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Four years and approximately $2 billion in total revenue after he and his business partners started Ignite, Founder Chris Domhoff is glad he took the risk.
Ignite is the direct selling arm of its parent company, Stream Energy, which provides customers with electric service in Texas and natural gas in Georgia. The products offered in each state depend on what type of energy is deregulated in that state.
“Ever since I was an executive in the telecommunications industry and saw what deregulation did in that industry across the country and internationally, I always had my eye on the deregulation of energy,” Domhoff says. “In 2004, when we were putting our business plan together, there were about a dozen states that had deregulated either electricity or gas. We thought that was great timing for us to jump into the Texas market.”
Ignite’s parent company Stream Energy went through the rigorous process of obtaining its retail electric-provider license in Texas and went into business in 2005.
Launching a Field of Dreams Though going into business in just one state might seem conservative, consider this: Texas is the 11th largest energy market in the world, right behind Great Britain. Texas residents crank up their air conditioners to battle the state’s heat, which typically reaches 100 degrees and higher several days each summer.
But electric deregulation was new in Texas, and many people didn’t even know they had a choice of providers. The timing was perfect for a new network marketing company to educate consumers.Enter Ignite.
“We thought we had a smart business plan when we launched Ignite,” Domhoff says. “We thought it would work, but just because you build it doesn’t mean they’ll come.”
But they did come. In 2005, when Ignite began selling power through its first independent associates, only about 10 percent of Texans had switched from the incumbent provider, which was determined geographically. Today, 50 percent of Texans have switched.
“A significant amount of those switches are because of Ignite, because of the network marketing approach,” Domhoff says. “We basically educate people on the benefits of electric deregulation and that they might be able to save money with us.”
Prospects are drawn to the Ignite opportunity for several reasons. First, energy is an essential life service. And the energy bill, whether it’s for gas or electricity, is one of the first that consumers pay every month. And when they pay that monthly bill for Stream Energy, an Ignite associate earns a commission. That residual income is a key reason why Ignite’s opportunity is unique. And Ignite’s parent company Stream Energy offers highly competitive rates—typically some of the lowest in the state.
Ignite associates don’t need to carry a product inventory, and they don’t need to convince customers to sign up for auto-ship. Essentially, Stream auto-ships energy to its customers every month—every time they turn on the lights, heat the stove or take a hot shower.
The key to the business is recruiting because associates bring in customers who drive revenue. And Stream works hard to make that decision easy, providing customers with award-winning customer service and a multibillion-dollar company to support their needs.
“I believe in a simplified business plan, so independent associates don’t get confused with dozens of products they have to educate themselves on,” Domhoff says.
The approach works. Ignite has recruited more than 100,000 independent associates (IAs) in two states—the company expanded into Georgia last year—and has enrolled several hundred thousand customers. They’ve produced approximately $2 billion in revenue during their first four years in business—more than $800 million during 2008. And the company has already produced four million-dollar earners.
“The opportunity is extremely appealing,” Domhoff says. “If there is a recession-proof direct selling company out there, it would be Ignite because of the services we provide. People pay their power bills first because they want to have power and heat in their homes. I feel fortunate to be in this position since so many people out there are hurting, and Ignite offers them an opportunity to earn an ancillary income through the energy market—one of the most dynamic and attractive business sectors in the world.”
In just four years, Ignite has had several key accomplishments: First, combining a utility with a network marketing company. And second, seeing field leaders mature and evolve as they see the benefits of Ignite’s residual income. The company has continued to build an infrastructure to support its field salesforce, including an associate-support department and a customer-loyalty division that automatically contacts customers when their contract expiration date is near. Those employees are part of the roughly 350 in the Ignite/Stream Energy corporate headquarters, which started with less than a dozen in 2004. The Stream Energy name appears on the company’s building, where the company initially had just 300 square feet of office space but now has 100,000 square feet.
Perhaps most important, the company expanded into a second state in 2008. It now markets natural gas throughout Georgia. Managers made a strategic decision to move into a state where natural gas, rather than electricity, was deregulated.
“One of the reasons we wanted to go into Georgia was because we wanted to learn about the natural gas market,” Domhoff says. “We’ve become experts in the electricity market, and we wanted to become efficient in the gas marketplace. Through our experience, we can bundle those products and take them to states where both are deregulated.”
He says Ignite plans to enter a third state this year and additional states in 2010. In each of those markets, as well as in Texas and Georgia, it will recruit new associates, who will enroll customers.
One of the things that Domhoff is most proud of is the diverse nature of the Ignite associate community. “The youth movement is very important to us as a company,” Domhoff says. “Our No. 2 money earner is 29 years old. I think we attract a youthful demographic because we are a cutting-edge opportunity in the energy industry. Not the same-old, same-old. And we’ve put a tremendous emphasis on attracting Hispanics to this opportunity.”
Domhoff actually spoke with Direct Selling News while he was in South Texas on a statewide tour.
“There is a large population of Hispanics in this market, and we’ve penetrated the southern part of Texas extremely well, both from an independent associate perspective and a customer standpoint,” he says. “All the materials we use for this opportunity, including our Web sites, are available in Spanish. We also bill and provide customer service in Spanish. We feel like we’re growing that market extremely well.”
No matter which demographic the associates represent, Ignite empowers them with comprehensive, up-to-date training as they start their new business and at key points as they progress. Experienced Ignite associates conduct Quick Start training at every meeting and business presentation. From there, a new associate moves on to Power Plan basic-training events, which the company hosts monthly in markets across Texas and Georgia. Associates in each state receive the same training so they can develop organizations in both states. It lets them learn about both types of energy: electricity and natural gas. They receive a Power Kit, which includes a Power Plan training workbook
and accompanying DVD.
Power Plan training modules are also available online, allowing associates to complete them at any convenient time.
Ignite offers a certification program for associates who complete the video modules.
“There’s no penalty if you don’t complete the workbook or video training,” says Ignite’s Senior Director of Marketing Operations Doug Witt. “However, when you receive a certification, you are acknowledged as a trained director. Through our back-office system, upline leaders and peers can track who is completing their certification. That gives them the opportunity to provide support and encouragement.”
Witt notes that associates who complete training and become certified are typically more engaged and have a significantly higher rate of success and retention than those who don’t.
Beyond the basics, Ignite conducts intensive quarterly training called Ignite Academy. Held in major and secondary markets in each state, Ignite Academy gives associates a better understanding of the energy industry and Ignite’s compensation plan. The academy also improves their ability to explain energy facts to customers, recruit new associates and make the most of Ignite’s compensation plan. The result: Associates’ confidence soars, and their businesses become, well, electrified.
And, of course, associates learn from their leadership and their peers. From weekly webinar training to the learning-, recognition-, motivation- and fellowship-charged atmosphere of the company’s annual conference, Ignition, training opportunities are everywhere. Associates can find classes on anything they need—from the energy business to business building.
“People don’t have to be energy experts to do our business,” Witt says. “They just need to understand some basic deregulation information. It’s definitely more important
to understand that it’s a people business.”
Ignite supports that people-focus by providing proven step-by-step advice and instructions that lead associates to understand that the business is about relationships, not rates.
“We offer competitive services that save customers money, but that’s almost beside the point,” Witt says. “Even if the price were the same, we’d still ask people to become our customer. We focus on the relational aspect of the customer connection as well as the team-building side. This business creates lifelong friendships.”
At Ignite information is power, so in addition to supporting training, Ignite’s online systems include state-of-the-art tools and resources for associates to report, prospect and manage their businesses. Upline leaders know that when new people come into the business and become certified, they can manage and run a myriad of reports to communicate with and manage their organization.
Witt explains, “For instance, a leader can sort all the way down to the associates in each county, so that if they’re traveling to a city or county, they can e-mail the people in that area. They can even filter it by rank. And they can track who has earned bonuses or are close to the bonuses and provide support for them.”
Ignite also offers associates a personalized, replicating Web site and even a Prospecting Center—an online introduction system that lets associates e-mail video messages to prospects. Both are effective, convenient, no-pressure ways to let prospects review Ignite’s rate plans and business opportunity.
Tools, training and events fire up associate activity, keeping them engaged and motivated. Domhoff believes in doing as many field events as possible.
“I really believe in the ‘rock in the water’ theory,” he says. “Throw the rock in the water, and the ripple effect from the rock stimulates activity. You know you’ll inspire people to do things. We try to make the business fun.”
Ignite runs new promotions each month for independent associates so that the business never becomes stale.
“On the first day of every month it’s exciting for IAs because they don’t know what I have up my sleeve, with respect to new promotions,” Domhoff says. “And from a retention perspective, it’s always important to do special events in the field. I’m very proud of the fact that, between Texas and Georgia, we have approximately 100 meetings each week that really help fan the flames and keep people’s interest piqued all the time.”
Interest and retention numbers are extremely strong in Ignite’s corporate office, too. Domhoff is proud that in four years, very few people have left the company. The turnover rate among his direct reports: zero.
“I like to believe that people are happy in their work because I give them the ability to make decisions and they get to work with our field leaders,” he says. “Nobody says this has to be boring. This is supposed to be a fun business, and we try to keep a light mood in the office. We’re not perfect, but at the end of the day, we’ve made some really good decisions along the way.”
Domhoff and his team work hard to balance the needs of the company’s IAs with the challenges of the ever-changing energy market. He admits that the task is challenging, but it’s also worthwhile. As Domhoff reflects on the time since Ignite’s launch in 2005, his favorite memories aren’t of the awards and recognition that Ignite has garnered—though there have been many: awards for innovative customer service, entrepreneurship and rapid growth, to name just a few. Rather, his favorite memories are more personal.
“Sending out our first run of residual checks to IAs basically told me that my vision and the goal of a residual-based compensation plan were working,” he says. “But my other favorite memory was when a young couple in East Texas came up to me and said that they had lost their jobs, but the residual check they were receiving from Ignite was putting food on their table. That was not only emotional, but humbling, to say the least.”
Back-to-back hurricanes Katrina and Rita gave Ignite an opportunity to grow up fast.
When they roared through the Gulf of Mexico in 2005, the two mega-storms wreaked havoc on the oil rigs and drilling platforms that produce natural gas there. The price of natural gas is the primary driver for the price of all types of energy, and the platforms in the Gulf are a key source of natural gas.
A young company, Ignite was faced with a spike in its costs. During its first year in business, it had to make a tough decision: raise rates due to the catastrophic event or tough it out. Texas law allows energy providers to implement emergency pricing after a catastrophe at any level they require to stay in business.
“But we had just launched our company, and we had switched over 40–50,000 customers at that point,” says Ignite Founder Chris Domhoff. “These people were the customers of our independent associates—their friends and family. We decided that we just couldn’t exercise that emergency clause. We never raised prices on those customers because we thought it was better for the independent associates in the field.”
Domhoff says the moment was critical in Ignite’s evolution as a company. Early in its life, it saw the ebbs and flows of the energy market and had to quickly learn how to protect itself during such catastrophes.
“We got a tremendous amount of mileage from that decision from our independent associates,” Domhoff says. “From that single choice, tough as it was at that time, associates could see that we were for real. They knew that we were a company of our word because in that difficult situation, we were being very ethical with our customers.”
When he considers the Ignite Opportunity, Founder Chris Domhoff says five core principles are near and dear to his heart.
The most fundamental activity of all is recruiting.
More independent associates mean more customers.
“This is a by-product of our first core principle,” says Domhoff. “The more we grow, the more residual income passes through to our associates. Right now, we’ve been very successful in Texas and Georgia, but we want to continue to expand into other markets so that IAs can enjoy the benefits of more residual income,” he says.
Ignite applies the principle to independent associates as well as to customers. “We are proud of the world-class service our Associate Support and Customer Care teams provide to our associates and customers,” Domhoff says. “We are committed to providing excellent service in all areas, from answering phone calls quickly to ensuring accurate and clear bills.”
Domhoff says that Stream Energy is always introducing new energy products (such as fixed-rate plans, green plans and other value propositions). They’re also planning for the future, considering new products they can bring into the fold from outside the energy market.
Domhoff is proud of the culture that Ignite has created over the last four years. One of its most important aspects is the creation of dozens upon dozens of weekly meetings throughout Texas and Georgia where people can share the Ignite opportunity. It also holds special events every month, along with an annual conference that attracts several thousand people. “Continuing to build on that
culture is incredibly important in network marketing, whether it’s how we recognize, compensate, run promotions to make it easier for IAs to do business, or develop effective training to help them grow. We’ve grown by leaps and bounds in all those categories.”
