Lodestar in Brief

Tim J. Smith, PhD
Founder and CEO, Wiglaf Pricing

Published January 21, 2004

Lodestar Corporation’s products solve a highly complex business process for power suppliers and transmission and distribution companies. They have produced load and customer management software for the utilities industry for over 25 years.

Customers

Lodestar’s customer base includes over 120 customers in the United States, Europe, Australia including some better known organizations such as Reliant Energy, Ital Gas, Alliant Energy, PEPCO, E.On Benelux, Hydro Ottawa, and ERCOT.

Sales Channels

In reaching their market, they have nurtured strong sales partnerships with Accenture, CGEY, Wipro, and SEMA as well as an executive sales team.

Size

While revenue figures are closely guarded for this privately held Peabody, Massachusetts corporation, Lodestar’s performance can be estimated through their 125 employee count.

Product Suite

Rich Creegan, Sr. VP of Global Sales at Lodestar, describes the product suite in relation to the challenges a power supplying company faces when transacting business in an open market.

A power supplier must construct offerings to attract customers, price offerings against customer loads using historical load profiles, and close the contract. The Pricing Expert supports the management of offerings.
Once a customer is acquired, the power supplying company needs to launch a series of messages to alert the market hub and other trading partners of their customer acquisition. Transaction Management Hub supports cross-business communication.
After supplying electricity, the supplier needs to manage and aggregate load data across a single customer’s multiple service points. During the post delivery settlement process, the utility also needs to evaluate whether they over-supplied the transmission and distribution grid earning a premium or if they under-supplied the grid and owe their trading partners. The Load Profile and Settlement System supports post-delivery settlement.
Finally, the power supplier needs to apply the correct bill rate factors and create the customer’s bill. The Rate Expert and Billing Expert support the customer billing process.

Growth Direction

Near term, Mr. Creegan, Sr. VP of Global Sales at Lodestar, reports they are applying pressure on three business areas: Organization Development, Customer Relationship Development in preparation of acquisitions, and Geographic Expansion.

First and foremost, as Sr. VP of Global Sales, Mr. Creegan is working to improve and expand sales execution globally. He is currently looking for an appropriate hire and has expressed high interest in expanding their sales presence in Far East Asia.

His second pressure is in developing Lodestar’s customer base into a customer asset. Mr. Creegan reported that Lodestar has made a recent acquisition in Australia and is currently considering further acquisitions to broaden their product footprint according to market demands. If Lodestar does make further acquisitions, their customer base will need to be transformed into a customer asset. The difference between a customer base and a customer asset is the ability to use existing relationships to facilitate the rapid market development of a broadened portfolio of products. A customer base implies a number of accounts with which Lodestar has at one time transacted business. A customer asset implies that relationships with these customers are ongoing and that these customers are willing to investigate new offerings from Lodestar.

The third pressure Mr. Creegan reported is to “solidify transition as international company while growing to a global company.” In Mr. Creegan viewpoint, there are three levels in which a company can operate internationally: (1) they do business abroad, (2) they have an international company presence, and (3) they are a global operation. The difference between an international company and a global company is the ability to produce intellectual property globally and respond to global market demands. While calling from Italy for our interview, Mr. Creegan reported that Lodestar was solidifying itself as an international company and developing into a global concern.

Posted in: Marketing
Tagged: communication

About The Author

Tim J. Smith, PhD, is the founder and CEO of Wiglaf Pricing, an Adjunct Professor of Marketing and Economics at DePaul University, and the author of Pricing Done Right (Wiley 2016) and Pricing Strategy (Cengage 2012). At Wiglaf Pricing, Tim leads client engagements. Smith’s popular business book, Pricing Done Right: The Pricing Framework Proven Successful by the World’s Most Profitable Companies, was noted by Dennis Stone, CEO of Overhead Door Corp, as "Essential reading… While many books cover the concepts of pricing, Pricing Done Right goes the additional step of applying the concepts in the real world." Tim’s textbook, Pricing Strategy: Setting Price Levels, Managing Price Discounts, & Establishing Price Structures, has been described by independent reviewers as “the most comprehensive pricing strategy book” on the market. As well as serving as the Academic Advisor to the Professional Pricing Society’s Certified Pricing Professional program, Tim is a member of the American Marketing Association and American Physical Society. He holds a BS in Physics and Chemistry from Southern Methodist University, a BA in Mathematics from Southern Methodist University, a PhD in Physical Chemistry from the University of Chicago, and an MBA with high honors in Strategy and Marketing from the University of Chicago GSB.