Four-year old Harold successfully created a world of his own simply by drawing it with a big purple crayon. He drew a path where one didn’t exist and a moon to light his way.
Was Harold living in a fantasy world or was he a visionary?
As adults, ‘crayon’ takes on an entirely different meaning via the Urban Dictionary – crazy, wild, stupid – or worse – unknown, mysterious and (well, it’s unprintable).
Since 500,000 professionals globally are directly and indirectly impacted by revenues earned from executed electricity and natural gas contracts, the time has indeed come to put away the wild and crazy crayons that create mysterious commission statements with too many unknowns and (again, unprintable) in favor of better data and standardized reporting. Equally important, it’s time to stop coloring outside the lines in communicating with the energy industry’s collective No. 1 sales channel.
It’s time to stop writing in crayon.
This most certainly is not a blame game. Here’s why. In the absence of an industry standard for commission reporting in the energy space, REPs have no best practices to guide them in reporting commissions to aggregators, brokers and channel partners. The reporting process is manual, which makes it extremely laborious at best and subject to significant human error at worst. Brokers are frequently left scratching their heads about the who, what, when and how much aspects of their commission statements. And if the industry as a whole has jumbled data and inaccurate reporting, does anyone truly know their own numbers? In the end, it’s a trifecta of negatives: bad for business, bad for brokers and bad for REP/ABC relationships.
We can learn a lot about reporting and communications from the financial services sector. Twenty years ago, tremendous proliferation in that industry led to equally tremendous consolidation. In order to retain brokers and customers, investment houses put their money where their mouths were by investing in technology and internal systems to ensure positive data experiences, and their commitment continues to this day. Reports are clear, accuracy is paramount, brokers and clients understand the numbers, and investment houses very wisely continue to identify ways to enhance reporting to retain valued brokers and customers.
REPs are now at the same proverbial fork in the road as financial service companies were 20 years ago. One direction is a path to more of the same, while the other direction takes positive steps that turn data into an asset.
Turn data into an asset?
This path is a win/win no-brainer. For REPs operating in an environment with little-to-no organic growth, solid data is a stepping-stone to growth through acquisition. If you’re the seller, you won’t get near the value of your business without good data. If you’re the buyer, you won’t really know what you’re buying without solid data. And the same goes for brokers, who control 70 percent of the energy deals getting booked and who collectively remain the No. 1 customer of REPs in deregulated markets. Solid data and accurate reporting will put them in a camp of loyalty. Without clear data and communications, brokers will look elsewhere for commission-based relationships.
Back to Harold. Throughout his journey, Harold used a purple crayon to draw a path and light his way on a journey. He was indeed a visionary. Let’s take our cue from Harold before we put away our crayons. Let’s use the power of that big purple crayon one last time to draw a thoughtful, inspired path and light the way toward best practices in reporting and communicating with ABCs in one of the nation’s most dynamic industries. In the process, REPs will position themselves for success in the undisputable environment of proliferation and consolidation, and brokers will have a true channel partnership and be gratified in knowing their efforts are appreciated and compensated as agreed.
About the Author
Jake Cantrell has spent more than a decade focused on risk and finance in the commercial lending and wholesale energy trading markets. He joined The Commission Exchange (thecommissionexchange.com) as Chief Financial Officer in 2016 to further develop proprietary programs that turn data into assets. The Commission Exchange has become a go-to resource for REPs and ABCs for viable, innovative, customer acquisition strategies. He is also a frequent contributor to EMC online newsletters.
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