06/14/2011

Selling Energy Efficiency to your CFO

By Eric Woodroof, Ph.D., CEM, CRM

 

Getting discretionary energy efficiency projects approved in today's economic environment can be tough.  Presenting a project may require more than just listing the logical benefits of saving money or reducing costs. 

Eric A. Woodroof, Ph.D., is the Chairman of the Board for the Certified Carbon Reduction Manager (CRM) program and he has been a board member of the Certified Energy Manager (CEM) Program since 1999. His clients include government agencies, airports, utilities, cities, universities and foreign governments. Private clients include IBM, Pepsi, GM, Verizon, Hertz, Visteon, JP Morgan-Chase, and Lockheed Martin.

Often, it is the non-logical or emotional benefits that influence a company's decision to approve one project over another.  Although many engineers' personality types will gravitate towards quantitative analysis, we must thoroughly evaluate the "soft" or even emotional benefits that the buyer will receive.  All of us are in a "sales" role when we present energy projects for approval (by a boss, committee or client), and it is important to maximize our chance of success. 

Failure to get a project approved means that it will save zero energy and have zero impact on jobs, the environment, etc.  Integrating the financial and emotional benefits will improve the approval rate of the projects you present.  Think about the last time you bought a car… was color a factor? 

This article mentions a few examples on the basic principles and there a link to a recorded webinar that will allow you to further develop your sales and marketing skills.  

Of course, when presenting a project, the financial benefits of energy management projects should be listed upfront and they are quite tangible (especially for projects with a 3 to 5 year payback).  In addition to presenting Net Present Value or other financial evaluations, don't be afraid to point out that the energy management project may have a greater return than the company profit margin.  Emphasize that energy efficiency projects can be financed such that they are cash flow positive. 

However, beyond economics, the other benefits such as improved "green" image, morale, productivity, resale value, free press and reduced risk do have great weight during the evaluation process.  These "soft" or emotional benefits have different impacts for different people. 

For example, if your audience is in the military, or someone with their son/daughter deployed overseas, then that audience may really appreciate the fact that your energy saving project may reduce dependence on foreign fuel sources.

If your project can make the approver "look good" (being good stewards of financial and environmental resources), the odds are in your favor.  If your project can help the approver avoid "looking bad" (not wasting money), then your chance for approval improves even further as most people will take more action to avoid a penalty.  For example, my clients are far more sensitive to meeting new "green" supplier standards (which are established by my client's customers).  My clients don't want to look "bad" by not being a good supplier.

Speaking of penalties, it is unknown what the environmental, social and medical impacts will be from our generation's addiction to fossil fuels.  Although many countries have embraced a path toward a "low carbon economy", the current US political/economic condition has made it unlikely that any carbon legislation will occur in the US for at least another two years. 

Despite the price spikes in oil, uncertainty in the Middle East, and the nuclear issue in Japan, the US government does not see carbon legislation as a critical issue on its radar screen. 

Most other countries already have taken action to develop a low carbon economy... and they are progressing ahead, which means the US is failing behind in a competitive market.  Sometimes this feature of an energy saving project will evoke strong nationalistic pride to get these types of projects approved in order to protect cost-competitiveness (companies will do more when inaction threatens their business).

However, even without the impact of US-legislated carbon trading, the importance of a company to have a "green image" is still very important and voluntary actions continue.  In fact, in many companies, "sustainability" planning is becoming an informal requirement for businesses… much the same way that "diversity" and "no sexual harassment" policies have become the norm of any enterprise.  Human resource departments know that if they want to attract the best people, they must have the right company image. 

The same is true for universities and cities- many entities (hundreds) within these subgroups have committed to becoming "carbon neutral".  They aren't doing this for the energy savings… they are doing it because it makes their institutions more attractive to their customers.

When you really evaluate sustainability plans, energy efficiency/management projects can deliver significant progress toward an entity's goals.  In addition, as the global economy rebounds and demand expands for energy, costs are most likely to rise (some may say the high gasoline prices are already occurring). 

This upward trend means that energy saving projects will yield higher returns on investment, even when you discount the possible effects of new externalities such as water pollution from natural gas fracking, avoidance/loss of nuclear, governmental instability in the Middle East, etc.. 

Presenting all the benefits of your project in a way that the audience can quickly understand (and remember) is probably one of the weaknesses of many engineers.  Ultimately, finding the key "sound byte" or project message can be important… the approval of a project is much more likely when multiple parties (within the CEO's sphere of influence) are supporting the project.  If a CEO has many people saying that the project should be approved… it will likely occur. 

 

If you would like to learn more about sales and marketing techniques relevant for the energy industry as well as how to develop your own inner marketing genius, there are recorded webinars that can help you develop in a self-paced format. To view these educational opportunities, click here: http://www.profitablegreensolutions.com/?q=services/self-pace-learning.

 

 

 

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