August 8, 2005
Bright idea | Lynn Goldfarb has built a career on marketing energy efficiency
By Sean Donahue
Changing entrenched consumer behavior is one of the toughest jobs a marketing expert can face. The task is even harder when the behavior in question is so automatic that people barely even think about it ˆ like flipping on a light switch. That's the scenario facing Lynn Goldfarb, president of Portland-based consulting firm L.K. Goldfarb Associates, which administers the Efficiency Maine business program.
To get business owners to consider the program's rebates and other incentives to purchase energy-efficient lighting and equipment, she must first convince them to think differently about their use of lighting and electrical equipment. "As a small-business owner, what I'm worried about is my bank calling in my loan, or my employees not showing up. Energy use is not a top-of-mind problem," says Goldfarb. "Our marketing challenge is to move energy up in their minds as a cost of doing business."
It's a challenge that Goldfarb has faced for most of her 20 years in the energy sector, first as a vice president of Central Maine Power and, since 1993, as a consultant to utilities and state regulators. Before helping launch Efficiency Maine's business program and market its residential program, Goldfarb helped Wisconsin market a similar statewide energy efficiency incentive program. Through that work, she's tried to show electricity users how to look beyond the often-higher initial cost of energy efficient lighting and appliances and toward their long-term benefits. Those efforts, which include her work to publish a booklet called Energy Efficiency Pays, garnered recognition from the U.S. Department of Energy this spring, which named L.K. Goldfarb Associates one of 24 "premier partners" for the DOE's Rebuild America program, which encourages community-based approaches to energy efficiency.
Goldfarb's consulting work also has reflected some of the energy industry's biggest changes: the deregulation trend of the 1990s, and the subsequent reemphasis on efficiency to deal with rising energy costs and increasingly congested grids. Since the late 90s, 16 states have created so-called "public benefits programs," which, like Efficiency Maine, are established by a state agency such as a public utilities commission to provide financial incentives to promote energy efficiency (see "The funding formula," opposite page).
Unlike earlier energy efficiency programs ˆ which usually were the result of state rules mandating that utilities invest in efficiency rather than continually building new power plants ˆ many of the new programs are created and managed by regulators themselves under deregulation. And in these cases, regulators have turned to professionals who understand both the energy sector and consumer and business-to-business marketing to help design, implement and manage their programs. "The [Maine Public Utilities] Commission was starting with nothing when they started Efficiency Maine, because they're a regulatory agency," says Linda Viens, business program manager for Efficiency Maine. "They write regulations, they don't start programs."
As a result, helping states design, administer, market and evaluate their efficiency programs has become "a cottage industry" for energy consultants, says Martin Kushler, director of the utilities program for the American Council for an Energy Efficient Economy. That industry includes small outfits like L.K. Goldfarb, which relies on a handful of regular subcontractors, to big firms like Fairfax, Va.-based ICF Consulting, which has 1,200 employees around the world, that bid to take on a state's public benefits program. Often, would-be competitors become partners, says Goldfarb, assembling teams to handle different tasks within a program and acting as subcontractors on each other's projects.
Now, with energy prices again a concern in many parts of the country, Kushler expects to see growing interest in efficiency programs in states or municipalities that don't already have them ˆ as well as potential expansions of existing programs. And with track records on state programs that are several years old, experienced contractors such as L.K. Goldfarb Associates are ready to pitch their skills. "People who have been involved in this area for a long time have really learned by their experience ways to do things right out there," says Kushler.
The rise and fall of efficiency programs
Efficiency incentive programs emerged during the energy crisis of the late 70s in places like New England, New York and California, where energy costs were high and grid congestion was most acute. Because utilities were still regulated, states had the authority to require companies like Central Maine Power to design and implement those programs. In Maine, for example, rather than approving a new power plant, state regulators would require CMP to invest the cost of that proposed facility in promoting energy efficiency instead.
It was in that environment that Lynn Goldfarb joined CMP in 1985 as vice president of marketing, in charge of managing the company's efficiency programs among other marketing duties. Goldfarb, who had management and marketing experience from the Lord & Taylor retail chain and undergarment maker Maidenform, was at the time executive Vice President for Portland-based Sun Savings and Loan. "I think they were looking for someone with a fresh perspective, but they wanted you to have regulatory experience," says Goldfarb, "and I came from the savings and loan industry."
When she joined CMP, Goldfarb says the company had taken only a few steps toward energy efficiency, such as a program to encourage customers to insulate their water heaters. To expand those programs, one of Goldfarb's first tasks was pitching energy efficient light bulbs such as halogens and compact fluorescents, which she admits were at the time both expensive and technologically questionable ˆ they interfered with televisions and often burned out quickly.
Rather than work with retailers immediately, Goldfarb turned to Maine's Lions Clubs to help seed the market. For years, the Lions had sold lightbulbs door-to-door as a fundraiser, and she partnered with the group to have its members sell energy efficient bulbs instead. As a result, in two years the Lions sold 85,000 halogen and 85,000 compact fluorescent bulbs.
Next, with price still an issue, CMP launched a coupon program offering customers $9 off compact fluorescents, and also convinced Shaw's and the pharmacy chain LaVerdiere's (since bought by Rite-Aid) to feature large displays of the bulbs. The first year the stores sold more than 171,000 compact fluorescent bulbs, which Goldfarb says saved eight megawatts of power.
During the 80s, Goldfarb also began targeting the CMP commercial customers with particularly high energy requirements, such as paper mills and supermarkets, and worked with them to install newer, more efficient equipment such as motors and refrigerators. But having grown tired of the commute between her home in Portland and CMP's Augusta office, she left the company in 1993 to start a marketing consulting business, which served both energy and non-energy sector clients.
By the early 90s, deregulation was emerging as the biggest story in the energy sector, and states were hiring consultants like Goldfarb to help them prepare for the change. "When I left CMP, energy efficiency was sort of in the doldrums," says Goldfarb.
The doldrums lasted most of the decade, until states began experiencing a new energy crunch. Rising demand for energy, combined with a lack of generating capacity and transmission bottlenecks, caused many states to look for ways to promote efficiency again, according to Robert Burns, a senior research specialist at the National Regulatory Research Institute. But even though the goal of reducing electricity use seems simple, there are any number of ways states can go about achieving it. "That's where the details get interesting. You've got lots of choices to make," says Burns, "Everyone looked at it in their own state and said, 'How are we going to set this up?'"
Those choices opened a new market for consultants like Goldfarb. In 1998, L.K. Goldfarb Associates won a contract to help Wisconsin develop a marketing strategy for its pilot incentive program. By 2001, the pilot was expanded to a statewide effort, named Focus on Energy, and Goldfarb was selected oversee marketing for the program's commercial division.
Goldfarb's tasks included helping the program's managers create marketing budgets and choose strategies to reach various target customers in the industrial, agricultural, commercial and educational sectors. "We were hiring program managers who for the most part were engineers. They could tell you what kind of [energy efficient] motor we might want in a certain situation, but they might not have a clue how to market it or influence a distributor to carry it," says Jolene Sheil, the section chief of Wisconsin's Focus on Energy operations.
In that job, Goldfarb gained experience with what analysts like Kushler and Burns say have become basic tenets of successful incentive program marketing: avoiding expensive advertising and focusing on targeted interaction. For example, says Sheil, Focus on Energy started reaching out to the agriculture sector by presenting information at events such as agricultural technology shows, where they knew they'd find an interested audience.
Finding allies
Goldfarb's contract with Wisconsin ended in 2003, but with that experience she was able to win a $940,000 contract that same year to launch the pilot of Efficiency Maine's business program. As the primary contractor, Goldfarb worked with PUC staff to design an incentive program that would meet the state's goal of reducing businesses' energy costs, while also overseeing a team of subcontractors that includes two engineering companies and an advertising agency. (A year later, Goldfarb won a two-year, $3.6 million contract to manage the full-scale program, which was recently extended for another two years at $11 million. Nearly $7 million of that contract is earmarked for incentives paid to participating companies.)
As in Wisconsin, marketing was one of Goldfarb's first concerns. First, Goldfarb and the PUC identified specific industries to target with incentive programs. Because many industrial users and retail chains had already begun switching to energy efficient equipment, Goldfarb says Efficiency Maine focused on critical Maine industries that were especially vulnerable to high energy costs, such as dairy farms, the hospitality industry and mom-and-pop groceries.
Then, says Efficiency Maine's Viens, Goldfarb suggested what would become the centerpiece of the program's marketing approach: convincing electrical contractors and equipment vendors to carry energy-efficient alternatives to standard supplies. By educating these so-called program allies about the benefits of energy efficient equipment (including higher profits for vendors), Efficiency Maine has created what amounts to its own sales force. To date, the program has signed up more than 300 allies. "That's a crucial part of a marketing strategy," says Kushler. "Your trade allies have really good access to people when they're in a frame of mind to be buying appliances and equipment."
As a subcontractor to the Efficiency Maine residential program, Goldfarb also helped develop a marketing strategy for residential customers to complement a traditional advertising campaign. Because of that program's $87,000 strategic marketing budget, she's looked to relatively low-cost promotional activities and public relations. For example, in June Efficiency Maine partnered with the Portland Symphony Orchestra to use energy efficient lighting throughout the PSO's annual Showhouse fundraiser, which featured local designers redecorating rooms in a Falmouth church rectory.
Although L.K Goldfarb Associates' business and residential contracts with Efficiency Maine run for another one-and-a-half and two years, respectively, Goldfarb is still looking across the country for potential new projects. The company is currently bidding on efficiency projects in Vermont and New Orleans.
Because Goldfarb assembles a team of subcontractors as needed for each bid, she says she could scale up or down the size of her business as needed to handle multiple projects. But if the company were to win both of its current bids, Goldfarb doesn't anticipate seeking too many more projects. At age 65, Goldfarb feels a few more three- to five-year contracts would likely keep her as busy as she'd like to be for as long as she'd like to be. "It's interesting work, but when I got my MBA did I ever think I'd be doing this?" says Goldfarb. "I thought I was going to go be a product manager for Procter & Gamble or something, but they didn't hire women to do that, so my career sort of evolved."
To get business owners to consider the program's rebates and other incentives to purchase energy-efficient lighting and equipment, she must first convince them to think differently about their use of lighting and electrical equipment. "As a small-business owner, what I'm worried about is my bank calling in my loan, or my employees not showing up. Energy use is not a top-of-mind problem," says Goldfarb. "Our marketing challenge is to move energy up in their minds as a cost of doing business."
It's a challenge that Goldfarb has faced for most of her 20 years in the energy sector, first as a vice president of Central Maine Power and, since 1993, as a consultant to utilities and state regulators. Before helping launch Efficiency Maine's business program and market its residential program, Goldfarb helped Wisconsin market a similar statewide energy efficiency incentive program. Through that work, she's tried to show electricity users how to look beyond the often-higher initial cost of energy efficient lighting and appliances and toward their long-term benefits. Those efforts, which include her work to publish a booklet called Energy Efficiency Pays, garnered recognition from the U.S. Department of Energy this spring, which named L.K. Goldfarb Associates one of 24 "premier partners" for the DOE's Rebuild America program, which encourages community-based approaches to energy efficiency.
Goldfarb's consulting work also has reflected some of the energy industry's biggest changes: the deregulation trend of the 1990s, and the subsequent reemphasis on efficiency to deal with rising energy costs and increasingly congested grids. Since the late 90s, 16 states have created so-called "public benefits programs," which, like Efficiency Maine, are established by a state agency such as a public utilities commission to provide financial incentives to promote energy efficiency (see "The funding formula," opposite page).
Unlike earlier energy efficiency programs ˆ which usually were the result of state rules mandating that utilities invest in efficiency rather than continually building new power plants ˆ many of the new programs are created and managed by regulators themselves under deregulation. And in these cases, regulators have turned to professionals who understand both the energy sector and consumer and business-to-business marketing to help design, implement and manage their programs. "The [Maine Public Utilities] Commission was starting with nothing when they started Efficiency Maine, because they're a regulatory agency," says Linda Viens, business program manager for Efficiency Maine. "They write regulations, they don't start programs."
As a result, helping states design, administer, market and evaluate their efficiency programs has become "a cottage industry" for energy consultants, says Martin Kushler, director of the utilities program for the American Council for an Energy Efficient Economy. That industry includes small outfits like L.K. Goldfarb, which relies on a handful of regular subcontractors, to big firms like Fairfax, Va.-based ICF Consulting, which has 1,200 employees around the world, that bid to take on a state's public benefits program. Often, would-be competitors become partners, says Goldfarb, assembling teams to handle different tasks within a program and acting as subcontractors on each other's projects.
Now, with energy prices again a concern in many parts of the country, Kushler expects to see growing interest in efficiency programs in states or municipalities that don't already have them ˆ as well as potential expansions of existing programs. And with track records on state programs that are several years old, experienced contractors such as L.K. Goldfarb Associates are ready to pitch their skills. "People who have been involved in this area for a long time have really learned by their experience ways to do things right out there," says Kushler.
The rise and fall of efficiency programs
Efficiency incentive programs emerged during the energy crisis of the late 70s in places like New England, New York and California, where energy costs were high and grid congestion was most acute. Because utilities were still regulated, states had the authority to require companies like Central Maine Power to design and implement those programs. In Maine, for example, rather than approving a new power plant, state regulators would require CMP to invest the cost of that proposed facility in promoting energy efficiency instead.
It was in that environment that Lynn Goldfarb joined CMP in 1985 as vice president of marketing, in charge of managing the company's efficiency programs among other marketing duties. Goldfarb, who had management and marketing experience from the Lord & Taylor retail chain and undergarment maker Maidenform, was at the time executive Vice President for Portland-based Sun Savings and Loan. "I think they were looking for someone with a fresh perspective, but they wanted you to have regulatory experience," says Goldfarb, "and I came from the savings and loan industry."
When she joined CMP, Goldfarb says the company had taken only a few steps toward energy efficiency, such as a program to encourage customers to insulate their water heaters. To expand those programs, one of Goldfarb's first tasks was pitching energy efficient light bulbs such as halogens and compact fluorescents, which she admits were at the time both expensive and technologically questionable ˆ they interfered with televisions and often burned out quickly.
Rather than work with retailers immediately, Goldfarb turned to Maine's Lions Clubs to help seed the market. For years, the Lions had sold lightbulbs door-to-door as a fundraiser, and she partnered with the group to have its members sell energy efficient bulbs instead. As a result, in two years the Lions sold 85,000 halogen and 85,000 compact fluorescent bulbs.
Next, with price still an issue, CMP launched a coupon program offering customers $9 off compact fluorescents, and also convinced Shaw's and the pharmacy chain LaVerdiere's (since bought by Rite-Aid) to feature large displays of the bulbs. The first year the stores sold more than 171,000 compact fluorescent bulbs, which Goldfarb says saved eight megawatts of power.
During the 80s, Goldfarb also began targeting the CMP commercial customers with particularly high energy requirements, such as paper mills and supermarkets, and worked with them to install newer, more efficient equipment such as motors and refrigerators. But having grown tired of the commute between her home in Portland and CMP's Augusta office, she left the company in 1993 to start a marketing consulting business, which served both energy and non-energy sector clients.
By the early 90s, deregulation was emerging as the biggest story in the energy sector, and states were hiring consultants like Goldfarb to help them prepare for the change. "When I left CMP, energy efficiency was sort of in the doldrums," says Goldfarb.
The doldrums lasted most of the decade, until states began experiencing a new energy crunch. Rising demand for energy, combined with a lack of generating capacity and transmission bottlenecks, caused many states to look for ways to promote efficiency again, according to Robert Burns, a senior research specialist at the National Regulatory Research Institute. But even though the goal of reducing electricity use seems simple, there are any number of ways states can go about achieving it. "That's where the details get interesting. You've got lots of choices to make," says Burns, "Everyone looked at it in their own state and said, 'How are we going to set this up?'"
Those choices opened a new market for consultants like Goldfarb. In 1998, L.K. Goldfarb Associates won a contract to help Wisconsin develop a marketing strategy for its pilot incentive program. By 2001, the pilot was expanded to a statewide effort, named Focus on Energy, and Goldfarb was selected oversee marketing for the program's commercial division.
Goldfarb's tasks included helping the program's managers create marketing budgets and choose strategies to reach various target customers in the industrial, agricultural, commercial and educational sectors. "We were hiring program managers who for the most part were engineers. They could tell you what kind of [energy efficient] motor we might want in a certain situation, but they might not have a clue how to market it or influence a distributor to carry it," says Jolene Sheil, the section chief of Wisconsin's Focus on Energy operations.
In that job, Goldfarb gained experience with what analysts like Kushler and Burns say have become basic tenets of successful incentive program marketing: avoiding expensive advertising and focusing on targeted interaction. For example, says Sheil, Focus on Energy started reaching out to the agriculture sector by presenting information at events such as agricultural technology shows, where they knew they'd find an interested audience.
Finding allies
Goldfarb's contract with Wisconsin ended in 2003, but with that experience she was able to win a $940,000 contract that same year to launch the pilot of Efficiency Maine's business program. As the primary contractor, Goldfarb worked with PUC staff to design an incentive program that would meet the state's goal of reducing businesses' energy costs, while also overseeing a team of subcontractors that includes two engineering companies and an advertising agency. (A year later, Goldfarb won a two-year, $3.6 million contract to manage the full-scale program, which was recently extended for another two years at $11 million. Nearly $7 million of that contract is earmarked for incentives paid to participating companies.)
As in Wisconsin, marketing was one of Goldfarb's first concerns. First, Goldfarb and the PUC identified specific industries to target with incentive programs. Because many industrial users and retail chains had already begun switching to energy efficient equipment, Goldfarb says Efficiency Maine focused on critical Maine industries that were especially vulnerable to high energy costs, such as dairy farms, the hospitality industry and mom-and-pop groceries.
Then, says Efficiency Maine's Viens, Goldfarb suggested what would become the centerpiece of the program's marketing approach: convincing electrical contractors and equipment vendors to carry energy-efficient alternatives to standard supplies. By educating these so-called program allies about the benefits of energy efficient equipment (including higher profits for vendors), Efficiency Maine has created what amounts to its own sales force. To date, the program has signed up more than 300 allies. "That's a crucial part of a marketing strategy," says Kushler. "Your trade allies have really good access to people when they're in a frame of mind to be buying appliances and equipment."
As a subcontractor to the Efficiency Maine residential program, Goldfarb also helped develop a marketing strategy for residential customers to complement a traditional advertising campaign. Because of that program's $87,000 strategic marketing budget, she's looked to relatively low-cost promotional activities and public relations. For example, in June Efficiency Maine partnered with the Portland Symphony Orchestra to use energy efficient lighting throughout the PSO's annual Showhouse fundraiser, which featured local designers redecorating rooms in a Falmouth church rectory.
Although L.K Goldfarb Associates' business and residential contracts with Efficiency Maine run for another one-and-a-half and two years, respectively, Goldfarb is still looking across the country for potential new projects. The company is currently bidding on efficiency projects in Vermont and New Orleans.
Because Goldfarb assembles a team of subcontractors as needed for each bid, she says she could scale up or down the size of her business as needed to handle multiple projects. But if the company were to win both of its current bids, Goldfarb doesn't anticipate seeking too many more projects. At age 65, Goldfarb feels a few more three- to five-year contracts would likely keep her as busy as she'd like to be for as long as she'd like to be. "It's interesting work, but when I got my MBA did I ever think I'd be doing this?" says Goldfarb. "I thought I was going to go be a product manager for Procter & Gamble or something, but they didn't hire women to do that, so my career sort of evolved."
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