Ambit Energy buys Commerce Energy
ByWhy 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.
3 Comments
November 14th, 2008 at 12:45 pm
I’d like to take exception to something you stated in your article regarding Ambit Energy. The initial cost to become an Ambit Consultant is a One Time Out of Pocket expense of $429.00. We don’t have to re-up each year to remain qualified. You have us confused with Ignite’s plan. However, in fairness, I believe in response to Ambit, they (Ignite)discontinued their practice of an annual re-qualification requirement.
Another erroneous statement made was that the initial fee paid in to become a consultant adds to Ambit’s profit margin. Reality is, 100% of that money is paid out in Bonuses to the field.
Probably the biggest factor in our profitability is our Patent Pending Proprietary Energy Purchasing system, designed by Jere Thompson. This system allows Ambit to forecast our energy needs with a 1% margin of error. This compares to the industry average of around 20% for other providers.
In addition, our customer acquisition costs are virtually zero, because Ambit doesn’t spend millions of dollars advertising. They pay commissions to the field only when a customer pays their bill. Therefore, no money is wasted on hopes of acquiring customers. We don’t get paid unless we actually acquire a customer AND they pay their bill!
On the subject of stability, Ambit has been chosen to partner with Dutch Royal Shell, the third largest company in the world, 2nd most profitable. This alliance gives us the ability to purchase electricity up to a year in advance. Many companies struggle to buy it two months in advance as is required by the PUC.
Also, by the way one other key difference between Ambit, Ignite and Zurvita…Ambit is the actual Retail Electric Provider, not a marketing arm reselling another company like Zurvita and Ignite. Zurvita is marketing for MX Energy and Ignite represents Stream Energy. Ambit is just Ambit.
Hope this clears up some of the mis-information.
Thanks for the opportunity to set the record straight!
Terri Hammack
National Consultant
Ambit Energy
December 28th, 2008 at 2:28 pm
Thank you Terri, for your verification. I just wanted to know pros and cons between these companies before making decision.
November 19th, 2009 at 3:27 pm
Terri,
You speak like a true MLM’r. Ambit energy is a joke and a scheme. Anyone who would pay $427 just to sell their product which they are ALREADY making a good profit from is ludicrous. You all should be shot. Oh and by the way Ambit is NOT the ONLY one who has partnered with Royal Dutch (Shell). There is another who has Star Tex. Do not unwisely spend your money buying that Ambit crap. Just to put things into perspective for you.
Say a company or residence is paying 10 cent per kilowatt back in 2007 and they signed a contract or are going month to month (makes no difference). This year in Texas depending on which part you live (some areas lower or higher than others) you can get rates for 7 cents. So this is where they really nail you BESIDES the entry fee you pay of over 400 dollars. So they can sign you up say for 8 cents per kilowatt per hour. That means they tagged 10 mils on it. And let me tell you folks 10 mils on something is substantial depending on how much they use.
In my opinion you guys working at the bottom for either company are SUCKERS and those at the top can burn in hell. My hats off to you for getting people sucked in but seriously f u.