While there are plenty of subscription site launches in recent months, we liked Megawatt Hour for its smart approach and use of existing industry data. Co-Founder Deirdre Lord spoke to us about why the site developed a percentage-based subscription plan that’s familiar to professionals in the energy purchasing industry. Plus, discover when to follow up a lead gen tactic with an email and when to call the prospect directly.
Company Profile
Founded: 2010
No. of Publications: 1
Employees: 3 full-time, 3 part-time
Business Model: Subscription Only
Paying Subscribers: Fewer than 100 at this point
Location: New York, NY
Website: https://home.themwh.com
Target Market
Megawatt Hour is a B2B “energy decision platform” designed to take the pain out of energy purchasing and supply management. Its target market consists of energy purchase decision-makers, which can include facilities managers or CFOs, in the greater New York City area. These professionals usually work for large organizations, iincluding corporations, nonprofits, K-12 schools and multisite retailers and manufacturers.
The site’s secondary market consists of consultants who are offering energy procurement but don’t have back-offices to get access to pricing, forward curves or other information.
Content
Megawatt Hour has a variety of free resources, from newsletters and reports to Webinars and tutorials. The Webinars are free to view and are made available as videos on YouTube. The whitepapers and reports require an email to download. The free content serves to update clients on wholesale prices of energy.
The site’s premium content mainly consists of comparison charts — supplier prices, market wholesale rates, even a subscriber’s energy usage and forecasts of future costs based on usage. Energy decision makers can then leverage this information to get a better deal on energy supply. The site will also track purchases and compare what subscribers are paying with what they thought they would pay since there is some volatility in the energy market.
The site is pay-worthy mainly because it fosters transparency in the energy supply market, a boon to energy purchasers looking to comparison shop. The information Megawatt Hour provides is not available on a Bloomberg terminal or in the Wall Street Journal, despite the fact that the energy market has been de-regulated since 1990. In addition, the subscription price, even at 1% of energy supply costs, is much lower than most energy brokers’ costs (which range from 3-10%, according to Lord).
The site is updated daily. The premium content uses a proprietary knowledge base and heavy coding to create dynamic content based on a subscriber’s utility account number. Lord says the content generation isn’t challenging, but coding to automate and generate the product is. Therefore, everyone who works at the company is involved in coding and maintaining the premium content is some shape or form.
Revenues
Megawatt Hour generates tens of thousands of dollars annually, and is 100% subscription-based.
However, its subscription pricing model is unique.
The site has a free plan, and then two paid plans:
- Free: Users can create and account and get access to daily prices, account analysis and and price forecasting.
- Premium: This plan includes the features of the free plan, but with an unlimited number of accounts, as well as access to the contracting module, energy budgeting, monthly tracking, advanced reporting and market alerts. Subscribers on this plan are billed on a monthly basis 1% of their energy supply costs. There is also an option to pay upfront for a year, which most subscribers do. The price can vary by size of the company, anywhere from $2000 to $15,000 a year. Megawatt Hour determines the pricing after a prospect has uploaded their utility account number; Megawatt Hour then looks at the past year’s usage to forecast the coming year and come up with a price.
We asked Lord what happens if there was a huge discrepancy in forecasted and actual usage, and she says it hasn’t come up yet, but she doesn’t think it would be an issue since the site is already so much cheaper than using a broker (who usually charges 3-10%). But she would take a “commonsense approach” to that sort of discrepancy.
- Supply Transaction Module: Subscribers on this plan are billed 2% of annual supply costs upfront for a year. In exchange, they get more support from Megawatt Hour, including contract reviewing and tracking. In this plan, Megawatt Hour is acting like a broker to some extent, but with sophisticated online tools that reduce time and cost for both subscribers and Megawatt Hour.
Lord says the decision to go with a percentage-based subscription model was a considered one. (The site also tinkered with the idea of charging a percentage of costs saved, but since energy costs are volatile, this would be harder to manage.) Basically, energy purchasers were familiar with commissions, so Lord decided to try a hybrid subscription and percentage pricing model.
The premium plan is more popular that the supply transaction module. All of the subscribers are NY-based, but the site looks to scale its operations to other markets in coming years.
The site doesn’t really have group subscriptions, but companies have more than one person on an account since the site is more concerned with the number of utility accounts not the number of email addresses or IP locations.
Marketing Tactics
The biggest drivers of traffic to Megawatt Hour’s site are PR, outbound marketing and content marketing (i.e., Webinars and newsletters). Oddly enough, however, the site is not particularly strong in terms of SEO, but Lord says the company plans to improve their SEO efforts in the coming year.
PR
Lord is part of a group that meets monthly to talk about building businesses, and her name, as well as Megawatt Hour is frequently featured in the New York Times blog “You’re the Boss” under the “She Owns It” section, written by Adriana Gardella. Lord says she was invited to join the group through someone who was interested in Megawatt Hour, a testament to her pervasive networking skills. The blog posts have been a good way for Lord to receive feedback on the Megawatt Hour site, albeit from outside her target audience.
Lord also has “great” experiences with PR firms in previous positions, but feels hiring one would be beyond budgetary constraints this point in Megawatt’s growth.
Outbound Marketing
Lord and her colleagues have established contacts in the energy supply business having worked in it themselves. Therefore, the staff leverages those long-standing relationships by contacting them regularly, usually through email. But because many energy decision makers receive cold-calls on a weekly basis (some even a couple of times a week), Lord and her team avoid cold-calling.
Trade Show Speeches
Lord speaks on a number of panels and at a number of trade shows, such as the Hotel Accounts Association and the Finance Professionals Associations. She manages her own calendar and bookings for these events.
Content Marketing
Lord says the newsletters and Webinars help drive people to the site despite the site’s poor SEO (which Lord and her team hope to beef up in 2013). The site has tried some paid advertising but felt it had poor ROI.
Word-of-Mouth
Since Lord and her team know so many people in the industry, word-of-mouth is a pretty big source of new business. However, the site has no formal word-of-mouth marketing program to date.
Conversion Tactics
Megawatt Hour requires an email to download a whitepaper or free report. Prospects can also sign up for a free account. The account sign-up page requires the user to create an account name (Note: We recommend making your user’s account name their email address since it’s easier to remember, and therefore diminishes obstacles to user engagement and subsequent retention. You’d be surprised how many subscribers will cancel a subscription simply because they can’t remember a user name or password).
If a user creates a free account, Megawatt Hour will follow-up with a phone call to introduce the user to the site’s services. However, the site will not call users who register with an email address to download a white paper. Those users are welcomed with an email.
Lord told us that most prospects usually sign up for newsletter or white paper, receive two or three newsletters and then sign-up for a free product. The site is still trying to figure out what drives conversion; whether it’s event-related (a prospect has a contract coming up and needs pricing) or if it’s a matter of building trust. Either way, however, the site is focused on branding itself as a trusted advisor before even making that first phone call.
Like we’ve seen with other industry sites, no credit cards are taken. Subscribers are invoiced via email or paper statements. Some subscribers “literally can’t get us into accounts payable system without paper invoice,” Lord told us.
This creates some lag time between sign-up and payment, but Megawatt Hour lets subscribers have access for 15-30 days before receiving payment. The site has not had people use it for 30 days and not pay, says Lord, making churn and abandons a minor concern. Instead, Lord wants to make sure that once subscribers sign up they have instant gratification through immediate access to the site.
Retention Tactics
Megawatt Hour had a 100% renewal rate last year, but the site assumes that’s a fluke of and has planned for a renewal rate around 80-85%.
Their retention program focuses on pushing people back to the site, which they do through outbound notices and alerts to subscribers.
About Deirdre Lord
Deirdre Lord started in the retail energy industry in the late 1990s, and felt that once energy utilities were de-regulated, customers would be able to make more investments in energy efficiency and renewable energy. She then became a serial entrepreneur in the energy supply industry, starting Constellation New Energy and Juice Energy, the latter of which focused on transparency. At Juice, Lord grew frustrated by the lack of innovation in industry, so she created a supply business around the concept of transparency. The company had working capital with Lehman Brothers, but had to close when Lehman declared bankruptcy.
In 2010, Lord re-evaluated the market and found that no one had picked up the transparency value-proposition. “The world didn’t need another supplier or broker — they need more transparent way for customers to evaluate offers.”
Her biggest lesson learned was that outbound content marketing does not engender sales and marketing fatigue as much as more traditional methods used in the industry, like cold-calls. “Tell, don’t sell,” she says.
Vendors & Technology
Megawatt Hour handles a number of its functions in-house. Below are some of the third-party providers they use.
Hosting — Amazon Web Services
http://aws.amazon.com/
Web design — Graduate student from the School of Visual Arts
More information here.
Subscription Site Insider Analysis
As opposed to the myriad of subscription site launches we see in a year, we liked Megawatt Hour’s approach since it relied heavily on industry knowledge and previous contacts instead of an optimistic use of SEO. We especially like that the site decided to launch in a market with no Web-based competitors, and created a site and online tools that really do solve a pain point. And while the company may not have a stated goal of transitioning energy purchasers to a subscription model by first instituting percentage-based subscription plans, we think this model is one other subscription sites looking to do so could copy.
Obviously, the site has room for improvement. While we admire the company’s use of industry contacts, it should still look to optimize the site’s SEO, especially given the focus on content marketing. And given the high word-of-mouth referrals, the site should institute a formal program. The site should also have users use an email address as an account name since it will be easier for subscribers to remember, and therefore eradicates obstacles to user engagement. And the site needs a more robust retention plan — we recommend tracking account usage, sending annual renewal notices via postal mail, and following up with a phone call for subscribers who don’t renew. We also think the site could benefit from upselling group subscriptions to companies with multiple utility accounts.
