The circumstances of the last two years have proven challenging for many of America’s small businesses. With half of small businesses going out of business within five years during even the best of times, the COVID-19 pandemic has delivered a new set of problems for business owners.
In this difficult business environment, the Smart Energy Consumer Collaborative (SECC) conducted 20 in-depth interviews with small business owners that occupy rental properties in nine different states. The types of commercial spaces rented included offices, warehouses, industrial spaces and retail/shopping complexes, while the industries ranged from manufacturing and construction to professional services, retail and medical/dental.
The interviews explored a host of energy-related questions, including:
- What are small business renters’ attitudes towards energy and the environment?
- What energy programs or offers are they aware of? What is their interest in them and what are the barriers?
- What types of energy programs or offers would they like to see? What’s missing in current programs or offers?
- Have renters approached landlords about making energy-efficient upgrades? Would landlords be open to this?
The resulting “Understanding Renters: Serving the Needs of Small Business” report outlines ways that electricity providers and other industry stakeholders can help small business renters optimize their energy usage and better meet their energy goals as they continue to deal with the effects of the COVID-19 pandemic.
Here are three challenges that stakeholders might face when trying to engage these often-overlooked commercial customers – and what electricity providers can do to help:
1. There’s relatively low awareness for existing programs and services.
Most small business owners interviewed were unaware of existing energy-efficient programs or offers from electricity providers for the spaces they rent. In some cases, they may recall receiving something in the mail but threw it out as generic advertising before reading.
If business owners have participated in residential programs at home – for example, receiving an energy audit or installing solar panels, awareness of programs was higher. These small business renters might assume something similar is available for their commercial space but aren’t sure. In addition, those that are aware of energy efficiency programs have not necessarily followed up, but many say they are interested and “open to everything.”
Finally, according to the interviews, some small business renters even question the motives of electricity providers and are skeptical as to why they would want to save their customers money.
These responses suggest that local suppliers and trade allies would be good targets to approach with personalized contact methods (calls, emails, letters) that don’t feel like advertising from the electricity provider. If it is possible with your Customer Information System (CIS) and program administration to cross-reference adopters of residential programs with small business accounts, direct outreach would be likely to yield more favorable interest.
2. Commercial landlords often don’t see a reason to make upgrades.
Landlords can also be barriers for commercial renters. Some property owners are resistant to making any kind of upgrades – even when the tenant volunteers to pay for them. The small business renters that we interviewed interpreted the landlord objections they received or anticipated:
- The building is old, and they don’t want to put any money into it.
- If they do it for one tenant, then they must do it for them all.
- The property owner does not see a need; they had someone look at the problem already and “everything was fine.”
- They don’t pay the energy bill so there’s “nothing in it for them.”
- They don’t see the potential for the investment or understand how being more energy efficient can benefit them down the road.
Other landlords may agree improvements are warranted but say the tenant must pay for any upgrades out of their own pocket. Some small business renters feel the investment is worth it in situations where they know the upgrades will pay for themselves or if they plan to be there for a while.
If electricity providers can provide energy usage reports that clearly show advantages to building improvements, those can be shared with property owners and other tenants of a given building. That will provide the interested tenant with ammunition to make their case.
3. Small business owners are focused on areas other than their energy costs.
In general, small business renters expressed greater concern with running day-to-day business operations and other priorities than what they perceive as energy efficiency.
When it comes to finding a business location, owners often focus on a space that’s in a good location for staff, while also being easy to access or convenient for customers and clients. It is important that customers feel comfortable in the space, and getting good value or a deal was often cited as a motivating factor for moving into a space.
When it comes to electric service, owners tend to think of whether it meets the needs of their business operations and customers rather than whether it’s as efficient or “green” as it could be. Running blow dryers in a hair salon, storing materials in a climate-controlled environment or taking x-rays in a dental office, for example, are naturally the priorities for these respective businesses.
Program participation needs to be simple for small businesses because their top priority is their core business operation. They do not have time to think about managing energy unless it materially affects their bottom line. Offers should clearly communicate the benefits that businesses can receive and should be as close to “one click” as possible.
As America’s small businesses continue to face challenges from the COVID-19 pandemic, electricity providers have an important role to play in helping these customers better manage their energy expenses and continue to serve their communities.