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North American Power Drops Original Direct Selling Model in Favor of Customer Referrals
July 1, 2011
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North American Power has ended its direct selling program that it utilized for the first 12 months of operations, it informed the Maryland PSC in a compliance report.
"While the company experienced success with this model it became apparent that direct selling, particularly, door to door marketing needs to be reserved for smaller and more local operations," North American Power said.
North American Power has not abandoned a warm marketing approach, however. Its new model is more akin to a customer referral program than direct sales.
In the new customer referral program, all customers enrolling with North American Power are given the opportunity to refer customers to the company through a unique website that is generated for customers that choose to opt into the referral program. Such customers, if they elect to opt-in, must complete mandatory training and testing, and agree to the company's independent representative agreement and policies and procedures.
North American Power has eliminated the application fee to become a North American Power representative.
North American Power's original model paid an independent representative enrolling a customer $15 upfront and $2 every month, "which may have created an incentive to just get as many customers as possible."
The new customer referral model eliminates that incentive by only paying $5 upfront and 25 cents per month for referring customers to the company. The new model also pays independent representatives if their customers refer customers and their customers refer customers, and it does this down to six levels.
Under this model, "the incentive that is given to our IR's is to find just a handful of customers that you know personally that are interested in becoming a customer and may be interested in telling their friends."
"We believe that this model will not only be more successful for the company, but will more importantly eliminate any incentive for bad behavior," North American Power said.
Additionally, under the new model, North American Power is emphasizing affinity donations to charities, under a program called Mission to Millions, as well as 100% renewable power.
Customers enrolling with North American Power may select from a list of charities, to which North American Power will donate $1 on their behalf every month that the customer pays their electric bill and uses in excess of 250 kWh. Currently, customers may select from nine charities/non-profits, including Action Against Hunger, Heifer Project International, Hope for Haiti, National MS Society, Save the Children, Room to Read, Malaria No More, Dress for Success, and Americans for the Arts. Additional organizations, including local charities, will be added in the future.
The goal of the program is to donate $1 million to worthy causes by the end of 2011, and North American Power hopes to be donating $1 million per month to those in need by 2014 (North American Power was not explicit that the $1 million per month would be entirely comprised of the monthly residual donations; however, if it were, it implies a goal of 1 million customers by 2014).
Additionally, independent representatives that choose North American Power's 100% green product can earn double residual commissions on the customers within their group that also enroll onto the 100% green option.
North American Power said that it enrolled 359 electric customers in Maryland during the Month of April -- 195 at Baltimore Gas & Electric, and 164 at Pepco.
Residential enrolments during April were 338, and commercial enrollments were 21.
Consistent with its previously announced timing (3/15), North American Power recently entered the Consolidated Edison and Orange and Rockland territories offering residential and commercial electric supply.
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