Energy retail companies have long been slated and vilified by politicians and the public for keeping disengaged “sticky” customers on high tariffs. And a total of 12 smaller suppliers going out of business in as many months has not only served to further damage public opinion of the energy sector, but has caused them to question the regulator’s ability to keep the industry in check.
The energy networks – traditionally the “silent” energy providers – have also found themselves in the spotlight recently, facing questions over their profits. There is now even talk of renationalisation of the sector (see Utility Week, 1 February).
Water companies, too, have found themselves in the unfamiliar territory of public scrutiny, driven largely by a dire warning from environment secretary Michael Gove early last year that “public concern about the way the water industry operates is growing.” His onslaught resulted in several water companies – including Anglian, Yorkshire, Southern, Thames and Affinity – closing down their Cayman Island subsidiaries in an effort to improve transparency and rebuild trust with their customers. Not because the subsidiaries were doing anything wrong, but simply because they looked bad to the public.
Meanwhile, companies in sectors such as telecoms seem to be able to get away with charging much higher prices without receiving the same level of PR flak. Despite the negative public perception, utility companies are also doing a great deal of good, so how can they communicate this and redress the balance?
Build your brand
Public image is difficult to change. It takes more than one good turn to throw off a negative reputation. Fridrik Larsen – chief executive of consultancy Larsen Energy Branding – insists that a positive image “must be earned”, and building a strong brand is a good place to start (see opposite page).
“Public image is sketched in the minds of the public in seconds, with the sketch affected by everything people know about the brand,” he says. “In a split second, people judge a brand by everything they know about it – from their own personal experience, from what other people have to say about the brand, and from coverage of the brand.”
So what should utilities do to improve their image? The best way of creating a positive public image, Larsen suggests, is by developing a brand that “communicates effectively and builds last relationships with the public”.
Ben Quigley (left), group chief executive at brand and creative agency D.fferent, says that while price is an important factor for customers when choosing a utility provider, putting the corporate focus on cost disregards the power of a strong brand. “It’s an error that many companies make,” he says. “Finding a distinctive voice in a functional market such as utilities and becoming memorable across all stages of the customer journey is vital.”
What’s more, companies with a clearly defined purpose are likely to be a great deal more successful than those without one, especially if they can get consumers and the public to buy into that purpose.
Talk to your customers
Having a good relationship with customers is key to a positive reputation. Abbie Sampson, Energy UK director of external affairs, says: “A good reputation is hard to earn but easy to lose. So while the energy industry is working hard to increase trust, it also knows that this won’t happen overnight and can only come from doing the right thing consistently.”
Greg Jackson, chief executive of Octopus Energy, agrees. He says that people’s personal experience of a company is what shapes their perception of it. “Many people say ‘if only they knew the real me,’ but that’s a myth – the ‘you’ people experience is the real you. It’s the same in business. I often hear people from legacy utility companies bemoaning their public perception. But the reality is that people’s experience of companies shapes their perception.
“If you have opaque pricing, provide poor service (compared with the best sectors, not your own past) and use every trick in the book to get customers onto high tariffs, you will be untrusted. This is an existential issue for sectors like energy. We are on the verge of monumental change, driven by digitisation and decarbonisation.
“Earning trust from the public, press and policymakers is the only way we as businesses can justify a leading role in shaping the new market. Failure to do so will lead to Blockbuster-like failures, but those who can emerge as consumer champions and value-driven innovators can be the Netflixes of this new world.”
Rob Doepel, UK and Ireland energy market leader at professional services firm EY, says many large energy companies do good work in communities, and always have. However, they don’t always get the recognition they deserve for it because they don’t shout about their purpose. “Companies which lead with a strong purpose often have a better conversation with their customers and wider stakeholders,” he says.
In the current price control – PR19 – Ofwat expects a “step-change” in the way companies are engaging with their customers. Carolyn Cooksey, head of customer insight at Anglian Water, says that, if they are to get customers to trust them and believe they genuinely have customer interests at heart, the water companies must show how they’ve listened to their customers and acted on their views.
Like other water companies, Anglian claims to have already made meaningful customer insight and engagement a “crucial part of its business planning process”. What the sector needs to get better at is showing how that engagement then changes what it does. “Our services are vital for customers, the local economy and the environment,” Cooksey points out, “so why would we not reflect all of these stakeholders’ needs in our plans and actions?”
Luis Correia da Silva, partner at consultancy firm Oxera, says the foundations of a company’s public image are built on trust, and trust is fortified through communication, engagement and commitment.
He believes that UK utilities have come “a long way” in considering all sources of capital, including social, human and natural, and this is “clearly articulated” in their business plans. “They are far ahead of other industries such as financial services and big tech,” he adds.
However, Correia da Silva suggests that utility companies need to put more focus on explaining what they are doing and how much societal value they add if they are to improve their public image. “Communication should come in the form of firm commitment at strategic level, and be practised through the organisation,” he says. “Lack of meeting such commitments damages reputation and trust in utilities.”
Sell your successes
Water companies are doing a great deal to tackle environmental issues, but they are, in many cases, failing to fully sell their successes. It will take more than just doing good things to improve public perception.
Historically, the water industry has placed a huge focus on “big numbers and big, grand ideas”, says Bristol Water’s chief executive Mel Karam. He believes, though, that big numbers don’t always mean that much to ordinary people and local communities. “We believe that it is the little but personal things that matter to people, and we need to look at a local approach to water to capture public imagination,” he says.
Bristol Water recently launched an “industry-first” social contract, which puts local communities “at the heart of board decisions”, and “brings the local communities voice into our decision-making”, says Karam. “It is unique because it has consequences where we need to change as society does; if we fail to deliver on our social promises, then we agree with our communities the actions we will take, as well as compensating customers for our failings.”
The energy industry, too, needs to shout more about its achievements. Paul Massara, chief executive of energy blockchain business Electron and former head of Npower, argues that the sector must talk more about what it provides for the economy, jobs and how it is playing a “crucial role” in decarbonisation – first in generation and now in transportation. “We also can take for granted all the engineers and technicians who keep the lights on, the power stations working and the grids functioning,” he says.
SSEN’s managing director Colin Nicol agrees. He tells Utility Week that the industry, particularly energy networks, don’t communicate the good things they’re doing enough. “This is a high-performing industry and we need to do more to engage and inform the public about it,” he says. “Network reliability is higher than ever before, costs on bills are lower and customer service is greatly improved. Importantly, we’ve achieved all this while progressing key innovations and investing billions in new infrastructure, enabling gigawatts of clean generation to support decarbonisation targets.”
But networks must do more, he believes. “As impressive as this track record is, we must look beyond delivery and recognise that, as providers of an essential service, society expects even more from us. The public want to know that big business is playing by the same rules as everyone else: paying the taxes due, at the right time and in the right way; providing a decent living wage and investing in a skilled workforce; and using fair returns to invest responsibly in the networks of tomorrow. Demonstrating delivery in the public interest has to be at the crux of what we do.”
Harness new technology
Energy companies are evolving into something more than just the providers of electricity or gas. An abundance of technological advances in recent years is driving change in the way energy companies in particular interact with their customers.
Speaking to Utility Week’s sister title Flex recently, energy and utilities expert at PA Consulting Ted Hopcroft said companies will need to increase their use of technology to empower customers.
Electron’s Massara says that although consumers and the public have recently lost faith in the retail side of the market, new technology offers a chance for companies to rectify the situation. “The transition from selling kilowatts and therms to selling energy as a service and using greater data to delivery insights and tailored products is under way, with new entrants creating new offerings,” he says. “With greater engagement from smart data, electric vehicles and new technology such as batteries, then hopefully a new, deeper relationship with consumers will develop and the industry can once again be fully respected and valued for what it does behind the scenes every day.”
EY’s Doepel agrees. He thinks energy retailers are “turning into something new”, as smart meters are rolled out and the number of electric vehicles grows. He suggests that the monumental change the sector is about to undergo gives energy companies an opportunity to get on the front foot. “There are some things they could be doing more of,” he says. “They’ve got more products and services they’re going to be able to deploy into the market, such as homecare, family care and elderly care products – things that offer security and peace of mind.”
Doepel believes this will change an energy company’s role in the lives of its customers from just money collection and home management. “Broadening the conversation away from direct energy will be key for companies,” he says.
Image must be earned
Brand Fridrik Larsen, chief executive, Larsen Energy Branding
Public image sounds, to most people, like something superficial that can be corrected with a good campaign or by supporting a good cause. But public image is, in fact, a complex construct. It is not a painting that can be commissioned from a skilled painter; it is not enough to paint the image – the image must be earned.
Public image is sketched in the minds of the public in seconds, with the sketch affected by everything people know of the brand. In a split second, people judge a brand by everything they know about it – from their own personal experience, from what other people have to say about the brand, and from coverage of the brand.
The best way of creating a positive public image is through a brand that communicates effectively and builds lasting relationships with the public.
The challenge of building a positive public image is twofold. One is finding the essence of the brand you are or want to be. The other is to get everyone inside the organisation in line with what the brand is and how it behaves. If outsiders don’t have the same experience with the brand at all touchpoints, then the quick sketch that forms the public image becomes confusing and negative. A positive image that is reflected to the outside must be built brick by brick from the inside of the utility, and the cornerstone is put in place by top management who need to lead by example.
In the long run there aren’t any quick wins: it takes time to shape a brand and then to implement it. But once a positive public image has been set, retaining it is a task that lasts as long as the brand lives. Brands need to stay relevant in people’s minds. They need to be monitored, fed and nurtured to be able to adapt to changing expectations and trends.
Listen and learn from customers
Marketing Ben Quigley, group chief executive, D.fferent
Price is, of course, a key factor for customers choosing a utility provider, but putting the corporate focus on cost disregards the power of a strong brand – it’s an error that many companies make.
Finding a distinctive voice in a functional market such as utilities and becoming memorable across all stages of the customer journey is vital. Therefore, when marketing efficiency is the focus, cutting the marketing budget, which is a common occurrence among big brands with high market share, destroys the foundations for brand success. In order to be successful, you need to target everyone who buys into the category, customers and non-customers alike, with creative ideas that will appeal to them.
Campaigns that include paid media are three times more effective than those with only earned or owned elements. Contrary to popular opinion, owned content generally demands paid media exposure to gain attention.
Customers’ preferred touchpoints are the spaces that brands should be seeking to occupy. Programmatic advertising allows brands to reach audiences with different messages at scale. By identifying audience splits and triggers, and developing specific messages for each split, brands can customise aspects of the creative within a central campaign without the need to run multiples.
Face-to-face research and customer data analysis are pivotal in identifying common motivations, goals, behaviours and preferences that collectively form a persona. In order to truly effect behavioural change, utilities need to identify their customers’ motivation and triggers, allowing brands to better understand their customers.
Taking the energy sector’s own research as an example, older people feel that utilities companies don’t know what they want. A shift in marketing strategy is therefore required to reach these consumers and help change their perception of brands in the category.
This means getting a better understanding of what channels matter to them and what kind of content will help them. This, in turn, will allow brands to target them with the right messaging at the right time, through the right channel. Whether it is through analysing the links that customers click on emails, the tonality of social media conversations, or browser activity, brands can gain valuable insight into making the customer journey as friction-free as possible.
What it all comes down to is helping your customers. Creating a communications strategy that deploys the right message at the right time through the right channel across the entire customer journey is pivotal if utilities wish to remain relevant and connected to their target audience. Understand people’s triggers to know when and where to target them; start conversations rather than merely telling them what you think they should know.
Put the environment on a par with other business priorities
Water Hannah Freeman, chair, Blueprint for Water, and conservation policy officer, Wildfowl & Wetlands Trust
While the water sector still has work to do, our latest scorecards have revealed a welcome step-change in environmental ambition in companies’ new PR19 business plans that can also deliver a step-change in their reputations. So how can companies best demonstrate their good environmental work to their customers?
First, water companies have listened, and responded, to their customers’ passion for improving nature. Companies that have consulted their customers around their new business plans have found that the environment was among their customers’ highest priorities. Seeking their customers’ input into the direction of their working plans is a key move in demonstrating that their priorities are aligned with those of their customer base.
The likelihood of success for water companies’ projects – with all the customer satisfaction that can bring – gains a boost when the companies work with expert environment organisations. From delivering transformative projects on the ground to joint-lobbying government, collaborating with much valued and expert groups means that the projects water companies work on are more likely to deliver environmental successes that their customers will see and appreciate. Working closely with respected independent organisations can also enhance the visibility of environment commitments.
But making a real organisational shift to put the environment on a par with other decision-making priorities is key to improving utilities’ environmental credibility. Putting the environment at the core of businesses decisions will affect organisational choices, and customers will recognise this – any real change in public image will come from a change within the company ethos. This may be a barrier that some water companies come up against, with many still not routinely factoring natural capital into their planning.
Ultimately, if they want to change their reputations utilities also have to meet the scale of the challenge. With our environment under rising pressure and nature increasingly at risk, we need to find truly ambitious and innovative solutions to address many utility-related issues, solutions that integrate natural processes and restore the environment.
Doing so will not only gain companies recognition for being guardians of our treasured wildlife, landscapes and environment, both in assessments like our scorecard and with their customers, it will also help to guarantee the natural resources they need for a thriving business in future.