Better, more focused marketing is needed by retailers of renewable electricity if they are to access the extensive untapped demand for green power among business customers, according to research by the University of Vaasa in Finland. "There is a huge potential to sell green electricity to businesses if it is done well," according to Philip Lewis from Vaasaemg, who authored a report titled Green By Demand.
The report shows that some 33% of all businesses say they are quite or very likely to buy green electricity in the foreseeable future. A large proportion, however, do not feel they know enough about the different sources, the labelling of those sources, how to access a green supply of power, and the benefits of doing so. Of the 1042 businesses surveyed in UK, Germany, Finland, Sweden and the Netherlands, 64% of businesses that expect to buy green power claim that no supplier has offered it to them.
As part of the survey, the research team conducted in depth interviews with businesses that already purchased green power. Between 40% and 60% of businesses that already buy green were approached by the retailer which eventually became their green power supplier. "Marketing should be direct and, if possible, personal," says the report.
Retailers need to approach the right targets -- particularly those that take a more ethical approach to business; they will also be less price sensitive, says the report. "There is no point trying to sell expensive green electricity to highly price sensitive businesses." But for around 37% of businesses that say they are likely to buy green, price tends to matter less than image and public relations. Retailers also need to approach the right people within organisations. It is normally the managing director who, if not the instigator, will be the one who approves or rejects the final decision to switch to a greener supply.
The research reveals that green labelling causes a surprising amount of confusion and mistrust among would-be purchasers. Forty-four per cent claim that not knowing enough about environmental labelling is one reason why they do not buy green electricity, and 34% say they do not trust it. "There are too many contradictory labels, too poorly communicated with a lack of officialness and transparency," the report says.
Really green to black
Electricity should not only be considered in terms of green or black, it argues. Opinions from businesses indicate four different categories of environmentalism: "really green" (solar, wind and hydro); "quite green" (green labelled electricity, biogas, biomass and CHP); "grey" (gas, peat, waste and, perhaps, nuclear); and "black" (coal and oil). Wind is viewed as green by 93.3% of businesses surveyed, although the figure varies from 88% in Sweden to 100% in the UK. Nearly 40% of Finnish and Swedish businesses believe nuclear to be very or quite environmental. The report suggests green supplies could be segmented, allowing customers to buy either the default green mixture or to omit the sources which do not suit them.
Marketing should be more inspiring, focusing on "personal consequences and responsibilities," including for children and grandchildren. Marketers should also promote the commercial logic of buying green. "What is needed are more examples, proof and ideas regarding the commercial benefits of green electricity." Over 75% of customers who switch to renewables are completely satisfied and many have noticed improved image and positive publicity. Some have even noticed added customer loyalty or gained new customers, claims the report.