Utility Companies: prioritising relationships with customers not shareholders.

Utility Companies: prioritising relationships with customers not shareholders.

British Gas & E.On both announced this week that they are changing the way they have a dialogue with their UK customers.

Quite right.

Energy markets are relatively straightforward – companies buy the product and supply their customers. Their customers use the product and pay for it. There is variability in price of the product  that the suppliers pay (usually in advance) and different ways the users can pay (before, during & after use).

However, by chasing increasing returns for shareholders, utility companies have over-complicated the market and lost the trust of their customers leaving them confused and, increasingly, disillusioned. Their biggest sins being

  • Ridiculously complex tariffs – 400 different ones – and complicated bills
  • Aggressive cross-selling
  • Inconsistent & apologetic messages

The relationship between company and customers have eroded significantly over the past few years as the economic slump hits our pockets, 21st Century branding offers clear guidance for regaining trust for service companies and these big energy companies have got great advisors. One of them would have a chance to take a competitive lead in their market by improving their relationships with their customers – by providing better experiences, by building trust via simplicity and transparency.

But it has taken their regulator Ofgem to mandate such change! “As part of urgently restoring confidence we are calling on all suppliers to get behind Ofgem’s reforms to deliver what consumers tell us they want – a simpler, more competitive energy market,” said Ian Marlee, of Ofgem.

So 2012 should see relationships improve. We will be looking for honesty, transparency, simplicity and a proper dialogue with customers. Let’s see. 21st Century brands depend on a consistent rewarding experience from the customer’s point of view – not raising profits for shareholders at their expense.

Phil Bentley (British Gas MD) made a good start last night on the BBC. He announced they “hadn’t made it easy for customers to trust them” – Honesty. He also admitted they had subsidised some tariffs in order to get to the top of comparison sites.  He said their customers should have 2 tariffs, variable or fixed – simplicity. British Gas had also secured a deal with Norway’s Statoil that could help insulate against future price volatility.

Mr Bentley spoke clearly and positively, He was believable and honest.  A good start. He said he was “committed to having an honest conversation with his customers” – that sounds like start of the dialogue the company needs. But it’s a start. Everything that touches their customers has to now reflect it.

The proof will be found out in a year or so when the changes are embedded and if his customers begin to trust British Gas again. If they do, they will steal a march on their competitors. E.On says they need 6 months to review everything in order to change. That may be too long.