Interview with Doug Luckerman and Alan Lehmann - January 2017

ERCG continues its ABC leadership interview series with Doug Luckerman and Alan Lehmann, Co-Founders of CurrentChoice®. We sat down with Doug and Alan and discussed several topics, including --

• the importance of transparency and product education to residential customers, especially given the threat to re-regulate the industry
• the reasons why shopping websites could be the preferred channel for residential customer acquisition and retention
• the goal of seamless integration with suppliers and a simple shopping experience for customers

ERCG:  Please let us a little about your background and your company, CurrentChoice®.

Doug and Alan:  Alan has over 20 years of senior-level management, marketing, and software development experience. Prior to co-founding CurrentChoice®, he was the VP of Finance Solutions at DealerTrack, a $240 million software-as-a-service (SaaS) provider to the retail and banking industries. Alan held a number of senior management roles in banking, including Senior Vice President in the Global Internet Strategy Group at FleetBoston (a $197 billion institution) and Director of credit card marketing for BankBoston (a $62 billion institution). Alan was also the CFO of a New England HVAC distributor, a partner at Adler Blanchard & Co., a public accounting firm, and worked at Arthur Andersen & Co. Alan has an MBA from Boston University and is a Certified Public Accountant.  He and his family live in Lexington MA.

Doug brings over 20 years of business, economic development and federal and state regulatory experience to CurrentChoice.com. Prior to co-founding CurrentChoice®, Doug managed his own law firm for over 10 years. His office specialized in federal and state regulatory matters.  Doug worked on complex federal issues that required appeals to the United States Supreme Court.  Earlier, Doug worked as a Senior Enforcement Counsel with the United States Environmental Protection Agency (EPA) and before that he worked as an associate in the Boston office of the law firm of Sullivan and Worcester. Doug owned and operated two successful businesses before he entered law school at the age of 30. Doug has been invited to speak at MIT and Harvard and was an adjunct professor at Boston College Law School. Doug also lives with his family in Lexington, MA.

CurrentChoice® was created when we tried to buy electricity in Massachusetts and neither of us could figure out how to do it easily. We quickly realized through our own experience that many residential and small business consumers could save money every month, just by switching suppliers. At lunch one day, we figured out on the back of napkin that over the course of just one year, in just one state, residential consumers alone were passing up about $500 million in savings simply by not selecting a less expensive electricity plan.  But we also realized it was very hard for those same consumers to get the information they needed to make an informed choice on which supplier to choose. We decided to build a website to make it easy for everyone to shop for electricity. We searched the internet for models in other markets, talked to consumers, government agencies that oversee state deregulated electricity markets, organizations that do extensive research on the competitive energy sector, experts in the field of electricity sales and service at major universities, corporations and consulting companies.  We took all that information and built a simple, quick and convenient way for consumers to honestly compare electricity plans side by side on the internet and determine for themselves which plan best meets their needs.

We are now licensed or corporate entities (where licenses are not required) in 13 states including TX, MA, PA, MD, ME, NJ, IL, MI, OH, NH, NY, CT, and RI.

ERCG:  Many states have state-sponsored shopping websites comparing utility default service rates to competitive retailer offerings. Why do we need private websites?

D&A: We cannot speak for all the private sites, but we can say that quite simply, we do a better job than the state sites in providing the information consumers need to make a true apples-to-apples choice.  Due to the pricing and fee structures each supplier can use and how that can change in each market, consumers need to a website that provides price comparisons that include all recurring fees and costs. And if applicable, all fees and costs that are relevant to their individual monthly electricity usage, such as low usage fees or step fees.  Without understanding all of the pricing components of each supplier’s offer and how those prices vary with usage, the consumer will not know what they are really buying.  Right now that information is not being provided to consumers on any of the state sites we are aware of.

ERCG:  How is your website and shopping experience different for residential customers compared to government shopping sites?

D&A:  We are different in two ways. First, as we indicated above, our site includes all the recurring ongoing fees and costs in our pricing so that a consumer can get a real apples-to-apples cost comparison. What they see on our site is what they will see on their bill.  We also identify all non-recurring fees (late fees, return check fees, etc.) so consumers can also compare these fees. 

Second, once a consumer has compared the various plans on our website they can sign up for a plan right on our site. We make it extremely easily -- it takes about 5 minutes.  On the state sites the consumer is sent to another web site where they have to start the sales process all over again.

ERCG:  Some jurisdictions have begun to question the benefits of competitive retail markets for residential consumers. How significant is the threat to re-regulate open markets? What role do you believe shopping websites have in adding value for residential consumers?

D&A:  We believe that while the competitive retail electricity market has a significant foothold throughout the US, the threat of reregulation remains real as long as many suppliers continue to offer plans with complicated fee or cost structures that make it hard for consumers to understand exactly what it is they are purchasing at the point of sale.

Our research shows that most consumers want to participate in deregulated markets where it is available. However, many are hesitant to do so because they either don’t fully understand the market or don’t trust the market. In this situation market players that act to take advantage of consumers can ruin it for everyone else by pushing too far. Consumers in return will demand reregulation for their self-protection if they believe the market is failing them.

We have seen this happen during the telecom deregulation era when companies slammed customers into plans they did not want, charged undisclosed fees and changed pricing without notice.  These practices, and others, brought the telecom industry to the brink of being reregulated.  The telecom industry figured out it was better to offer customers straightforward easy to understand plans with no gimmicks, e.g. “Get 100 minutes a month for $50”, rather than risk being reregulated.  

Shopping websites, like CurrentChoice.com, can play an important role in helping the deregulated market function smoothly and beneficially for both the consumer and the supplier. Consumers sites like CurrentChoice provide a transparent flow of information regarding the products for sale that is critical to consumers in any successful deregulated market.  For suppliers, our shopping site acts as marketing tool since we draw consumers to our site that appreciate the information we provide. We also act as a branding tool.  Suppliers using a shopping site send a message to consumers that they believe a fully and fairly educated consumer is their best customer. 

While door-to-door, telemarketing, and direct mail currently account for the majority of retail residential sales, we believe that the future of retail electricity marketing and sales will be shopping sites like ours.

A well-designed and executed shopping site like ours is the only sales channel that can leverage the power of the internet to offer personalized apples-to-apples pricing comparisons with highly transparent pricing and terms and conditions. A properly designed and executed site can make what is otherwise a time consuming and difficult process simple.  And it is for these reasons that wide-spread awareness and usage of sites like ours could reverse some of the bad press that other channels have brought to the retail electricity market.

ERCG:  What qualities do you look for in an ideal supplier partner?

D&A:  Our ideal supplier is one that --

• Is willing to sell in a clear and transparent sales channel
• Has a robust API that can integrate with our system to deliver a seamless credit check (where needed), and enrollment and renewal process for the consumer
• Builds a responsive and skilled customer service team that can resolve consumers’ issues when they arise
• Provides marketers with an easy to use online access point to see enrollments, rates, and contract expiration dates
• Views their marketer as a partner in the acquisition and retention of their joint customers
• Compensates their partners fairly for the work they do to acquire and retain their joint customers
• Can be trusted to do what they say and act fairly and with integrity with you and your joint customers

ERCG:  You’ve made substantial investments in your technology. What benefits do suppliers get in using your shopping website?

D&A: To date, most of our technology investments have been focused on creating a simple and transparent buying process for the consumer. 

However, we have designed several unique features that will help suppliers more efficiently acquire and retain the most profitable customers. 

Our shopping site can capture a wealth of information about how different customer segments shop and make purchase decisions. We will be able to provide suppliers with insight into how consumers compare product offers and the key product attributes that drive sales and retention. Our site has the capability to continuously test and help suppliers evolve the product attributes needed to drive the acquisition and retention of the most profitable customers in each of their markets.

ERCG:  Which trends should suppliers and residential brokers look out for in 2017?

D&A: There are two interesting trends on the horizon. First, consumers are buying more and more gadgets to plug in that you can run from your smart phone. However, these gadgets, and many other home appliances, are becoming much more energy efficient.  Second, consumers around the country are increasingly looking for ways to save energy, like switching to LED light bulbs.  These two trends are among the reasons the US Energy Information Administration predicts energy consumption in the US will be flat in the coming years.  This may be a good time for suppliers and brokers to start thinking about offering companion services in addition to the sale of electricity to bolster their bottom line.

Finally, as the market becomes increasingly competitive, suppliers will be faced with increasing margin pressure. And as the market matures consumer’s expectations for exemplary customer service will drive service costs up.  Falling margins and rising costs will drive suppliers to look for more ways to reduce their back-office costs.  Well-designed shopping sites that have made investments in robust electronic connections with their supplier partners will help suppliers cut those back office costs.