Viridian Energy: Unreal Savings

"SAVE MORE THAN $1,200" but not for sure
This article from retailenergyx.com discusses a direct mail offer from Viridian Energy. It is the type of marketing solicitation that I consider a Fail for Creative for being misleading.  

A bit of context: National Grid is a utility in parts of New York, Rhode Island and Massachusetts. As the utility, they maintain the power lines and are the basic supplier provider for electricity. As described on their site, National Grid adjusts their prices every six months in Massachusetts using a regulated formula. As this chart shows, in the coming six months, their supply price will increase by 97% to reflect current and anticipated supply costs, and that price will last for six months. After that, it could decrease back to the historical averages, or not. The price for the next six months will be over 16¢/kWh, while the last time the price was above 12¢/kWh was in 2009.

Are these the questions you would ask?

The direct mail offer from Viridian Energy touts the National Grid rate increase to 16.18¢/kWh as a reason to switch to their rate of 11.99¢/kWh guaranteed for 36 months. This is where the misrepresentation starts. Headline-level copy in the sidebar touts “SAVE MORE THAN $1,200 OVER 3 YEARS!”* That type of claim assumes that the National Grid Basic Service Charge will not change during the 3-year comparison period – but it will change. The Basic Service Charge changes every six months. So the touted $1,200 savings may be nearly zero.

Yes, Viridian explains this a bit in their disclaimer*, and they even throw in the mutual fund prospectus favorite line “Past performance does not necessarily predict future results.” But they hide this in the disclaimer, suggesting it was a misleading claim. Most consumers will scan the claims in the Johnson Box, headlines, and sidebars to determine if they are interested. They will read the $1,200 savings message, not the disclaimer that notes lack of validity.

There are other relevant facts to this offer missing from the headline and body of the letter:
  • The so-called “clean electricity” is not completely clean. Their disclosure explains that it has 50% renewable energy in addition to state requirements. Nice, but that could still mean a sizable percentage of fossil fuel generation.
  • If a customer signs up for this 36-month offer and later decides to cancel – perhaps because the National Grid Basic Service Charge returns to normal rates in six months – there is a $50 early termination fee. That is not disclosed anywhere in the letter. Perhaps this might be excusable if the call to action were to get more information, but the call to action is to “make the smart choice,” i.e., sign up for the offer. At the very least, it could have been included in a disclosure.
Direct mail solicitations like these give the industry a bad name.

Lesson: Disclose the specifics of your offer and relevant comparisons in a clear, concise, communicative manner. If you have to use a disclaimer to explain why your claim is not fully valid, consider your moral values.

* Many people mistakenly refer to the small print associated with marketing communications as a disclaimer, when, in fact, much of it is a disclosure. According to dictionary.com, a ‘disclaimer’ is “the act of disclaiming; the renouncing, repudiating, or denying of a claim; disavowal,” while a ‘disclosure’ is “the act or an instance of disclosing; exposure; revelation.” ‘Disclose’ is defined as “to make known; reveal or uncover.” From a marketing standpoint, a disclaimer is an admission that the headline is false – otherwise, why renounce it? However, a disclosure provides secondary but relevant facts of an offer. So the only reason an offer or marketing communication would require a disclaimer is if it was misleading from the onset.


Direct Energy: Phone Sex, It's a Gas!

This is a classic Fail for Creative … 

Direct Energy, when offering a renewal price to natural gas customers, mistakenly gave out the phone number of a phone sex line rather than its own customer service number.   

No doubt a term-contract renewal mailing like this was sent dozens or hundreds of times by a large company such as Direct Energy, which makes the mistake all the more notable.  It is easy when reusing a standard mailing to overlook the obvious – proof everything every time.

Lesson: Call every phone number in your communication to verify correctness.