PNM is New Mexico’s largest electricity and natural gas provider. It serves more than 425,000 electricity customers and more than 480,000 natural gas customers in 100 communities statewide. PNM Sky Blue^® is a voluntary program that allows customers to purchase renewable energy, including up to 90% of their current electricity needs from wind-generated energy.

Sky Blue^® customers are charged an additional 1.8¢ per kilowatt-hour (kWh) of electricity purchased. Although many people pride themselves on being environmentally conscious, not everyone will pay a premium to do so.

Outside of marketing to the entire customer database, SKM needed to determine which customers were most likely to purchase the Sky Blue^® product.

Using our proprietary SureFire system, SKM Group took a step-by-step approach to determine the best plan of action. First, we analyzed the database of current Sky Blue^® customers to create a model. The model determined which demographic information would predict the customer segments that were most likely to participate in this program. We found that there are three variables that can determine whether the customer is likely to respond—age, household income and median home value.

Next, we appended demographic data to all PNM electricity customers and selected only those meeting the model criteria for mailings. Over the course of several mailings, SKM Group tested different creative kits and copy positions to determine which would prompt the most responses. After each mailing, SKM analyzed the results to determine the most likely responders and the most effective creative package.

As a result of the customer segmentation and package testing, PNM has seen a consistent rise in response rates over the course of several mailings, with some customer segments pulling as high as 7%. In three years, the number of customers enrolled in the Sky Blue^® program has gone from 5,500 to about 19,500. Meanwhile, the cost of acquisition has decreased more than 31% per account.