Rather than constantly looking for new customers to help improve their energy management, energy services companies can improve their bottom line by becoming more deeply embedded with existing customers so that that they have more recurring revenue.
As a famous study from Bain & Company and Harvard Business School found, a 5% increase in customer retention leads to a 25-95% increase in profits.
For energy services companies, this retention can go beyond acting as the power supplier through a utility company and collecting a monthly payment or financing a project to upgrade equipment. Instead, these companies can retain customers by becoming a partner that continually analyzes energy management to find energy savings year-round, similar to a consultant on a retainer.
Keeping Up with Change
As companies change, such as by adding offices or adopting new production methods, their energy usage will likely change as well. So, it makes sense for them to have a partner close by to help along the way.
In order to continually find energy savings, energy services companies need to develop an understanding of how, when and at what cost their customer use energy, and they can easily do so by getting customers to adopt real-time energy analytics software (EAS).
While an audit might reveal insights such as that HVAC usage is unusually high and that it would be cheaper in the long-run to upgrade to more efficient system, there are limits to looking in the rear-view mirror. Once that new equipment is installed, it’s still possible for HVAC costs to rise or at least be higher than expected, such as if a company inadvertently uses more energy on a day that the utility measures overall strain on the grid.
Thus, the company could be hit with a high capacity tag, which would raise their rates for all of the following year, just because of one high usage period, which could be as short as 15 minutes.
Yet if the company had EAS installed, they could get real-time notifications and predictions on when those capacity tag measurement periods are coming, and their energy services company could then advise them on what to do to minimize costs. For example, if a company has offices in multiple states, they could shift processes to another location that is not within the region being measured for capacity.
An Investment That Pays Off
Energy services companies may have to invest in account management or in-house energy consulting resources that can understand and articulate the analytics that the EAS is uncovering, but this investment can dramatically improve the company’s bottom line, as customer retention studies show.
For example, a recent study by Sailthru and Forbes found that retailers and publishers that upped their investment on customer retention over the past one to three years had an almost 200% better chance of increasing their market share in the last year compared to those that spent more on customer acquisition.
So rather than only doing one-off jobs and having to continually find new projects to increase revenue, energy services companies should develop long-term partnerships with customers to continually work with — and bill — for ongoing energy savings.
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