Marketing to Cooperatives WORKSHOP MODERATORS Janine Weidow Manager, External Marketing NRECA email@example.com Steve Collier Vice President of Business Development Milsoft Utility Solutions firstname.lastname@example.org
Marketing to Cooperatives AGENDA 8:00 am Welcome Remarks – Introduction/Goals 8:30 Workshop Session: Electric Co-op 101 10:00 The Cooperative Perspective 12:00 Working Luncheon – NRECA Resources 1:00 pm Doing Business with/Selling to Co-ops 2:00 Discussion/Closing Remarks 2:30 Adjourn
Workshop Goal: Education Workshop Goal = EDUCATION –Better understand cooperatives structure & operations. –Hear cooperatives discuss how they do business with vendors. –Learn about NRECA structure & operations. And how NRECA works with its sister organizations. And NRECA resources for Associate Members –Hear successful vendors discuss doing business with co-ops. –Get your questions answered.
Marketing to Co-ops The Electric Cooperatives National Trade Association The Electric Cooperatives National Trade Association
Electric Utility Trade Associations Cooperatives Municipals - Investor-Owned
National Rural Electric Cooperative Association –www.nreca.coopwww.nreca.coop Primary Focus: Rural Electric Cooperatives –Distribution Cooperatives –Generation & Transmission (G&T) Cooperatives –Statewide / Regional Trade Associations –Products & Services Co-ops –Affiliate Members (vendors) >99% of electric cooperatives are Members.
RE Magazine –Advertising –Editorial Content Conferences –Flagship conference = TechAdvantage & Expo Cooperative Research Network –Part of NRECA All NRECA Members benefit Touchstone Energy
American Public Power Association –www.appanet.orgwww.appanet.org Primary Focus: Public Power Systems –Divisions of local government: municipal, county, state Include other utilities: water & wastewater, gas, telecomm –Joint action agencies (like co-op G&Ts) –Statewide / regional trade associations –Associate Members (vendors) –Municipal leagues & related government organizations Less than half of public power systems are members.
Public Power magazine –Advertising –Editorial Content Conferences –Flagship Conference = Annual National Conference. Relatively small, limited exhibitor space & exposure. DEED R&D network –Voluntary, dues based. A minority of APPA Members participate.
Home Town Connections is a for-profit affiliate –APPA owns 64%, public power systems the remainder. –Selects an exclusive preferred vendor in each category. –Public power systems and trade associations are indirect marketing & sales channels. –Charges a marketing fee and receives commission on sales to any public power system. –Vendor partners discount products / services to APPA Members.
Edison Electric Institute –www.eei.orgwww.eei.org Primary Focus: Shareholder-Owned Electric Utilities, –aka Investor-Owned Utilities (IOUs). –International Affiliates –Associate Members (vendors) –Edison Institute –Institute for Energy Efficiency >95% of IOUs are Members
Publications & Conferences are not central to membership. –Scant advertising, exhibitor opportunities or exposure Electric Power Research Institute –Independent of EEI –Voluntary, dues supported –Also has co-op and public power members.
Founded in 1942 Organized specifically to: –Overcome World War II shortages of electric construction materials, –Obtain insurance coverage for newly constructed rural electric cooperatives, and –Mitigate wholesale power supply problems.
Member-Elected Board of Directors –47 members –One from each state with an electric cooperative Glenn English – Chief Executive Officer –Formerly U.S. Representative, Oklahoma Headquartered in Arlington, Virginia –RS&I Division in Lincoln, Nebraska
THE NATIONAL ORGANIZATION DEDICATED TO REPRESENTING ELECTRIC COOPERATIVES AND THE CONSUMERS THEY SERVE –National leadership and member representation for legislative, regulatory, and public policy. –Education and training programs –Insurance, employee benefits and financial services –Technical expertise, advice and R&D –Electrification assistance in developing countries around the world –National branding and services
DISTRIBUTION MEMBERS Poles, wires and meters –Electric distribution cooperatives and nonprofit associations, nonprofit corporations, public utility districts, and government corporations or authorities –Located in a state, territory, possession or commonwealth of the U.S. –Engaged in furnishing electricity at retail to consumers
GENERATION & TRANSMISSION MEMBERS –Generate and resell wholesale power to their member utilities –Cooperatives, nonprofit associations, nonprofit corporations and public utility districts –Located in a state, territory, possession or commonwealth of the United States –Engaged in the marketing, generation and/or transmission of wholesale bulk electricity for sale to others for the purpose of resale
TRADE & SERVICE ASSOCIATION MEMBERS –Related organizations that are not actually engaged in the marketing, generation, transmission or distribution of electricity members are generation & transmission or distribution cooperative, associations, nonprofit corporations, public utility districts –Located in a state, territory, possession or commonwealth of the United States –Engaged in support of electric co-ops marketing, generation, transmission or distribution of electricity
TRADE & SERVICE ASSOCIATION MEMBERS (cont) –Unified advocacy to the general public, regulatory bodies and state legislatures on behalf of their members –Voluntarily membership –Governed by member-elected representatives –Offer desired services Education & training Publish newspapers or magazines for members Group purchasing Other
PRODUCT & SERVICE COOPERATIVE MEMBERS –Cooperatively-owned organizations –Members generally include NRECA members –Objectives are aligned with the objectives of NRECA. –Provide products and services at better price, quality, terms, service than would be available elsewhere Insurance - Federated Banking - NRUCFC Data Processing – NISC, SEDC Telecommunications – NRTC Transformers & Equipment - UUS
ASSOCIATE MEMBERS –Companies doing business with NRECA members –Includes: Utility equipment manufacturers, distributors, wholesalers Consulting / professional services IT & software products and services Telecomm products and services Financial products and services Consumer products and services –Many participate in TechAdvantage & Expo and advertise in Rural Electric Magazine.
November 1962 - NRECA and the newly-established U.S. Agency for International Development (USAID) signed an inaugural cooperative agreement in the White House Oval Office in a ceremony witnessed by President John F. Kennedy. NRECA International, Ltd. was incorporated as a wholly owned subsidiary of NRECA in June 1972.
HELPING DEVELOPING COUNTRIES ELECTRIFYY –Original purpose: Share lessons learned from US rural electrification with developing countries around the world. –Assisted development and deployment of rural electrification programs in over 40 countries. –Support from USAID, U.S. Department of Agriculture, the World Bank, the UK Department for International Development (DFID), Asian Development Bank (ADB), and host country government agencies.
THE NATIONAL BRAND OF ELECTRIC COOPERATIVES –Voluntary membership for NRECA members –More than 660 Touchstone Energy ® cooperatives in 46 states are delivering electric power and energy to more than 30 million consumers. –www.touchstoneenergy.comwww.touchstoneenergy.com
THE POWER OF HUMAN CONNECTIONS –National promotion & advertising Television ads on various channels including: Print ads in major national publications including: Advertising brand and collateral for member co-ops to use.
NATIONWIDE SERVICES FOR MEMBERS CUSTOMERS –Bill Consolidation and Energy Management Program –Touchstone Energy ® Home –Energy Saver Program –Co-op Connections –Sites Across America.com –Energy education programs Kids "Super Energy Saver" Program Discovery School Program - Get Charged!
Monitor, evaluate & apply technologies that help electric cooperative utilities control costs, increase productivity, and enhance service to their consumer–members. –Results are available to all NRECA voting members. Online and printed studies, reports, newsletters Web conferences Seminars and presentations at conferences –Partners with US DOE, EPRI and other R&D organizations. –Six Member Advisory Boards & an Industry Advisory Group NRECA ®
Principal areas of investigation include: –Clean coal and environmental-management technologies –Renewable and alternative energy –End-use solutions that help the customer make better use of electricity –Distribution system operations best practices –Broadband communications and information technology –Transmission capacity and security NRECA ®
Marketing to Co-ops National Cooperative Business Network Organizations
INSURANCE EXCHANGE FOR ELECTRIC COOPERATIVES –Founded in 1959 –Property & casualty insurance for rural electric co-ops in 40 states. –Includes coverage for water, sewer, propane and natural gas, surge suppression, security systems and other cooperative business ventures. –Phil Irwin, President –www.federatedrural.comwww.federatedrural.com
SERVICE | INTEGRITY | EXCELLENCE –Founded by NRECA, incorporated in 1969 –Original purpose was to develop independent financing to supplement / replace REA –Provides banking services to more than 1,050 electric cooperative owners serving 32 million ultimate users. –Also provides banking services to rural telephone utilities. –Sheldon Petersen, Governor & CEO –www.nrucfc.orgwww.nrucfc.org
NATIONAL INFORMATION SOLUTIONS COOPERATIVE –Merger of CADP & NCDC in 2000 –500+ electric & telco members in 47 states –Accounting & business services, customer information & billing services, e-commerce solutions, E&O solutions. –Also provides CIS services to national retailers in cooperation with Touchstone Energy. –Vern Dosch, CEO –www.nisc.coopwww.nisc.coop
SOUTHEASTERN DATA COOPERATIVE –200+ electric members in 33 states –Accounting & business services, customer information & billing services, e-commerce solutions, E&O solutions. –Ron Camp, CEO –www.sedc.coop
UNITED UTILITY SUPPLY –230 electric co-op members in 17 states –Manufactures and sells distribution transformers –Distributes electrical distribution supplies & equipment –Ron Sheets, President –www.uus.org
YOUR TELECOMMUNICATIONS COOPERATIVE –Founded 1986 by NRECA, NRUCFC and NTCA –To provide telecommunications for internal use and for resale by rural electric and telephone utilities. –Bob Phillips, CEO –Original business was satellite television for members and affiliates eventually serving >2 million retail subscribers –Also offers IPTV, satellite broadband, AMR, SCADA, voice & data dispatch radio, MVNO mobile phone. –www.nrtc.orgwww.nrtc.org
COOPERATIVELY-OWNED BUSINESSES –A business incorporated under local state law. –1752, Benjamin Franklin forms Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, still in operation today –1844, the Rochdale Equitable Pioneers Society opened a cooperative store on Toad Lane in Rochdale, England. –Cooperatives are deemed to be not-for-profit and therefore usually tax-exempt.
THE COOPERATIVE PRINCIPLES –Voluntary & Open Membership –Democratic Member Control –Member Economic Participation –Autonomy & Independence –Education, Training & Information –Cooperation Among Cooperatives –Concern for Community
Cooperatives usually form to provide products or services with greater economy, efficiency, quality or values than would otherwise be available. –Often to achieve economies of scale or leverage of scope. There are three kinds of cooperatives: –Consumer-owned –Producer-owned –Employee-owned Electric cooperatives are consumer-owned
COOPERATIVES IN THE US –Over 120 million people are members of 48,000 cooperatives. –Nearly 10,000 U.S. credit unions have 84 million members and assets in excess of $600 billion. –Well known national cooperatives include: USAA (customer-owned) ACE Hardware (employee-owned) Ocean Spray, Land O Lakes (producer-owned)
Marketing to Co-ops More About Electric Cooperatives
A Brief History of Electric Cooperatives FDR learned in 1930 that 80% of the US was electrified, but only 10% of rural America had electric service. –FDR formed Rural Electrification Agency in 1934. Congress formed Rural Electrification Administration under USDA in 1935. Offered loan guarantees / low interest loans to qualified borrowers (not just cooperatives). Provided financial and engineering standards. USDA reorganized in 1994 and replace the REA with the Rural Utilities Service (RUS).
A Brief History of Electric Cooperatives RURAL ELECTRIC COOPERATIVES –Most IOUs were not interested in the risks and low rate of return for extending rural electric service. –Consumers banded together to form cooperative (consumer- owned) corporations to qualify for REA loans and loan guarantees. –Within ten years of the REA being formed, 90% of rural Americans had electric service.
864 distribution cooperatives and 66+ generation and transmission cooperatives serve: –Over 40 million people across 47 states 15.5 million+ residences 1.8 million commercial accounts 138,792 industrial (less than 1% of the total)+ industrial accounts –17.5 million meters –2,500 of 3,141 counties in the U.S. Electric Co-op Facts
–Assets worth $100 billion –Own and maintain 2.5 million line miles 42% of the nations electric distribution lines covering ¾ of the nation's landmass –Deliver 10% of total kilowatt hrs sold in the U.S. each year –generate nearly 5% of total electricity produced in the U.S. each year –Spend nearly $9 billion annually on products and services needed to operate their systems –Employ nearly 67,000 people Electric Co-op Facts
Rural Electric Cooperatives –Only 16 of 47 states with electric regulatory authorities regulate some aspects of electric co-ops' operations –Rates are reviewed and approved by local Board of Directors –Rate Objectives of Utility: covering costs/expenses Electric Co-op Facts
DISTRIBUTION COOPERATIVES RESELL POWER –Purchase wholesale power A handful of distribution cooperatives generate some power –G&Ts provide about 40% of power purchased by distribution cooperatives Full and partial requirements contracts –Distribution cooperatives obtain the remainder of their wholesale power from a variety of other sources Electric Co-op Facts
SOME ELECTRIC COOPERATIVES ALSO OFFER –Community development & revitalization projects Improvement of rural water and sewer systems –Assist in delivery of health care and education –Internet service provider (ISP) –Propane –Natural gas –Premises security monitoring & control –HVAC equipment & service Electric Co-op Facts
COOPERATIVE COMPARISONS –Pedernales (TX) is largest with 230,000 meters. –Alaska Village serves the largest land area of any electric utility in the world with only 7,400 meters. –Gila River Community Utility Authority is the smallest with 26 meters. I-N-N (AK) is the next smallest with 296 meters. –Average size = 19,000 meters –Median size = 12,500 meters –Rio Grande (TX) is the sparsest with <2 meters / line mile (national average = 7 meters / line mile) Electric Co-op Facts
Marketing to Co-ops Comparing Electric Co-ops to Other Electric Utilities Comparing Electric Co-ops to Other Electric Utilities
Division of Activities – Americas Electric Utilities
Cooperatives Compared With Other Electric Utilities: Co-op sales grew twice as fast as the total electric industry average in 2000. Customers Per Mile of Line Revenues Per Mile of Line Cooperatives6.6 $8,500 Investor-Owned34$59,000 Municipals44$72,000
Marketing to Co-ops Understanding Electric Cooperatives
Understanding Electric Co-ops ELECTRIC CO-OP CHARACTERISTICS –They are customer-owned, not-for-profit, principle-based. –Their primary focus is cost, not profit. –They are extremely sensitive to individual customers. –Staff roles are broader & duties overlap. –Their have distinctive practices & vocabulary.
Understanding Electric Co-ops ELECTRIC CO-OP CHARACTERISTICS –Business is very relationship based, more personal, less formal. –Cooperatives nationwide are a tight knit community. –Individual cooperatives are locally controlled, operate like a family, are very independent. –Co-ops prefer that you already work well with other co-ops.
Understanding Electric Co-ops ELECTRIC CO-OP CHARACTERISTICS (cont.) –Most electric cooperatives share many characteristics –But, no two electric cooperatives are just alike. –What most impacts a co-ops view of planning & operations? Size Growth Load factor Wholesale power cost C&I customers Community demographics Leadership
Marketing to Co-ops The Cooperative Perspective Panel Discussion The Cooperative Perspective Panel Discussion
The Cooperative Perspective Panel Discussion Moderator:Steve Collier, Milsoft Panelists:Final list to come ASAP
The Cooperative Perspective Purchasing Technology Operations
How Co-ops Buy Products & Services Cooperatives vs. Municipals –RUS procurement rules (CFR 1726) –Government procurement rules –RUS borrowers must purchase from approved materials list
How Co-ops Buy Products & Services Common purchasing practices –5 vendors or less (few suppliers) –3 bids – orally requested –90% of purchasing activities are manual transactions –Public bid opening not required unless a large power plant –Supply chain management decisions by committee, OR –Purchasing responsibilities are split among several functions So find the center of influence for your product or service
How Co-ops Buy Products & Services Advantages for the supplier: –Co-ops are easy to work with – less bureaucratic –Co-ops are dependable and pay on time –Co-ops are usually willing to pay for JIT deliveries and other value added services –Co-ops are known to be honest and loyal
The Co-op Supply Chain Purchaseneed WarehouseReview Engineeringplanning SupplierscontactedQuotesreceived Price & Delivery Supplierselected Order typed & transmitted Order shipped or backorder or backorderreleasedWarehousereceives Receiving copy is sent to purchasing &/or A/P InvoicereceivedSupplierPaid
How Co-ops Buy Products & Services What Co-ops Buy –Line transformers (20%) –Conductor (18%) –Poles, towers, etc (13%) –Station equipment (11%) The big 4 account for @ 2/3 of the spend!
How Co-ops Buy Products & Services The Suppliers role –Long standing relationships – mutual trust –Products priced on a case-by-case basis –Stocking/Consignment/JIT programs –Little long-term planning
Areas of Potential Improvement Some co-ops manage their supply chain, some dont Growing focus on supply chain cost performance and measurement Group buying, standardization, etc. can reduce costs –Almost ½ of all co-ops are unwilling to join with other co-ops in the purchase or storage of materials Normally utilize short-term forecasting 3 bids and a cloud of dust – preferred method Inventory turnover varies based on vendor alliances vs. self management
Decision Influences Having other co-ops as customers Understanding what a co-op is and how co-ops operate Successful track record Appearances at NRECA conferences/shows Customer Support/Tech Support
Panel recommendations: Show success with other co-ops (if not a co-op, then a similar sized electric utility) Understand what a co-op IS and what a co-op is ABOUT Demonstrate a willingness to work with the co-op, even if theyre not huge Create a relationship Customer Service
How do co-ops find information? Shows/Conferences (mostly NRECA) Trade Magazines (RE, T&D,…) Web sites GOSSIP –Talking with counterparts at other co-op shows, meetings, schools
Staying Informed Reading publications such as: – Rural Electric Magazine –Transmission & Distribution –Electrical World –Utility Automation –Energy IT –PC Magazine Networking with other cooperatives. Keeping informed on technology projects ongoing at cooperatives.
Staying Informed Attending trade shows –Distributech –NRECA TechAdvantage ® Conference & Expo –IEEE Rural Electric Power Conference –IEEE Transmission & Distribution –Other specialty conferences and shows (GITA Autovation, CS Week)
Rural Electric Magazine Mission is to help readers become more informed participants in the electric utility industry and in the business life of their co-ops and local communities. –With nearly 26,000 subscribers, RE Magazine has the widest circulation among employees of electric co-ops of any utility industry magazine. –Two-thirds of those readers make or affect purchasing decisions.
NRECA Publications Two major publications inform and educate members, decision makers and the interested public: 1.Rural Electric Magazine, published monthly 2.Electric Co-op TODAY, a weekly newspaper
Rural Electric Magazine Help readers become more informed about new technologies, products and services through monthly technical articles and special issues and sections. Technical Articles –Co-op Tech –Solutions –Utility Marketplace
Rural Electric Magazine Special Issues/Sections –TechAdvantage ® and Expo Preview (usually February) –Connections Supplement (April and October) –Buyers Guide (May) –Directory of Electric Co-ops (July) –Advertisers Study (September)
Rural Electric Magazine Associate Members can help by supplying RE with examples how they work with co-ops to improve their utility operations and enhance customer service. Check for upcoming topics in the printed media kit or at the RE Magazine Web site: www.remagazine.coop www.remagazine.coop Contact us three months ahead of the issue date.
Rural Electric Magazine: NRECA Contacts Co-op Tech and Utility Marketplace: Bill Koch, (206) 772-0283, email@example.com firstname.lastname@example.org Solutions: John Lowrey, (217) 529-5561, email@example.com@aiec.org CONNECTIONS: Nancy McMahen, (800) 230-2601, firstname.lastname@example.org email@example.com Editor: Perry Stambaugh, (703) 907-5712, firstname.lastname@example.org@nreca.coop Advertising: Danielle Burton, (301) 829-6333, email@example.com@remagazine.org Contact us anytime to discuss how your product or service helps electric co-ops do a better job for their consumers
NRECA Conferences and Expos Overview of NRECAs Conferences and Expos
Identifying Conference Topics and Speakers Electric Cooperative Business Network –Access e-communities of electric cooperative employees to identify key issues, objectives, and potential speakers for conferences NRECA input Year-round input welcome, especially on hot topics and new technologies Call for Presentations-6-9 months before each conference
Participants Have Told Us: They like to hear co-op success stories They like to hear directly from the co-ops –Case studies They do NOT prefer to hear sales talks They want practical information to take home. This is the way they can sell ideas to management. BOTTOM LINE: The more success stories you have with co-ops, the higher your chances are to get the word out about your products.
Associate Member Benefits Increased exposure to electric utility decision- makers Access to electric utility industry information Valuable networking opportunities Potential for sales, partnering and other business alliances
Types of Memberships NRECA offers you a choice of three associate membership levels designed to fit the needs of your company and your business: –Silver Associate Member –Gold Associate Member –Platinum Associate Member
Exposure Benefits for Associate Members Subscription to Rural Electric Magazine Annual Subscription to Electric Co-op Today Designation in the Annual Network Services/Associate Membership Directory Designation in our Annual Buyer's Guide Access to NRECA Conferences and Seminars Associate Member Logo for Print Advertising Certificate of Associate Membership Link to NRECA's Home Page I&FS Benefits Access to NRECA member database Listing In NRECAs Buyers Guide 2010 Network Services/Associate Membership Directory Rural Electric Magazine Utility Marketplace section CONNECTIONS: RE Magazine Supplement Listing in NRECAs Membership Directory – Published in July issue of RE Magazine
Exposure Benefits for Gold and Platinum Associate Members All Silver Associate Member benefits, plus: –Discounts on Space at TechAdvantage ® Expo: –VIP Suite at TechAdvantage ® Expo –Discounts on Full-Page, Four-Color Ads in RE Magazine –One complimentary registration to the CEO Leadership Conference –One complimentary registration to the Marketing to Co-ops Workshop
Exposure Benefits for Platinum Associate Members All Silver Associate Member Benefits, plus: –Complimentary Space and Discounts on Space at TechAdvantage ® Expo –VIP Suite at TechAdvantage ® Expo –One Free Full-Page, Four-Color Ad in RE Magazine –One Free ½-Page, Black & White Ad in RE Magazine –Platinum Associate Membership Plaque –$12,000 Annual Dues
Marketing to Co-ops Doing Business With Cooperatives Panel Discussion Doing Business With Cooperatives Panel Discussion
Vendor Panel Members of panel have spent years working with co-ops Are Platinum Associate Members and Affiliate Members of NRECA All have extensive knowledge of co-op business practices, sales cycles and business needs
Final Points: Selling to Co-ops Assist - dont pester Understand position and perspective Do homework for the co-op Be available - not underfoot Price to co-op pocketbook Produce what you promise Provide Excellent Customer Service
Appendix: Resource Information 2007/2008 NRECA Annual Report About NRECA Brochure Associate Member Brochure and web site on nreca.coop Touchstone Energy ® web site on www.touchstoneenergy.com 2010 TechAdvantage Exhibitor Prospectus 2009 Connect Exhibitor Prospectus 2009 New and Emerging Technologies Exhibitor Prospectus (for information only) CONNECTIONS Supplement Information Rural Electric Magazine Media Kit
Final Points - Selling To Co-ops Final Questions?