All Juiced Up - Green Mountain Energy's green energy marketing campaign for California customers - Statistical Data Included

American Demographics, Jan, 2001 by Joan Raymond

A Texas energy company uses direct mail to "brand" eco-friendly electricity.

The Memo Two years ago, when California led the nation in deregulating its utility market, the entrepreneurs at Green Mountain Energy smelled opportunity.

This Austin, Texas-based company is the nation's largest renewable energy services provider, favoring wind and solar power generators over coal or nuclear power to generate electricity. Green Mountain executives believed that the deregulation trend would spread to other states, and when it did, the prize would be radiant: consumers spend about $200 billion on electricity each year. By 2002, retail energy sales in deregulated states are estimated to reach at least $12 billion annually, according to Xenergy, a Massachusetts-based energy consulting firm.

Trouble is, deregulation and consumer choice of utility providers are still new concepts. Executives at Green Mountain realized they would have to provide more than just electrons to California consumers if they hoped to crack the market. They figured that the best way to enter California's new deregulated market was to appeal to consumers' environmental conscience. They'd offer a cleaner, earth-friendly brand of electricity, and leverage the efficiencies of the Internet at the same time. Green Mountain customers can sign up for services, as well as pay bills, online. Currently, about 10 percent of its business is over the Net.

The Green Mountain team had its work cut out. First, "green" power can be more expensive for consumers. Depending on where you live, alternative energy sources can cost about 5 percent to 6 percent above the standard rate, according to Ethan Cohen, an energy analyst with the Aberdeen Group, a research firm based in Boston. Second, consumers would have to trust a dot-com to provide their home utilities - something that hasn't exactly caught on, according to The Yankee Group. Less than 1 percent of all households with Internet connections in deregulated states now buy power online. Third, the energy service provider would need to generate excitement about an ephemeral commodity like electricity, while convincing consumers that they could save the planet by using renewable energy sources. But how would they do it?

The Discovery Green Mountain needed to convince consumers that buying green power would be beneficial. Even in California, long known for its environmental activism, eco-friendly energy accounts for just 12 percent of the overall mix. And less than 2 percent of customers have opted to switch to green-only providers. The company also faced stiff competition: There are more than 25 providers of "renewable" energy in California. Relying on a series of its own in-house focus groups, as well as secondary source research, the marketing team believed they'd be able to convince a substantial share of Californians to choose Green Mountain as their provider. For example, in a survey conducted by PricewaterhouseCoopers, two-thirds of respondents in Ohio said they would be willing to pay $5 more per month to reap the environmental benefits of green power. And, in one Massachusetts pilot program, 31 percent of residential customers picked the green-power option.

Customer surveys conducted by Green Mountain prior to its California launch, revealed that an environmentally-conscious electricity provider would have to motivate people to leave their current utility provider. In fact, only saving on costs was given as a compelling reason to switch. Believing that competing on price alone was not a sustainable model, the marketing team decided to focus on building the leading brand of clean electricity, with a mission to change the way power is made.

Green Mountain also had reason to believe that consumers would become more open to buying their power online. The Yankee Group projects that by 2005, 28 percent of online households will be using the Net to find alternative energy sources, spending an estimated $10 billion.

Further, the execs gathered information that convinced them that consumers were ready to embrace companies that demonstrate an intense and abiding commitment to worthy causes. This is still the case today, and the trend is expected to continue. A 1999 Cone/Roper Cause-Related Trends Report reveals that more than 80 percent of adults have a more positive image of a company that supports a cause they care about. Two-thirds place greater trust in companies aligned with social issues. And, three-fourths say it is acceptable for companies to link causes with their marketing efforts, up from two-thirds in 1993.

The biggest challenge, Green Mountain figured, was to let California consumers know that the company was a player amid the numerous choices which were available to them. To that end, the marketing crew kicked off a slate of different activities aimed at building brand awareness. In an attempt to capture a share of Sonoma County residents, the company sponsored festivals such as the Health & Harmony Festival in Santa Rosa, California, which attracts 15,000 to 20,000 Sonoma County residents. Company representatives distributed literature, and spread the green message in on-site booths. Additional marketing efforts, to target Californians, as well as consumers in other deregulated states, included partnerships with Web-based providers of green products and rotating banner advertisements on various Internet search engines.