Segmenting Commercial Marketing – A Few Do’s & Don’ts

Segmenting Commercial Marketing – A Few Do’s & Don’ts

You cannot treat all commercial energy customers as a monolithic block. A School Superintendent does not think like a Manufacturing CEO. That’s why you break your marketing into targeted segments. However, there is an art to picking the right segment. Below are my Guidelines For A Good Segment and Pitfalls To Avoid.  Following these tips should spare you wasted money and time running campaigns on targets that never close.


Segmenting – How & Why 101

Let’s start with the end in mind. What are some of the tactical advantages of segmented marketing? Once you identify a segment, you can:

  • Build customized target lists (ex. All the manufacturers in Orange County);
  • Tailor marketing collateral to your segment;
  • Identify the trade press and events popular with your segment; and
  • Find channel partners and associations serving your segment.

Often, segmenting around industry works well for marketing messaging. For example, car dealers, grocery stores, and manufacturers.   Segmenting improves if you combine industry with city. (e.g. Car Dealers of Raleigh). The goal is to pick a label they will respond to.

A couple lessons learned the hard way:

  • I have tried segmenting around other criteria, and it did not work that well. A few that did not work well: building type, location, and utility customer.
  • Segmenting around Job Title works well for messaging, but it does not allow you to apply the company screen criteria discussed below. Thus, I don’t recommend building campaigns using Job Title as a segment.


Guidelines For Picking A Segment

When picking a segment, you need to consider a mix of traditional market attributes plus a few technical attributes unique to solar. Below are the main factors that I always consider:


1. Market size:  I will not pursue a segment unless I have at least 300 targets that meet all of the following:

  • Typically owner occupied
  • Over 10,000 sqft building
  • Revenue over $5,000,000 a year

ProTip: You can find most of this on Hoovers.

2. Typical Load:  Your sales team should have a minimum system size necessary for it to pursue sales efforts. When picking a segment, make sure the typical electric load clears this minimum size.

ProTip: Use California Commercial End-Use Survey (CEUS) results for load profiles.

3. Load Profile-to-Squarefoot:  In California, selling solar is all about switching customers to the solar friendly tariff. To do that, you need to install enough solar to offset about 70% of their load. Thus, the magic trick for marketing is to identify those segments where available install space typically exceeds the size required for 70% of the load.

Protip: Combine CEUS and Hoovers to run this analysis

4. Financeability:  If most businesses in a segment can’t get financing, then it’s a waste of time. Each industry has its own credit rating. Make sure your segment is not considered high risk. For example, shopping centers might seem like a great target because of their big flat roof, but they are often not financeable.

ProTip 1: The best practice is to identify a target financier for your segment. If you cannot find a finance partner, then do not pursue that segment.

ProTip 2: Check BSA Industry Risk Ratings or RMA (Robert Morris & Assoc) ratings.

5. Solar ACOE:  Similar to setting a minimum sale size, I recommend setting a minimum ACOE before allowing sales to pursue a target. The minimum will vary by region, size, and EPC pricing. In California, $0.11 is a good minimum for small commercial. One way to do this is to make sure your segment is on a tariff favorable to solar. For example, in California farms get a special AG Tariff which charges about ½ the price as a normal commercial tariff. As a result, solar offers half the value as non-AG customers.

6. Buying Tendencies:  It is critical to understand the buying process of each segment. Knowing the buyer and process will drive so much of your campaign’s implementation, such as: who you address mailers to, how to frame messages, and how much to budget for the sales cycle. Non-profits buy via committee, which is slow and non-committal. Private family owned companies on the other hand can quickly pull the trigger. Public companies are slow, bureaucratic, and often go out to bid.


Pitfalls To Avoid When Picking A Segment

There is an art to picking segments for marketing. If you pick the wrong segment, you waste marketing dollars and your own time. Even if a potential segment meets all the guidelines above, you may still want to avoid it. Below are a few other factors to watch out for.

Avoid Segments that are:

* Not receptive to messaging. For a variety of reasons, your target customer may not care about your energy savings message. A great example are commercial landlords. Many commercial landlords have their tenants pay the utility bill, so they don’t care about saving energy.

* Not a good fit for solar. Many segments are not able to go solar, even if they want to. Restaurants have crowded roofs and poor credit. They can’t fit much solar up there and they don’t qualify for financing.

* Not accessible through cost-effective distribution channels. I once tried to target Facility Managers as a segment. Quickly, I found Facility Managers as a whole are tough to access. Most are not on Linkedin, rarely check email, don’t do much after-work networking. Direct mail and cold-calling were the only ways to access this segment, making it more expensive than others.

* Too small. Some segments are great, but there are only a dozen or so in your area. The segment needs to have enough addressable targets to justify the effort required to develop customized collateral.

* Oversaturated with your competitors. Often, a segment is so perfect that everyone else is already bombarding them with solar/energy pitches. Schools are an excellent example. Before jumping in here, you need a clear plan to rise above the noise. Without it, don’t waste your time.


Brandon Conard is the Director of Zenergy, providing energy finance advisory services to developers and investors. He has more than 16 years of legal and energy experience, with expertise in raising tax equity, early stage project development, commercial energy analysis, solar fund structuring, and project finance. Previously, he was Chief Strategy Officer/VP Structured Finance at HelioPower, CEO of Greenzu, and Director of BlueMap. As former Weil, Gotshal, & Manges attorney, Mr. Conard also understands the changing energy, tax, securities, construction, and environmental hurdles every clean energy project must clear. He’d love feedback on this article. Send it to