Business Edge Resources, LLC Slide 1 Developing and Marketing Products and Services for Commercial and Industrial Customers April 19, 2006 E Source Major Accounts Service Summit Annotated and edited presentation to utility key account managers

Business Edge Resources, LLC Slide 2 Why Develop Products and Services? Help Customers Enhance stakeholder return Competition Justification is Easy – Execution is Hard!

Business Edge Resources, LLC Slide 3 Competing Market Factors Business Environment –Energy is small % of costs –Essential input –Fastest growing indirect cost Understand both environments - find the intersection Utility Environment –Risk aversion –Stakeholder Return –Rate Cases and Regulated Returns –PUHCA Top-of-mind strategic issue but may still be a lower priority Risk and return go hand-in-hand

Business Edge Resources, LLC Slide 4 Product Environment Spectrum Revenue DrivenSolution Driven Different Characteristics Different Focus Areas Different Risks and Considerations

Business Edge Resources, LLC Slide 5 Revenue Driven Characteristics –Product Management Orientation –Uniform product or service –One-to-many relationship Focus –Efficiency –Cost control Risks and Considerations –Can be effective in target rich environments –Prone to assumptions –Staffing “Here’s your answer. What’s your question?” “Track and Maintain” Lifecycle Management

Business Edge Resources, LLC Slide 6 Solution Driven Characteristics –Project Management Orientation –Custom solutions –One-to-one relationship Focus –Flexibility –Measured growth –Customer relationship Risks and Considerations –Blindness to market opportunity –Staffing “Market Myopia” “Build and Launch” Solution Developer

Business Edge Resources, LLC Slide 7 Product Environment Spectrum Revenue DrivenSolution Driven Different …but not mutually exclusive! Different Characteristics Different Focus Areas Different Risks and Considerations

Business Edge Resources, LLC Slide 8 Evolving the Product By evolving products from a customer, you – Respond to a defined and articulated customer need first Keep costs in line with revenues Avoid (or at least reduce) the risk of market assumptions Have more control over internal and external expectations Revenue DrivenSolution Driven The customer voice can lead you to sustainable products

Business Edge Resources, LLC Slide 9 Strategic Solution Development Customer Describe the pain Define the “box” Account Manager Actively Listen Translate Initiate Marketing Constructively listen Collaborate Innovate Delivery Design Build Commission Let customers drive product development Quality Check Validation Check Operational Check

Business Edge Resources, LLC Slide 10 Turning Solutions into Products Validate the solution Deconstruct the concept Unique or shared pain? Uniform or highly customized? Business Case Conclusion Jumping is not a Sustainable Strategy

Business Edge Resources, LLC Slide 11 Context for Listening Constructive listening means stepping out of your business and into your customer’s Know your strengths Know your weaknesses Know your competencies Know your relationships Then listen

Business Edge Resources, LLC Slide 12 Educating the Customer Convey value in their terms Speak to the audience –Decision Makers –Advisors –Operators Best sale? Customer buys without you needing to “sell”

Business Edge Resources, LLC Slide 13 Lessons Learned Reliance on others to make numbers Reliance on partners for delivery Key Account Managers Understand how the customer buys Manage Expectations Add value More than a hand shake – requires mutual commitment Don’t underestimate the value of due diligence You’re not alone – use your product managers with customers What is the process? Who is involved? What are the criteria? Under-promise and over-deliver Captive customers not enough – need captive demand Don’t abandon too early Don’t retain for wrong reasons Don’t expect huge margins by being a markup on a markup