"All cause-related marketing is incentives." Milton Friedman, the late economist said that. OK, not really. He said to be an economist is to believe that incentives work. So call me an economist.
[Somebody please tell me where I can find the real quote. I seem to remember it but haven’t been able to track it down.]
Whether or not I’m remembering it right, it’s certainly true that cause-related marketing is based on the premise that incentives work.
We when think of those incentives, especially in the wake of the criticism surrounding RED, we tend to think that the incentives work only to encourage consumption. That’s only sometimes the case.
Rocky Mountain Power, an electrical utility that serves the U.S. states of Utah, Wyoming, and Idaho sent out this cause marketing driven offer in fall 2006. The offer goes like this: sign up for their Cool Keeper plan and the company installs a device on the air conditioner at your home or office which allows Rocky Mountain Power to shut down your air conditioner when electrical demand peaks.
If you signed up during the promotional period, Rocky Mountain Power sent a check for $25 to the school of your choice. Rocky Mountain Power also credits your account $20 once a year for as long as you participate.
The American West gets quite hot in the summer and air conditioners are almost universal. Ergo, power demand peaks during July and August, the hottest months of the year. Rocky Mountain Power could build more electrical generation capacity into their system to meet that peak demand, but instead they encourage a kind of conservation using cause-related marketing.
This isn’t energy conservation cause marketing in the sense that people are being incentivized to use less power, per se. Instead, customers are being induced to allow Rocky Mountain Power to temper demand so that the company avoids or at least forestalls the time when it has to build more power plants.
In the States, building a power plant these days… even in sparsely-settled areas… is a crapshoot; it takes a long time to secure the permits and it’s expensive, never mind the environmental costs. In effect, Rocky Mountain Power is sharing with its customers some of the cost-savings it enjoys by not building more power plants.
Rocky Mountain Power could have chosen almost any cause for this campaign but choosing schools helps ensure wide participation; everybody is near a school. The mailing included a list of all Utah schools, so the campaign is almost idiot-proof.
The donation amounts are clear and the materials are quite good. The addition of the color photo of the girl in the classroom is a nice touch. The website is helpful and the name, “Cool Keeper,” suggests the American idiom ‘keep your cool,’ which means to ‘remain calm.’
No wonder Milton Friedman said, “Cool Keeper’s use of incentives is proof that cause-related marketing can work in many settings.”
OK, I made up that quote, too.
Labels: Cool Keeper, Milton Friedman, Red Campaign, Rocky Mountain Power