AESP: Measuring Energy Efficiency Marketing Goals

By Clean Markets . 03 Feb, 2017 . in Publications

The following article first appeared in the August 2015 issue of Strategies, the newsletter of the Association of Energy Services Professionals.

Defining Marketing Metrics through the Customer Decision Process

By Ellen Lutz

Gone are the Mad Men days when creative ads were all that companies wanted from their marketing departments. Now companies require marketing expenses to link to business goals. Proving the return on investment (ROI) from marketing, however, remains a challenge for many marketers, especially for those who have used brand awareness as their primary metric for almost half a century.

Measuring marketing ROI starts with program implementers and their marketing teams establishing clear goals at the start of the program, and asking the right questions along the way. What are the major goals for marketing? What defines success? What tracking methods will be used to determine results? Is the infrastructure in place to track these activities? What operational procedures will need to be put in place?

Calculating marketing ROI is not a new challenge. Marketing companies have been trying to solve the ROI puzzle for more than 20 years. Fortunately, digital analytics coupled with campaign tracking software now give marketing firms more than an ample array of tools to understand marketing impacts, improve effectiveness over time, and calculate an ROI from those efforts.

In most companies, marketing return is generally measured, at a minimum, by sales volume and profitability. ROI is presented as a percentage, calculated by dividing the return by the marketing investment.

For demand-side management (DSM) programs, energy savings or demand reduction is the goal, rather than profit and gross margins. Marketing ROI is often measured by dollars invested in marketing the DSM program, divided by energy savings generated. But this formula can be too simplistic for a number of reasons.

First, DSM program managers cannot be certain that program results are due directly to any given marketing effort. When so many different channels might be influencing customer decisions, such as program outreach, utility customer communications, or the daily conversations between contractors and customers, how can we be certain that customer engagement ties back to the original marketing activity?

Secondly, energy savings and demand reduction aren’t always the goals. In oversubscribed programs the goal might be to drive customers to other valuable program offerings, such as assessments and technical assistance programs, which do not result in immediate energy savings.

So how should DSM programs measure marketing’s contribution to program success? Developing good metrics has to start with understanding a program’s business goals and how marketing activities impact those goals. Is the goal to accumulate greater energy savings, to increase the number of participants, to introduce a specific niche technology, or something else entirely?

Marketers and program managers need a common understanding of the customer decision process for participating in a DSM program. Generally, the more time and money the customer needs to invest, such as in a whole building or home retrofit, the more time they require to make the decision to invest in a project and participate in a program. Understanding how customers make their decisions allows marketers to apply the right metrics at each stage, and to set clear expectations at every step along the way.

Deciding which metrics to track depends upon which stage of the decision process the customer is in. For example, a CEO at a medium-sized business may be more sensitive to the costs of an energy efficiency project and less certain of how to start. The CEO responds to an ad about a utility incentive program that will help lower the upfront cost, but needs to be more educated about the process of selecting a qualified contractor and the types of measures that make the most sense.

After responding to the ad, the prospect might take time to peruse the website, download educational materials, call the program to ask questions, and possibly attend a presentation. That prospect moved along the decision process from Awareness (seeing the ad), through Engagement (interacting with the program’s marketing materials). At this stage, the level of engagement with the program’s marketing should be tracked. Clearly, the marketing efforts were successful in piquing interest and engaging him/her with the program. If the prospect then moves to becoming “Interested” and completes a program application and moves to “Participation”, then the resulting energy savings can be tracked back and credited to Marketing as the origin.

When the goal of a marketing campaign is to drive energy savings, diligence is required to track every interaction a prospect has with each marketing tactic. When campaigns drive prospects to a program website, marketers are able to receive a large amount of data on potential customers’ activity. But if prospects are given the option to contact the program by phone, it is important for call takers to record how each customer heard about the program. It is also important for marketers to include all marketing activities when asking customers what drove them to make the call. To track actual energy savings, programs that rely on applications must include a field on the application that asks how the customer first heard about the program, with standardized responses. Closing these loops requires that marketing results tracking become embedded within routine program operations and outreach activities.

When driving potential participants to the program website, response mechanisms must be built into every marketing approach. Each campaign and tactic needs a unique code that makes it possible to trace customer actions back to that tactic. Marketing automation software can trace those customers through their interactions with the program, beginning with awareness of the program and ending with program enrollment or participation. To trace specific customers who engaged with program marketing and track them through program enrollment, marketing automation software must be compatible with the program’s application tracking platform. This all requires that program marketers invest time, money and resources into setting up and tracking the impact of each method they use, and the DSM program would need to prioritize such tracking within the program budget.

Once appropriate tracking mechanisms are established for each marketing activity, the challenge then becomes how to make sense of the flood of data that marketers will begin to receive. Generally, Google Analytics metrics such as Time on Page, Bounce Rate and Pages per Session show the degree that visitors are engaged with the content, while New Users will show the campaign’s success at reaching new targeted customers. Understanding the importance of each data point at every stage of the customer’s decision process — and interpreting the data to appropriately adjust the marketing strategy — is critical for success.

The famous John Wanamaker quote that “50 percent of advertising dollars are wasted, but I don’t know which half” is becoming increasingly obsolete. Just as the DSM industry uses more sophisticated tools to verify the energy savings and demand reduction of DSM programs, program managers will likewise be using state-of-the-art tools and analysis to verify the impacts of their marketing investments. The result will be greater precision and impact, and steady growth in marketing ROI.

Ellen Lutz is the founder and CEO of Clean Markets, a market development firm that supports numerous clean energy programs.

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