- BRW Lists
Published 26 February 2013 12:09, Updated 24 April 2013 10:12
Opportunity knocks ... direct door-to-door selling remains one of the electricity industry’s most effective sales channels. Photo: Eddie Jim
The salesman may not be dead yet. Despite decisions this week by EnergyAustralia and AGL to cease the practice of door-to-door sales, the practice immortalised in Arthur Miller’s Death of a Salesman remains a crucial tool that many consumer industries – most of all energy – are reluctant to end.
CLP Group-owned EnergyAustralia said on Monday it would stop the practice because consumers didn’t like it.
“While door knocking is an effective way of selling electricity and gas contracts and deliver us significant sales, households have made it clear that it’s something they don’t like or want,” group executive manager of retail, Adrian Merrick, said. “Door-to-door selling is our most complained-about sales channel.”
On Tuesday rival AGL, which last year ended door-to-door sales in SA and Queensland – in part reflecting the conditions of those two markets – said it would cease the practice in Victoria and NSW ‘over the next month’. That will mean it has completely withdrawn from the practice.
“Feedback from our customers after AGL withdrew from selling energy plans through unsolicited door-to-door sales in Queensland and South Australia last year has been overwhelmingly positive,” Group General Manager for Retail Energy Stephen Mikkelsen said.
It is, however – and this is the problem for energy retailers – one of the most effective sales channels. For a product for which consumers only pay a quarterly bill and spend little other time thinking about, the doorstep visitor offering a discounted product is an effective way of convincing people to change providers.
A report on the door-to-door sales industry commissioned by the Australian Consumer & Competition Commission last year estimated that in 2011, the energy industry made 55 per cent of its residential sales through door-to-door sellers. In a consumer sector with a high level of switching, door-to-door energy sales that year numbered just more than 1 million, or 61 per cent of the total 1.7 million small customer transfers made.
So while the practise can raise the ire of household consumers and risks brand damage to the retailers – as when sales people ignore “Do Not Knock” signs or knock outside the hours in which they are permitted to do so – it is a cost-effective method for energy retailers, particularly smaller, second-tier operators seeking to gain a foothold in a retail market that is just opening up post-deregulation.
“Most retailers who are actively targeting the residential market use door-to-door sales as a main channel to market,” the report, authored by consultancy Frost & Sullivan, says.
Hence the dilemma for the three largest retailers. Origin Energy has no immediate plans to change its use of the practice.
“Origin uses a number of channels to inform customers about energy offers, and we review and amend these channels from time to time,” a spokesman said on Tuesday.
Energy sales still dominate Australia’s door-to-door sales industry, accounting for more than three-quarters of the 1.3-million transactions made in 2011, the report says. Fixed-line telephony, solar panels and pay-TV were other significant users.
“Based on 8.425 million households in Australia, this equates to an average of one door-to-door sale for every 6.5 households in 2011,” the report says.
The number is likely to grow. Even if energy providers retreat from the practice, demand will be boosted, the ACCC/Frost & Sullivan report says, as telecommunications providers will step up sales efforts with the roll out of the National Broadband Network, and as still-regulated energy markets in Tasmania, WA and the NT open up for retail-level competition.
Smaller retailers, such as Australian Power & Gas Company, which sells electricity and gas in Victoria, NSW and Queensland, are keen to retain the practice.
“A door-to-door operation plays a key role in what is a highly competitive retail energy market and increases customers opportunities to save on their household bills,” general manager for retail David Goadby said on Tuesday.
“Our door-to-door operation uses industry-leading technology to provide customers with a real-time quote on whether they would make a saving through switching retailer.”
The attraction of door-to-door will also only strengthen as the number of phone lines listed on the national Do Not Call register, which started in 2007 and by October last year had eight million phone and fax numbers on it, makes an increasing number of lines off-limits to telemarketers, the report says.
“The perceived advantages of this channel and in particular its effectiveness will continue to drive usage,” it says.
But as they go about the job that is likely to continue for some time, Australia’s army of door-to-door salespeople – which numbered about 3400 at any given time in 2011, the report estimates – will no doubt identify with a quote from Willy Loman as they deal with the anger and suspicion of wary householders: “A small man can be just as exhausted as a great man.”