to marketing program success. For more detail on the research conducted above, download the SECC report. For more on energy B2B marketing strategy, download the MG Energy B2B Marketing Benchmark Report.

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