Understanding SMBs: Takeaways from SECC’s Research

By Emily Rich on

Women business owners

In the US, residential customers outnumber businesses by nearly 7:1, yet business customers contribute ⅔ of utility load and revenue. There is widespread acknowledgment that business customers are an extremely critical segment to engage. As our industry transforms to tackle broad energy sector decarbonization goals that include energy efficiency, load flexibility, rates adoption, and electrification, this trend will only magnify; business customers will continue to have an outsized impact on our ability to meet our clean energy future thanks to their enormous decarbonization potential. 

Yet, business customers are not all alike. According to the Small Business Administration, businesses with 500 employees or less account for 99.9% of U.S. firms. Small and medium-sized businesses (SMBs) have been notoriously hard to engage. Despite their smaller individual impact, in aggregate, they play a critical role in our clean energy future. The Smart Energy Consumer Collaborative (SECC) recently released their new research: Understanding the SMB Landscape: New Needs and Concerns. In this study, they uncover the current challenges and emerging opportunities facing SMBs today. 

Uplight’s business customer suite is built around activating hard-to-reach business customers. Our solution is aligned around a key challenge for our industry  – how do we engage SMBs in droves to partner with us on the clean energy transition? We were excited to sponsor this research to deepen our understanding of – and thus even better engage – this important segment. Here are our top 10 takeaways for utilities serving this important segment.

  1. Personas can be a powerful tool in understanding and activating SMBs

SECC’s previous research with SMBs emphasized a business customer segmentation approach, giving energy providers a helpful framework to understand market interest in new products and services based on customer data. In this report, SECC builds on this segmentation to define customer personas, which add emotional and behavioral components to a segment.

SECC SMB Personas

So what? Understanding customers is the first step in driving engagement. Segments can help utilities go beyond firmographics to better make sense of their customers – for instance, which customers have a higher propensity to participate in clean energy products versus those who are unlikely to participate. But personas take it a step further; armed with personas, we can better understand the “why” behind customer decisions–giving us a better inroad to message based on customer attitudes and get customers involved. 

2. Energized Enterprises are the “low-hanging fruit”, but you still need to do your homework

Energized Enterprises are engaged with their energy usage and are inclined to participate in new products & services from their utility. They are likely adopters of time-varying rates and they have a unique participation opportunity in electrification. Despite being the “easiest” customers to engage in programs, they still want to feel like their provider is doing their homework and giving them an individualized offer.

SECC SMB Energized Entreprise segment

So what? Personalization is key with SMBs. No two businesses are alike, and blanketing SMBs with mass-market messages will not work. Even Energized Enterprises – our “easiest” to engage persona – need to feel that the utility knows them and is attuned to their unique needs before partnering. While most utilities lack time and resources for in-person tailored outreach to each SMB, digital business customer engagement & analytics tools can help utility providers engage SMBs with personalized insights at scale. 

3. Win over “Opportunistic Orgs” by making the business case

Opportunistic Organizations are next on the list in terms of propensity to engage. With electricity a large expense, these businesses have a vested interest in managing their energy costs. They will participate in programs and offers from their utility, but only when they have a clear path to optimizing their energy costs. One key to engaging this segment is to build trust by clearly communicating the costs, benefits, and trade-offs of each option. 

SECC SMB Opportunistic Organizations segment

So what? These businesses want a detailed analysis of the options available to them, and how they stand to benefit. This mirrors feedback we’ve heard from customers before, which is why a large emphasis in Uplight’s solution is placed on showcasing options to help businesses make decisions. For instance, our rate comparison and analysis options enable an SMB to easily see which rate plan would be most financially advantageous to them. In our recommendations for action, we highlight expected energy savings and cost implications to help with quantitative decision-making. As shown in the report, this analytical support can help businesses gain trust in their utility and inspire them to participate in utility offers. 

4. Break out of “afterthought” mentality with Small & Satisfied Businesses

In contrast, Small & Satisfied businesses spend a relatively small amount on their energy costs. For these SMBs, energy is an afterthought. These businesses are small in multiple senses – fewer employees, smaller space, and a lower energy bill. For them, more mass-market, consumer-focused programs can be tailored to unique SMB needs. 

SECC SMB Small and Satisfied segment

So what? The old adage that SMBs are just like residential customers has proven to be false – with SMBs having unique needs that are completely distinct from residential customers. Yet for Small & Satisfied customers, there’s a kernel of truth in this outdated myth. For these customers, utilities can employ digital customer engagement portals to showcase more mass-market offers such as SMB marketplaces and introductory energy efficiency programs to spur a first step in the decarbonization journey.   

5. Enlist Entrenched Businesses in a common sense appeal for incremental change

Last but not least, Entrenched Businesses can be thought of as the most difficult business persona to engage in programs. They are established businesses, can be bogged down by inertia, and may be resistant to participating in new offerings. They often have a “if it’s not broken, don’t fix it” mentality, backed by years of success in running their business. Utilities can successfully engage these businesses through incremental change, with ideas like energy audits and appliance replacement programs being good first steps.

SECC SMB Entrenched Businesses segment

So what? These businesses are easy to identify but hard to motivate to take action. For Entrenched Businesses, consider designing a journey that prioritizes small actions to kick-start the cycle of participation, rather than promoting large shifts. Then use various outreach tools – advisor outreach enablement tools, digital customer engagement, and outbound emails – to pique customers’ interest in these sensible first steps. 

6. Awareness & participation are low across the board The not-so-great news – awareness of utility programs is rather low, ranging from 40-45% awareness of offers tested. And of course, not all customers who know about programs participate. Participation is also low; just around one-third of SMBs participate in the most common programs and offers in the energy marketplace today, with rebates/incentives for energy efficiency upgrades being the highest at just over a third. 

SECC SMB Energy Participation

So what? If we want to have any hope of meeting our decarbonization goals in partnership with our customers, we need massive amounts of business customer participation on levels not seen today. Utilities have a critical role to play in reaching customers and motivating them to take continuous action. Digital customer engagement is a critical piece of the puzzle for SMBs, a proven strategy for engaging and activating business customers at scale.

7. Some barriers to participating are SMB-specific  

Several key barriers to participation are particular to business customers, such as renting a commercial space, lack of understanding around cost & payback, the potential for data overwhelm, and “analysis paralysis”, and the need for buy-in from a broader business team. 

SECC SMB Barriers to Reducing Energy Consumption

So what? Here SECC recommends one key for engagement that helps chip away at these business-specific barriers: “For all SMBs, a financial return is a must. Start with a common set of tools and education that helps these businesses assess the return on investment.” The idea here is that once an SMB – regardless of persona – understands the business impact, they can block and tackle to overcome the other barriers. Bonus points if the utility helps them overcome these barriers with digital tools that allow for team decision-making, clear insights that reduce overwhelm through succinct cost-benefit analysis, and an easy way to understand actions that renters can take.

8. Utilities are well-positioned to build partnerships with SMBs

The good news: SMBs are relatively very satisfied with their energy providers, with CSAT almost a full point higher than residential customers (8.2 vs. 7.4). 

SECC SMB Customer Satisfaction

So what? This level of satisfaction gives utilities a strong foundation to build from and explains why SMBs would rather take action with their energy provider than any other ecosystem player. Utilities have all the puzzle pieces for SMB action: high satisfaction and trust, the energy data to surface personalized insights at scale, and the well-designed clean energy programs and offers that are in SMBs’ best interest. 

9. SMBs are wanting more: Renewables, Reliability, and Knowledge.

The relationship between utilities and SMBs is evolving to be much more than simply transactional, as SMBs increasingly expect more from their energy providers. The findings show that SMBs don’t just want reliable energy, but they also seek cleaner energy and empowerment about how to take active control of their usage. 

SECC SMB Priorities for Electricity Providers

 So what? Higher customer expectations are a win-win: customers get more from their provider and utilities benefit from having deeper, more two-way relationships with their customers through higher satisfaction and more program conversion. These emerging top priorities in the SMB landscape offer new entry points for engaging with SMBs on the issues they care about. 

10. Our bottom line: it’s all about personalization 

Throughout SECC’s new research report, it’s clear that no business is alike. The challenge with SMBs is how to effectively engage each business to participate in the clean energy future with tailored messaging that is relevant to them and cuts through the noise.

So what? It’s not feasible for most utilities to engage each SMB through direct 1:1 outreach. Digital customer engagement is an effective strategy for reaching business customers with personalized insights and recommendations. We meet SMBs where they are, with a multi-channel approach leveraging outbound engagement, self-service portals, and advisor outreach tools. Uplight’s tool uses advanced analytics to identify & detect business characteristics, surface personalized energy usage insights, and recommend relevant recommendations for clean energy action. 

SMBs hold enormous promise as partners in the clean energy future. With high levels of satisfaction and trust, utilities are well-positioned to engage SMBs with personalized insights and actions that get them off the sidelines and actively engaged in our collective clean energy future.

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