Feb 4, 2011
An interview with Sonita Lontoh, Director of Marketing at Grid Net
Marketing in the clean tech space involves challenges beyond those faced by traditional marketing professionals. For example, creating customer value is a guiding principle of traditional marketing, but in clean tech, one must also create societal value. MITER discussed the application of traditional marketing to the smart grid space with Sonita Lontoh, Director of Marketing at Grid Net.
Grid Net delivers the first universal smart grid operating system for any device and any networking technology. The company was founded in 2006 and is backed by Cisco, GE, Intel Capital, Braemar Energy Ventures, and Catamount Ventures.
Ms. Lontoh has spent several years as a technology entrepreneur, and her experience includes a successful venture-backed startup that she co-founded and sold to a prominent player in the Greater China region. Prior to Grid Net, Ms. Lontoh was with Pacific Gas & Electric Company (PG&E), where she was a member of the company’s Leadership Program and was responsible for various strategy and marketing initiatives. She holds an MBA from the Kellogg School of Management and a Master of Engineering from MIT.
Ms. Lontoh shared three important insights on how she adjusts traditional marketing for the clean tech space.
Adjustment 1: Utilities care about social benefit – not just cost-effectiveness
In traditional B2B marketing, it is essential to credibly demonstrate that a product’s benefit to the customer will outweigh the cost. Energy startups often identify the utility as their main customer, so they focus on analyzing the cost-effectiveness of their product from the utility’s point of view. While cost-effectiveness is important to utilities, startups commonly miss the regulation aspect of the utility world.
In the utility world, utilities agree to submit to the oversight of a regulating body in exchange for enjoying a monopoly. For regulators to approve a major proposed utility investment, they must be convinced the investment is in the best interest of society and worth more than the small rate increase required to fund it. Therefore, an entrepreneur must demonstrate the cost effectiveness of their product to society, not just the utility.
“Smart Grid vendors need to look at total cost of ownership and cost/benefit analysis – and they have to show that their solution is the most cost effective from those perspectives,” Lontoh said. “You need to show why ratepayers should pay for your product because utilities will ultimately ask a regulator to approve a rate increase. It’s the ratepayers’ money, so it has to be cost effective and scalable, and the benefit must be quantifiable.”
Adjustment 2: Marketing must target all stakeholders – not just the buyer
The success of traditional marketing is measured by the rate at which customers respond to calls to action. In smart grid marketing, a company needs lots of stakeholders to take different actions over a 15-20 year time frame. First, the company must influence standards-setting bodies such as NIST. Next, it must convince utilities and regulators to adopt its technology and approach. Finally, it wants to create an ecosystem within which independent developers can create smart grid applications. During that time, credibility and name recognition is critical to a company’s success.
“Dealing with policymakers, regulators, and utilities takes a different skill set and patience because decisions and the transformation of the grid won’t happen overnight,” Lontoh said. “Thus, most of the marketing activities in the Smart Grid arena are focused on advocating a company’s important view on the direction of the technology in a visible and aggressive way to all stakeholders.”
To establish credibility among regulators, potential partners, and standards bodies, a smart grid startup must build its brand by demonstrating its intellectual leadership. Boston-based marketing firm Hubspot.com tells its clients that generating outstanding content on their websites is the key to getting found by potential customers. For example, Hubspot would advise an auto repair shop to create a web presence through videos and blog entries about how to maintain a car. This builds the client’s brand by establishing its thought leadership and attracts hot leads to the client’s website – customers who need to fix a problem with their car.
In the same way, smart grid companies most effectively market themselves by being a consistent presence at industry events and contributing key analytical results. This builds their brand, establishes credibility, and positions the company for future sales opportunities.
“Most of the marketing we do is industry marketing,” Lontoh said. “We attend conferences, utility executive round tables, regulatory forums, and political forums. We want to make sure we are the go-to company, so we market ourselves as a thought leader in this space.”
Adjustment 3: Establish marketing communications early with end consumers and make it a two-way street
Most marketing managers have the luxury of focusing their efforts on the target market. In clean tech marketing, the end users who do not care about the product are those with whom it is most critical to establish good communications.
“Consumers don’t care about technological change; they see change as something happening ‘to me’ because they don’t think of the electric infrastructure,” Lontoh said. “Better communication and customer service will help ensure that consumers see this technological transformation as something that is done for them, not to them.”
The dual challenge about energy-related marketing communications is that energy is abstract and it must be communicated with the entire population. Involving customers by creating two-way communication channels improves the clarity and reach of a change message, improving customer engagement and satisfaction.
For example, Austin Energy did extensive customer outreach – through the web, phone calls, post cards, and news coverage – before installing smart meters throughout its service territory. The company set up a special call center and offered to test meter accuracy in person when requested(1). This resulted in a supportive customer base that recognized the value for the consumer even though the benefit of the meters came initially to Austin Energy.
“Utilities that have handled this change successfully took their risk mitigation strategy very seriously. They prepared for calls and complaints, and they tried to fix things on the first call,” Lontoh said. “It is critical to employ customer feedback opportunities, engage customers actively in the process, and set up systems to quickly resolve complaints.”
Clean tech marketing managers must consider factors beyond those faced by their counterparts in technology or retail. By successfully communicating with a diverse set of stakeholders and a large customer base, clean tech marketing managers can prepare the marketplace to adopt their firm’s products. Even though the focus in the clean tech space is usually on product innovation, marketing innovation may ultimately make the difference between success and failure.
For more, see http://www.grid-net.com
1. Phil Carson, “Anatomy of a successful smart meter rollout”, Intelligent Utility, Sep 09, 2010. http://www.intelligentutility.com/article/10/09/anatomy-successful-smart-meter-rollout