Deregulation Fuels Energy Mailer in NJ

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A targeted direct mail campaign from power supplier Select Energy Inc. to fence sitters among New Jersey's largest commercial and industrial electricity users paid dividends.


Sixty companies signed up last summer to buy power from Select Energy out of a mailing to 1,122 prospects. The companies contracted energy supply at a set price to avoid rates that fluctuated on an hourly basis in a deregulated New Jersey market.


"The strategy was to convince the target that electric deregulation was really going to happen and if they didn't pick a licensed supplier, they'd get hit with uncertain electrical energy rates," said David Katz, vice president and managing director of Select Energy agency Cronin & Co.'s direct division.


Part of the Northeast Utilities System, Select Energy is one of the country's oldest power suppliers. The Berlin, CT, company provides electricity, natural gas and other energy commodities to customers in 11 states from Maine to Maryland.


For this customer acquisition effort, Cronin, Glastonbury, CT, created a 9-by-12 three-panel brochure, letter and business reply card. The material was enclosed in a bright red plastic envelope and mailed First-Class Presort to catch the prospect's eye.


Several points were made in the mail piece to New Jersey manufacturers, large institutions, hospitals, colleges and office complexes. Recipients were told the next deregulation phase was unavoidable. Unless they switched from their local supplier, major power users could end up paying by the hour. A new charge by the local electric company would add to the tab.


Select Energy then segued with a claim that it was a proven supplier in New Jersey. Prospects were asked to mail the business reply card, call a listed toll-free number or e-mail a contact. The headline read: "Can you defend yourself against the next phase of electric deregulation?" Inside was a comparison of the various pricing plans and the sales pitch for Select Energy. For good measure, a photograph showed a boxer getting a knockout punch. The accompanying copy read, "Obviously, he wasn't prepared. Are you?"


The pieces went out slightly ahead of the August 2003 deregulation deadline. A direct sales effort through Select Energy account executives complemented. Several meetings, phone calls and e-mails later, Select Energy won the new clients.


"We're working with them to sell energy supply in other states that have begun the deregulation process," Katz said.


Interestingly, electrical energy for large commercial users in New Jersey had been deregulated for years, with little effect on the market or prices. Even when told that the market was going to be deregulated, most energy users in the state stayed with their local supplier's standard offer.


"They stayed with the standard offer, and nothing happened to their prices or supply," Katz said. "However, in August 2003, the New Jersey Department of Public Utility Control said there absolutely would be consequences if large commercial users did not make a choice of energy supply.


"After August 1, 2003, if they did not have a designated supplier, their rates would vary hourly based on market conditions. They would not find out what the hourly rate was until the end of the month, and there would be a 5 percent surcharge and other fees on top of that. Thus, deregulation was really going to happen, and we needed to convince people of that fact."


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