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November 01, 2010

Company Spotlight

Ambit: Ample Accolades and Awards

by Barbara Seale

Ambit at a Glance

  • Established: 2006
  • Headquarters: Dallas
  • Products: Electricity and Natural Gas
  • Markets: Texas, New York,
    Illinois, Maryland (Nov. 1), 
    Pennsylvania (Q1, 2011)
  • Revenue growth, 2007 – 2010: 20,369 percent
  • Employee growth, 2007 – 2010: 969 percent
  • Customer growth, 2007 – 2010: 7,916 percent
  • Consultant growth, 2007 – 2010: 728 percent

Honors and accolades seem to be a way of life for direct seller Ambit Energy. And why not? The company was built to excel.

Ambit’s latest award is one any company would love to receive, and not just for the sake of recognition itself. Inc. magazine named it the Fastest-Growing Private Company in America in its August 24 issue. The ranking measures revenue growth from 2006 through 2009. Ambit’s growth: An amazing 20,369 percent.

The Inc. magazine honor was the latest in an ongoing series of tributes Ambit and its founders have collected in the company’s almost five-year life. But it was far from the only one. Check out these impressive kudos from just the last two years: Ambit was ranked No. 1 in the prestigious SMU/Cox Dallas 100 for 2009, recognizing the fastest-growing privately held companies in North Texas (based on the years 2006–08); and it was listed as one of the Top 100 Places to Work 2009 by the Dallas Morning News and Best Places to Work 2009 by the Dallas Business Journal.

Jere ThompsonAmbit executives have received national acclaim as well. CEO and Co-Founder Jere Thompson Jr. was one of Ernst & Young’s Entrepreneur of the Year Award finalists. Chief Information Officer and Co-Founder John Burke was named to the CTO 25 List for 2010 by InfoWorld, and Computer World placed him in its Premier 100 IT Leaders in 2009.

Formula for Success

No wonder the company keeps collecting kudos. From the time Ambit was just a gleam in Thompson’s eye, he was determined that it would be a premier company, and he had the background to do it. He had entrepreneurial DNA, coming from the family that built the international 7-Eleven convenience store chain. He had also created and run a fast-growing telecommunications network company, taking advantage of deregulation in that industry. Because of his experience in that company, he knew he already had access to the fundamentals that would let a new company switch and bill energy customers. He saw a chance to seize the opportunity in energy deregulation, but he wanted to be smart about it. His big concern: How would this new company attract and retain loyal customers who paid their bills regularly?

Chris ChamblessA confidant told him that the best way to find such customers was through direct selling. His friend recommended a meeting with Chris Chambless, who had been a top executive at a telecom direct seller. The two met over lunch, their relationship clicked, and within days they agreed to go into business together with the shared goal of building the finest, most-respected company in America. Then they found Burke, who, as Chief Information Officer, created the unique technology platform that let Ambit Energy grow fast and flawlessly, even as it offered unique marketing options.

Then they started building a staff of the best and the brightest people they could find.

“We have a lot of smart people here,” now-Chief Marketing Officer Chambless says. “We believe strongly that every time you hire a person, you’re reinforcing your culture and either improving your IQ or detracting from it. Everyone has to be a cultural fit. It all translates into the ability to learn and perform.”

To create synergy between those bright minds and the brilliant technology at their fingertips, executives have created an environment where people can present ideas and act on the best of them. Add direct selling to that mix, and you’ve got rocket fuel.

“The two things that allowed us to be here is that we built a [software] system that anticipated a high volume of growth, and we picked a business model that is capable of producing it,” Chambless says. “They’ve allowed us to have the number of customers we have today. The direct selling channel is capable of incredible productivity. But you also have to have a platform that can support all that. We have a bucket with no holes.”

Developing Differentiators

That hole-less bucket is actually an information technology platform so sophisticated that Ambit trademarked its name: BlueNet™. It lets the company do more than switch and bill customers. BlueNet also lets the company offer a variety of enticing marketing programs that help set Ambit apart from its competitors in the energy market. When any of Ambit’s 80,000 independent consultants talk about its opportunity or its energy products, they can talk about things like free travel, free websites and even free energy.

Free travel serves a dual purpose. Ambit wanted its customers to have an immediate positive experience with the company. The company also wanted to arm its independent marketing consultants with a strong initial sales point. So it offers a welcome gift to customers just for enrolling. Currently, the gift is a travel voucher good for a free three-day/two-night stay for two at a three-star hotel. Ambit also tracks the kilowatt hours of electricity and therms of natural gas that customers use and then it credits customers with points toward discount travel. Cruises, airline tickets, travel packages—Ambit customers can earn points toward them every time they turn on the lights or fire up their gas cook top. And they do it while saving money on their energy costs. In its first market, Texas, Thompson says that Ambit saves customers 30 to 40 percent on their electric bills. In New York and Illinois, they guarantee a 1 to 2 percent monthly savings compared to the incumbent energy providers.

BlueNet also provides replicated, task-specific personal Internet sites for each customer that lets them refer their friends to Ambit. When the customer refers a minimum of 15 customers who pay their bills, the original customer receives a credit on his Ambit Energy bill equal to the average amount of their payments. If the average is equal to or more than the referring customer’s bill for the month, he pays nothing. What’s more, the credit applies every month as long as the customer maintains a minimum of 15 customers who pay their bills. Bottom line: Ambit customers can earn free energy.

“No one else in the industry is doing that,” Chambless notes. “I think part of the reason is they don’t have the technological capability to track and do it. But we’re a young company with a technology platform built for the future, instead of a legacy system.”

The same software that makes the free energy possible also enables the Ambit independent consultant who enrolled that first customer to be paid on everyone their customers enroll. That creates a deep layer of recurring monthly income. Some 8 to 10 percent of Ambit sales are referred by existing customers.

All those innovations attract not just customers but also consultants—the people who build their own Ambit Energy business in regions of Texas, Illinois and New York. Their interest begins with energy itself. Electricity or natural gas is a bill that many people choose to pay before any of their other monthly bills. And each and every month when their gas or electric customers pay their bills, Ambit independent marketing consultants get paid as well—on the bills of their own customers as well as the customers of consultants they’ve recruited and on customers their customers enrolled. It’s a recipe for rich potential.

Expanding Opportunity

“We benefit from selling energy,” Thompson says. “People are already using the product. We’re in an industry that has already been around for 100 years, and we offer non-discretionary services at a lower cost, pushing the service aspect of the business.”

Even though Ambit’s had tremendous success, the company’s plans for the future are just as impressive. At its Labor Day weekend convention, called Ambition, it announced plans for expansion into new markets and new customer bases. Ambit had always served residential customers exclusively, but the week after the convention, it launched small-business energy service in Texas, a move that lets them leverage the reputation and presence they’ve already built there.

“We think this has a lot of potential,” Chambless says. “It’s a huge, underserved market, and traditionally it’s expensive to market to them. But our consultants can talk with small-business owners and show them our value proposition. At the same time, that’s putting them in front of entrepreneurs. We think it will be good for us from a recruiting standpoint. They’ll be talking to motivated, goal-oriented, driven people. It has a lot of potential, both in terms of electricity revenue and also new consultants.”

Ambit also announced that it’s about to march into several new markets—no small thing. Energy deregulation is different in each state. Public utility commissions can decide to deregulate electricity or natural gas or both. And the geographic area they decide to deregulate can vary. In Texas, for example, electricity is deregulated in the whole state, except for a few areas, such as municipal power companies or co-ops. Texas natural gas is still regulated. But some states deregulate in much smaller bites—literally one incumbent service provider at a time. Entering any new energy market is almost like starting a new company. Ambit deals with each state’s regulatory system, incumbent energy providers and legacy billing systems. The system makes expansion a slow, detailed process.

But it’s worth it. The size of the U.S. energy market is a staggering $474 billion annually. So when Ambit announces expansions, it’s front-page news for both the company and its consultants. It announced expansion of its footprint in New York to include the Rochester Gas and Electric area. Ambit has expanded steadily in New York since it first entered the state in 2007. Then, on November 1, it will expand into the Baltimore Gas & Electric region, making Maryland its fourth state. In the first quarter of 2011 it will begin competing with the Pennsylvania Electric Company (PECO), serving Philadelphia and its suburbs. Ambit executives are especially excited about the Baltimore and PECO territories because they’re so near each other.

“Strategically, those two markets are linked,” Chambless says. “We’re excited about the synergies we’ll be able to create on the East Coast.”

Combined, the new territories alone offer an addressable market of $4.3 billion.

Great Expectations

To help their consultants run their business in an efficient, impressive way, Ambit launched a new iPad application at its convention. It lets consultants powerfully present the Ambit business opportunity to customers and prospects.

“I think it will change the way the business is presented,” Chambless says. “It allows people to do it the way they want to. It’s very interactive. It can calculate different scenarios based on what they can do and what their team can do.” He adds, “We want consultants to know that we don’t let good enough be good enough. We think that the use of the iPad gives the company credibility, and that it will be a phenomenal success.”

The introduction of the iPad app symbolizes the way Ambit has approached its business from Day One. The company focuses on doing everything better. For the direct selling star, the steady approach has worked. The company doesn’t set goals for such benchmarks as customer growth. Instead, it constantly challenges itself to find ways to operate better and more efficiently. The growth follows.

CEO Thompson notes that, during a luncheon at Ambition, he was asked about the company’s defining moments. He recalled recruiting Chambless and Burke, but the next one was probably unexpected for most in the audience.

“We had the group we buy electricity and natural gas from witness firsthand how we manage the operations of the business. We showed them screen shots of what we had developed from scratch,” he says. “They told us, you’re doing at six months what other companies haven’t even thought about. They signed up to be our partner. That wholesale provider relationship was critical to us at that point in time. It validated that the path we were taking in building systems from scratch, and the direct selling model they hadn’t partnered with before, were great paths.”

From that moment early in the company’s life to being named Inc.’s Fastest Growing Private Company in America has been a marathon run at a championship pace. Ambit keeps on running, putting one talented foot in front of the other at breakneck speed.
Thompson says, “After we got the Inc. magazine recognition, my dad [the former president and CEO of 7-Eleven Stores] gave Chris and John a call and said congratulations to you, but don’t take your eye off the ball. That’s the same thing we told the consultants at Ambition. Now isn’t the time to feel invincible. Now’s the time to refocus and get serious about your business.”

With three new markets opening up in the next six months, industry-leading technology and an opportunity as powerful as Ambit’s (pun intended), that’s good advice.
Chambless says, “We have a system that works for anyone who wants to do this.”


Warmer Markets Through Advertising

Ambit

Blank billboards became a branding boon for Ambit Energy.

About two years ago, as he drove his daily commute, Ambit Energy Co-Founder and Chief Marketing Officer Chris Chambless noticed something odd. A lot of the billboards he usually saw on his 40-minute drive were empty. Chambless had driven the route for years, but he

had never seen such a dearth of advertising along the way. The economic downturn was obviously having a negative effect.

But for Chambless, that represented opportunity.

“It was a good time to negotiate for the space, and that made it a good time to test whether advertising could move the needle for our business,” he says.

He discussed the idea of a market test in the Dallas-Fort Worth area with field leaders. Some of them were a bit skeptical, but Chambless was convinced that if he could introduce Ambit Energy to consumers in a way that helped create confidence and brand recognition, it could help consultants be more effective. He reached an agreement with the independent consultants that they would do a test that would be paid for by the corporation, and the consultants would then assess whether they felt that advertising helped them.

Ambit acquired billboard space, ran television ads and bought time in a few movie theaters before movie trailers started. It even tried transit ads on city buses. The results: An incredible 40 percent increase in recruiting and customer gathering in the DFW area, as compared with other markets. With those results, Ambit expanded the ads to its Houston market.

“It’s easy to take for granted the credibility that just being on TV gives you,” Chambless says. “Consultants who had approached people about being customers years earlier, but the prospective customer declined, were having those same people call them up and say, I saw your ad. How can I become customer? Even [Co-Founder and CEO] Jere [Thompson] and I had friends call us saying the same thing.”

Chambless is now trying to determine the right mix of advertising media that is cost-effective and gives the company the punch it needs. He acknowledges that competition in Texas is stiff, with many companies vying for the same customers.

“We believe 100 percent in word-of-mouth,” he says, “but it does help when a consultant approaches a friend or family member who has heard of the company. When we can help our brand stand out among other companies, it gives our consultants a competitive edge.”