Why buy Another Electric Company?
Commerce Energy selling their business to Ambit Energy is a good thing. There are many electric companies in Texas right now struggling to stay in business and there have been dramatic changes on how some electric providers now compete for new business. A few electric companies have even stopped taking on new customers as they determine how to hedge the electricity they sell. Electric prices in Texas are so volatile it requires an electric company to have a lot of capital on hand and a disciplined fundamentally strong commodities trading desk. Ambit Energy is an MLM electric company which sells electricity through a large direct sales force. The sales force they have has to pay in each year (correction: only a one time $400 payment needs to be made) in order to qualify to continue to sell for Ambit as well as receive commissions. If you decide to join up with Ambit Energy to sell their electric service you will have to pay around $200 – $300 depending on the promotion they may have going on. This added money paid into Ambit just to sell the electric service helps keep a company like Ambit profitable with little risk and exposure to the volatile Texas electric market (these payemnts are fed back in to their sales force through bonuses and fast start commissions). Since it is risky to sell electricity in Texas as a new Texas electric provider it makes since to attempt to market and sell in the most affordable unrisky way possible. Ambit Energy has accomplished this and basically rode on the coat tales of Ignite Energy which started the MLM direct selling of electricity in Texas. Now Ignite Energy has seen a steady drop in enthusiasm while Ambit has become the name most heard when it comes to selling electricity as a home based business opportunity. Commerce Energy may have found themselves becoming unprofitable due to any number of factors. They may have not had enough capital for selling long term contracts because of skyrocketing electric prices, they enrolled too many credit risk customers who then defaulted on their electric bill, or some other reason, we really don’t know why they sold but Ambit is smart to buy them up and I will tell you why.
High Customer Churn Rate in the Deregulated Utility Service Markets
Ambit Energy, just like, Ignite, Excel telecom, Amway and similar companies like them many times experience a high customer churn rate as their followers who are also their customers and sales agents become dispassionate about the product or service they sell. They drop out of the company after a few years and do not attempt to resign their family and friends they may have asked to help them with their home based business opportunity. This is not always the case with this type of direct sales company but many times it is especially in the utility services industry. By Ambit buying up traditional seasoned electric providers during their succesfull period it may help them stay in business for the long haul. Without an outside marketing effort through tradional channels it may be hard for Ambit to keep the electric service customers in Texas they currently have.
MLM and Texas Electric Companies
Some of the other MLM work from home opportunities in the Texas electric service market are with Ignite Energy, Green Mountain Energy, Zurvita Energy, Affordable Energy, and Cirro Energy. New Age Power Brokers is a slightly different take as they are more of an affiliate program than an MLM company offering brokering opportunities to sell for Glacial Energy. Green Mountain Energy, Affordable Energy and Cirro Energy are tradional electric companies that have toyed with MLM marketing to try and increase their market share after seeing the huge success that Ignite Energy had when they started back in 2002. There are sources that claim Ignite Energy had at their peak close to 400,000 electric service customers.