August 17, 2017

KEY DRIVERS OF THE SMB MARKET

3 STRATEGIES FOR SMB ENGAGEMENT

1. Segment by vertical, and then segment the vertical

2. Talk less about savings to drive savings

3. Offer greater choice in technology and buying options

SNEAK PEAK: SMB MANAGED ENERGY

Q&A

SMBs consume

40-50% of

commercial energy

SMB programs are 75%

more expensive than

other C&I programs

Less than 2% of SMBs

participate in their utility’s

energy efficiency program

40% <2%75%

Sources: ACEEE, Small and Medium Sized Business Customers: Proactive Services to Increase the Installation Rate of Efficiency Upgrades, 2010. ACEEE, Expanding the Energy

Efficiency Pie: Serving More Customers, Saving More Energy Through High Program Participation, 2015. LBNL.

??

SMB Programs Spend versus Savings

Sources: Entrepreneur, Businesses Find Benefits in Going Green, 2013. ACEEE, Big Opportunities for Small Business, 2016.

0%

2%

4%

6%

8%

10%

12%

14%

16%

% of PortfolioSpending

% of PorfolioSavings

Represents utilities

that are getting out

what they’re putting

in for SMB programs

Each line represents

a utility program

Over 70% of small businesses

want to go green and be more

energy efficient

70%

And the savings from SMB programs justify

the investment for many utilities

40%

GROCERY STORES

• Food safety and product loss

• Razor thin margins (2-3%)

• Customer experience

• Diverse operations

• Strict safety protocols

• Guest dining experience

• Tenant turnover

• Employee health / safety / comfort

• Maintenance costs

• Quantifiable results and metrics

• Attracting new customers

• Customer experience

RESTAURANTS

OFFICES

RETAIL

GROCERY STORES

RESTAURANTS

OFFICES

RETAIL

Regional-level manager

• Willing to think about change but generally reluctant to outsourcing energy management

EXAMPLE USER PERSONA

• Wants to discuss energy savings and total sustainability, such as waste and water

• Pride-of-ownership makes some reluctant to pursue operational changes

Local store owner

• It’s all about the numbers – willing to get aggressive with more measures

Quick serve restaurantcorporate manager

Real estate investment trust

Nest made the thermostat something that customers wanted to buy, even at a premium – for benefits aside

from energy savings:

Simplifying their lives

Leading a high tech lifestyle

Having a more optimized home

Multiple Reasons People are Buying Smart Thermostats

Source: Houzz, 2016 U.S. Houzz Smart Home Trends Study.

^ = data was not available in 2013. Source: The Shelton Group, 2016 B2B Pulse Survey

31%

24%

23%

22%

17%

17%

15%

15%

42%

31%

16%

35%

11%

4%

17%

66%

0% 10% 20% 30% 40% 50% 60% 70%

Commitment to health & wellness

Consumer expectations^

Compliance with government mandates, policies orguidelines

Company culture/owner or CEO's values

Employee retention & recruitment

Availability of tax credits, rebates or incentives^

Concerns about climate disruption/extreme weather

Competitive differentiation/market opportunity

Energy savings and/or other cost reductions

2013

2016

Businesses that decide to

invest in energy efficiency do

so for many reasons, and

these rationales shift over time.

In recent years the percentage

of respondents citing energy

and cost savings has

declined, while the percentage

noting concerns about climate,

employee retention, and

regulations has increased.

TECHNOLOGY GROCERY RESTAURANTS OFFICE RETAIL LODGING

Smart thermostats

Lighting

Water efficiency

Refrigeration

HVAC upgrades

Plug loads

People want to buy

discounted EE products online

Midstream program designs can dramatically

increase unit sales at a lower cost/kWh

year-over-year increase in energy

savings from sales of EE products

through a utility-sponsored

marketplace

Sources: The Cadmus Group, Mass Save: Online Promotions. Ecova research.

0

100,000

200,000

300,000

400,000

500,000

600,000

2014:Downstream Only

2016:Midstream + Downstream

Midstream Program Unit Sales

(Real Utility Example)

Solution: SMB Managed Energy

Solution: Virtual Energy Assessment

Whitepaper: Utility Commercial Customer Engagement:

The 5 Analytics-Enabled Strategies That Matter Most

Data Sheet: Virtual Energy Assessment