Important Things to Know About Selling Deregulated Energy

Deregulated Energy Sales

Selling energy in deregulated markets can be a rewarding but complex career path. With opportunities for financial growth, flexibility, and industry influence, it attracts both independent brokers and energy consultants. However, it’s important to understand the intricacies of deregulated energy markets to succeed in this competitive space.

Selling energy in deregulated markets is no easy task. Especially if you are just entering the space and have little energy knowledge. This article is written to provide expert advice to energy sales veterans and even those just getting started as an energy broker. With these tips, you can multiply your energy broker income, learn how to navigate volatile commodity markets, and most importantly, develop a strong six-figure income selling deregulated energy.

Key Factors To Consider

In order to enjoy a successful career as an energy broker, you first need to develop a solid foundational knowledge of the industry. Here are some of the key aspects of the deregulated energy markets:

• Gain a comprehensive understanding of energy deregulation and how it applies to both energy suppliers and customers. 
• Familiarize yourself with state-specific licensing requirements, energy market policies, and utility tariffs. 
• Get educated on how electricity and natural gas pricing works at both the wholesale and retail levels. It’s important to fully understand energy futures, index rates, and pass-through components. 
• Learn about capacity and transmission costs and how they ultimately affect fully-bundled fixed price premiums. 
• Become educated about challenges in the market such as new energy policies and common customer issues with energy suppliers. 

The Role Of The Energy Broker

In deregulated energy states, energy brokers and energy brokerage firms serve as the liaison between suppliers and commercial energy customers. Here is some common knowledge related to energy brokers and their roles in the marketplace:

• Energy brokers must be licensed in some states and are often required to post financial collateral with state regulators. 
• Successful energy brokers offer more than price options. They bring value to customers through market knowledge, experience, contract negotiation, and supplier relationships. 
• A good energy broker is not just an energy salesperson, but rather a true consultant acting as a trusted advisor for his or her customers.
• Energy brokers earn commissions from suppliers when negotiating the purchase of energy, which are based on contract volumes. 
• Energy consultants, on the other hand, typically charge their customers fees directly and do not earn sales commissions. 

Sales Strategies

The first step to becoming a better energy broker is to understand your target market and develop a sales plan. The advantage of the deregulated energy industry is that anyone with an electric or natural gas bill can be your customer, providing they are located in a deregulated state. Unfortunately for many salespeople, this can also serve as a distraction.

With so many potential customers it’s quite easy to become scatterbrained and not know where to focus your energy (pun intended). Your first step is to narrow your focus and decide what type of customer book you would like to build. If you have some knowledge about manufacturing and heavy machinery, then targeting industrial customers might be your best bet. On the other hand, if you have many family members in the restaurant business, use those connections to build a career.

Pitfall Alert: One of the biggest mistakes most deregulated energy brokers make is not having a specific focus. Because they don’t have a prospecting plan in place and a target focus, they lose sight of their goals and their activity usually dwindles. Having a specific focus, such as I am going to try and sell electricity to every grocery store in the state of New Jersey, allows you to instantly have a plan. Now you can come up with a list of every grocery store, network and build relationships with those in that industry, and successfully become the grocery store, energy expert.

Here are some key takeaways:

• Identify your target market
• Focus on pain points and solving customer problems
• Use tools such as LinkedIn, networking events, email campaigns, and cold outreach to generate leads. 
• Offer free utility audits, bill reviews, or rate comparisons to demonstrate immediate value.

How To Create An Effective Energy Sales Plan

Developing a sales plan is critical to your success in the energy business. Here are some tips for developing a sales strategy. 

• Define your sales goals, such as monthly contracts, revenue targets, or retention rates.
• Use CRM software to track prospects, meetings, follow-ups, and closed contracts.
• Develop scripts and objection-handling tools for different industries.
• Allocate time daily to prospecting, closing deals, and customer management.

Prospecting Tips

Cold prospecting for new energy customers is quite challenging. The market is quite competitive and you need some sort of advantage to stand out. Here are some prospecting tips to get you started:

• Focus on quality prospects with high energy demand. Do not waste your time calling on small retail businesses with energy usage comparable to a large residential home. This will ensure that you are using your time in the most efficient manner. 
• Use energy benchmarking tools to identify companies that might be overpaying for energy. There are several tools available that can predict energy spend based on utility rate classifications or customer usage. Utilize these tools in order to find prospective customers with real energy needs. 
• Partner with local professionals as referral sources. Commercial HVAC companies, property managers, and accountants are great industry partners who can help you gain access to customers. 
• Build your digital presence on LinkedIn or other social media platforms. Share industry articles, or even give your own commentary on where you see the market going. Developing your reputation as an industry expert can help you generate leads. 

Proving Your Value To Customers

Now, prospecting is one thing, but proving your value to a prospect is another. If you are able to demonstrate that you can solve a real problem for your prospects, then they will quickly become your new customers.

Below is a list of common challenges and problems faced by many commercial energy customers. This is how you can bring real value to the marketplace:

High Utility Bills

When you come across customers who are simply looking to save money or control costs, your job is simple. Find a fixed rate that is lower than what they are paying, and the contract is yours!

Past Supplier Problems

Unfortunately, there are many customers who might have been taken advantage of in the past by other energy brokers or suppliers. Maybe they forgot to renew and the supplier doubled their rate on a variable price. In order to overcome this challenge, you must show proof of how you effectively manage your existing customers’ accounts, renew them at prime opportunities, and are available for all customer service-related issues.

Lack Of Understanding

Some customers simply just don’t understand energy deregulation, what it means, and how it can benefit them. Educating these customers in a simple-to-understand manner is key to winning their business. Articles like this one on A Simple History of Energy Deregulation are a great place to start so your customers understand their opportunity to shop for a supplier.

Use The Market To Manage Accounts

The number one key to maintaining your customer accounts is to learn how to effectively renew them. Most customers are simply looking for a good renewal offer from their brokers, and do not have the time to track the date of the renewal.

A good energy broker watches the future prices of energy and looks for opportunities where he or she can renew a customer at a better price.

In the current market, for example, prices have been relatively high for the past year. In fact, prices in the natural gas market have reached 14-year highs and attractive renewal opportunities are few and far between.

A great energy broker would have noticed the recent decline in natural gas prices (~20%) and priced his customers who had a renewal coming soon. These recent decrease in prices was driven by global geo-political issues in the news. Subscribe to our monthly newsletter to learn more about energy market news.

Developing Customer Relationships

Last but certainly not least, are developing powerful customer relationships. Remember, people do not buy products or services, they buy people. When you take the time to cultivate relationships with your customers, they stand the test of time. A simple regular phone call might be enough to do the trick, and other customers could require more attention. Understanding who your customers are, their needs, and their goals is a great step to developing long-lasting relationships. Here are some tips:

• Remember the details: Remember when a customer tells you who his favorite sports team is, or that he is taking his son on a camping trip. Recognizing these personal details sets you apart from other self-centered salespeople.
• Truly Care: Most people can sense when you are doing something to get something else in return. When you truly care about your customers and their businesses, it rings true and helps develop authentic relationships.
• Be Upfront and Honest: No one likes a liar. If you do not know the answer, tell your customer that you will find out and get back to him or her. If the market is high and you think there’s a chance it might come down, don’t scare your customer into locking into a long-term deal. Do what’s right for them and their business and they will trust you forever.

Looking For Help In The Market?

Are you looking to learn more about how you can become a better energy sales representative? You can attend one of our online training courses or speak to a Diversegy energy expert today. Contact us to learn more.