Blog

October 08, 2020

Customer Retention is Key to Long-Term Profits

Thinking of a won deal as the beginning, not the end, of the journey is the key to realizing the customer’s lifetime value – the key concept covered so much in business and marketing books. The customer lifetime value (CLV) for an energy brokerage business depends on the commission received, the frequency of renewals, and customer’s lifetime span. Acquiring a new customer can be time-consuming and costly. That’s why investing in customer retention is essential, making nurturing and identifying potential renewals one of the key activities for energy brokers.

Achieving high levels of customer satisfaction will translate directly into happy customers staying with you for many years. It all starts with the basics, treating your new customers like VIP’s. Thank them for using your brokerage, send them a simple token of appreciation, follow up a won deal with an email or a phone call. After your customer is enrolled with the supplier and the energy is flowing, stay in touch and remind the customer of the savings realized by working with your company. Be proactive and give customers a reason to come back and do business with you again. For example, share an article with industry news or tell them about the latest pricing trends and recommend a plan that maximizes savings. Ask your clients to share their latest developments with you, which will give you a chance to peek into their energy usage, analyze it, and offer creative ways to save money.

A good CRM system will help you implement a follow-up campaign and schedule a set of interactions with customers throughout the contract term, ultimately leading to the moment when renewal offers can be presented. You can schedule your entire campaign right after closing a deal, and the CRM system will notify you when it is time to get in touch with customers, so your team can dedicate the time to customer retention activities along with new business development.

Don’t forget that your competitors are not sleeping and are always looking for ways to take your customers away, sometimes using shady business practices. In some cases, if you fail to be there at the right moment, your customer may end up at the mercy of the supplier or the utility, who have no good incentives to be transparent about their renewal policies, pricing, or contract terms. If this happens, you might be the one carrying the blame, when your customers are hit with the sticker shock of unexpectedly high energy bills. It could be too late to win the customer back at this point.

If no action is taken on your part when the initial contract expires, suppliers can lock your clients into auto-renewed contracts. There are some well-defined legal requirements that suppliers must follow when automatically renewing customer contracts. These requirements vary by state and typically dictate whether automatic renewals are allowed, list customer notification requirements, limit price increases or contract types, set limits on termination fees, and so on.

Here are a few examples of automatic renewal requirements that suppliers must follow. They will give you a taste of what kind of communications customers may expect from suppliers and help inform your clients about their renewal options.

• Connecticut: Automatic renewals are allowed if the provision is included in the contract. Customer may choose not to accept renewal the offer and should incur no cancellation fees if cancelling within 7 business days after receiving the first billing statement. Residential customers have to be notified 30-60 days before the renewal date.
• Washington DC: Automatic renewals are allowed as long as any changes in the material terms and conditions of the agreement are clearly stated and a method of terminating the contract without penalty is provided Customers need to be notified 45 days before the intended renewal date.
• Illinois: Automatic renewals are allowed for the same price and contract term as the original contract. The renewal terms must be clearly disclosed in the initial contract, including the cancellation process.
  Automatic renewals of a fixed price contact to a variable price contract is not allowed; renewal into a higher rate requires the explicit consent. Customers need to be notified 30-60 days prior to contract expiration, and two notices are required if renewing for more than two months.
• Maine: Automatic renewals are allowed for fixed price contracts, as long as the price increase is no more than 20% and the contract is of the same length as the initial one. Fixed to variable or variable to variable price contracts may be automatically renewed without express consent. Suppliers must notify customers two times between 30 and 60 calendar days in advance of renewal of service. There are very specific requirements regarding the language that has to be used in renewal notices.
• Texas: Automatic renewals are allowed; however, customers must give the affirmative consent to enroll in any product other than the “default renewal product” (i.e. fixed to variable month-to-month product). If customer takes no action regarding renewal/expiration notice, the service will continue with the month-to-month contract, cancellable at any time without penalty. Residential customers must be notified 30 days or one billing cycle prior to contract expiration, but no more than 60 days or two billing cycles in advance of contract expiration; Small commercial customers must be notified 14 days prior to contract expiration, but no more than 60 days or two billing cycles in advance of contract expiration.

It is a good idea to get very familiar with all auto-renewal requirements in the states where you operate and design your renewal follow up campaign around notifications that will be sent by suppliers. If you will help your clients understand their renewal options early and put them with the right supplier at a great rate, they will appreciate your efforts by staying with you and talking about your services in their social circles.

Finally, here’s another tactic that one of our customers shared with us. This clever energy consultant tells his clients that if anyone approaches them to talk about energy, to immediately provide him or her with his business card and to contact him directly about any energy-related questions. This way, any sneaky attempts of stealing his business are intercepted and dealt with swiftly. Needless to say, he excels at developing and maintaining great relationships with his customers, earning their trust by always being the most knowledgeable point of contact for all their energy needs.

If you are looking for a platform that will help you maintain your customer relationships, let us show you BrokerX platform. With its advanced CRM functionality, you will be able to easily design and implement customer follow-up campaigns, receive notifications, store all client information in one place, and have full visibility into your deals pipeline. In addition, you will enjoy the convenience of simple multi-supplier pricing, automatic generation of professional proposals, and more.

To see see our software in real time, click here to schedule a demo.