At a Glance:

There are many mistakes the common energy broker makes that can set him down the path to failure. In this article, we outline the 3 lessons every energy broker must know in order to become more successful.

1. Read Supplier Contract Terms.

Retail energy supplier contracts are complex and can be confusing to novice energy brokers, and it is imperative that you understand the terms of all supplier contracts before recommending them to your customers. If you put a customer with an energy supplier that has adverse terms, you could be putting your customer and your reputation at risk. Here are some of the common clauses energy brokers miss in supplier contracts:

Auto-Renewals

Some suppliers have auto-renewal clauses in their contracts that can be harmful to your customers. For example, the clause might read that if the customer does not cancel the contract by a certain date, then it will auto-renew at the then market price.

Your customers can end up paying a much higher price for the renewal period than what you can obtain from another supplier.

Knowing what suppliers have auto-renewal clauses is critical to being an apt energy advisor. Furthermore, if you have enough business with a particular supplier, you may even be able to negotiate the removal of such clause.

Pass-Through Clauses

Another more recent clause found in many matrix contracts is the pass-through. This clause allows suppliers to charge customers for any additional costs they may incur over the duration of a fixed-rate contract. For example, should transmission or capacity costs increase, the supplier reserves the right to have the customer pay the difference. However, suppliers do not typically credit customers should these costs decrease.

It may not be possible to eliminate these terms from a supply agreement, but it is important to know what suppliers’ contracts contain them and how to present them to your customers.

Bandwidth Requirements

Lastly, many suppliers offer prices that are contingent to a certain swing or usage bandwidth. In other words, the price they offer is only valid for a certain amount of kWh (+/- a specific %). If your customer uses more or less than the allotted bandwidth, then the supplier reserves the right to charge them to market rate for that energy.

Customers who signed fixed rate agreements are not happy to realize that the supplier is charging them a different price for this usage variance. However, there are some advantages to utilizing bandwidth clauses to secure lower rates. It is important to understand this concept and be able to discuss it with your customer.

Learn more about energy bandwidth clauses here.

2. Track Your Commission Payments.

Another mistake energy brokers make is to not properly track their commission payments from suppliers. Some brokers assume that the suppliers will simply get it right since they are bigger companies with robust systems; however, in our experience, suppliers make mistakes.

It is important to have a CRM or database where you house all of your commission payment data. On a regular basis, you want to cross reference your commission payments against the benchmark data in your CRM. Any discrepancies call for an email to the supplier to question the payment amount.

Benchmark Data

  • Account Numbers
  • Margin
  • Usage

At Diversegy, we help our energy broker sales partners reconcile commission payments automatically through our commission system, ELIAS. In fact, our system saves our partners hundreds of ours per year in commission reconciliation.

3. Stay In Touch With Your Customers.

Last but not least, remember that the retail energy sector is crowded and competitive. On a regular basis, your customers are fielding sales calls, emails, and in-person visits from your competitors looking to steal your business. While a long term supply contract is certainly a deterrent, it is important to keep a relationship with your customers throughout their contracts.

It is too easy for another broker to court your customers and offer them renewal terms dated well out into the future. Having some sort of system for staying in front of your customers is key. Here are a few tips:

Email Newsletters

You may want to consider crafting an email newsletter to your customers once per month or quarter. In this newsletter, you can share energy savings tips and other information that might be relevant to them. Using a system such as MailChimp, makes it quite simple to add your customers’ emails to a list and set up regular email campaigns.

Phone Calls or Visits

A good old fashioned phone call or face-to-face visit always does the trick. We know seeing all of your customers in person might not be feasible, but if you happen to be in their area, a nice drop-in to say hello always does wonders for the relationship. At minimum, try to contact your energy customers by phone at least once per year to say hello and give them an update on their contract status.

This regular communication tells your customers that you haven’t gone anywhere and that you are staying on top of their energy accounts.

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