And then he remembers a few more. Utility Week listens in, fascinated, as call handler Tracey works through his list with calm, patient friendliness, ending the call by making an appointment for him to have a smart meter fitted, giving him greater control over his energy use and hopefully driving down those energy bills.
We’re in Eon’s shiny, eco-friendly office in central Nottingham and Tracey, one of the dedicated team for Eon’s growing customer base of smart meter users, is a smiling embodiment of chief executive Tony Cocker’s vision to make Eon a “trusted energy partner” for its customers. A few more calls and we’re off upstairs to meet the man himself and discover whether his plans to refocus the business on customer service can survive the squeeze on investment, the political and media savaging ofÂ
suppliers, and the relentless rise of energy bills.
Tony Cocker is not your typical chief executive. Down-to-earth, friendly, fiercely intelligent, he doesn’t seem to possess the ego that usually goes hand-in-hand with a corner office. That may be why he was able to so quickly perceive that something was very wrong with the relationship between UK energy suppliers and their customers when he returned from a stint in Eon’s German HQ to take the reins in 2011.Â
“I read the FT and the business press from the UK,” he says of his four years’ abroad, “but just by doing that you don’t have an appreciation of the political and media climate and the hostility towards energy companies in general. So when I first returned, it was like looking from the outside in, and I was bombarded with that every day by reading the papers. Also in my first few weeks I spent time trying to get to know the organisation, going out with meter readers and fitters and spending time in call centres. You see that actually our colleagues really do want to help our customers. There’s this disconnect between what individual colleagues want to do internally, and the perception outside.”
So what went wrong? Cocker blames rising bills and the overcomplication of the market. “As an industry, we focused on the mantra of choice and choice actually led to complexity,” he says. “The industry historically has been engineering focused, so you focused on the power stations that needed to be built, and the wires, and not really on explaining that to our customers. Then the people who came into the industry came from different sectors where isn’t really such a vital component of your life. The so-called marketing disciplines came in and were around choice and innovation. Of course we do need some choice and innovation, but we’ve got to get the balance.”
Cocker decided that the situation called for a total reset of Eon’s relationship with its customers, and in January 2012 launched the “Reset” programme to do just that. A six-month initiative (“part of the culture change was to show we can move quickly”), it entailed a 28,000-strong customer panel, intense research with frontline staff and the launch of the customer council. Similar in many ways to the customer challenge groups currently feeding into the water sector’s price review, the customer council was designed to “hold a mirror” to the organisation, showing where it let customers down and how it could do better. Eon drafted in business big shot and former Asda chief executive Allan Leighton to chair the council, who was not a man to compromise. Staff across the business, from the front line to Cocker himself, reported back to Leighton and the council, having what Cocker calls with a smile “very challenging discussions”.
These resulted in tangible actions. Within the six-month programme and on the advice of the customer council, Eon reduced its electricity price by 6 per cent and simplified its direct debits, introducing automatic refunds for customers who were overpaying. It also ended the practice, widespread in the industry, of offering significant discounts to new customers. Cocker says: “Deep discounting seems to me to be fundamentally unfair because its offering a relatively large sum of money off to new customers, taking that away from existing customers – so we flipped that, to reward loyalty.”Â
Eon demonstrated political prescience with its decision to simplify and reduce its tariffs just a week before prime minister David Cameron’s intervention in the market. Under the “Best Deal For You” initiative, it now aims to offer every customer the tariff most suited to their circumstances.Â
The Reset programme lasted six months – “a long enough time in which to do some things, but a short enough time to really put the pressure on” – and Cocker is confident it was a success. Eon has since picked up much-prized accolades for customer service, including first place in the Uswitch customer satisfaction survey, though it declined to provide customer retention figures.
By the end of the Reset period, Cocker had fully assembled his management team and board, and they were ready to plan further ahead. “We spent some time with our teams reviewing our strategy off the back of Reset. What we’d inherited as a team was a much more complicated set of strategies. It was 57 pages and weÂ
simplified it down to one page,” he says.
That page could itself be summed up as “becoming our customers’ trusted energy partners”. As Cocker admits, it sounds deceptively simple: “We want to provide simple, fair, comparable products, at fair prices, and have great customer service; help our customers control and understand and manage their energy use and reduce energy waste; and run our operation as efficiently and effectively as possible. If we do those things then we’ll earn a fair profit.”
Eon’s retail results are looking good, giving Cocker a strong position. Profits in the UK retail business were up in the first half of this year, with Ebitda rising to £273 million from £238 million in the same period last year. Cocker puts this down to cost efficiencies as well as the higher demand occasioned by the long winter. Generation and upstream profits were significantly down, however, to £159 million from £399 million Ebitda, reflecting the closure of Kingsnorth power station and other changes in the energy mix.
Cocker has to deal with a number of factors outside his control: group profits are plunging as European utilities feel the squeeze, and energy suppliers in the UK are the favourite whipping boy of politicians and the popular press. Cocker himself has been hauled up before a select committee with fellow chief executives in a display of public pillorying. Meanwhile, Eon’s group profits are plunging in response to the European financial crisis -down 42 per cent year on year for the second quarter of 2013. How do these elements affect Cocker’s plans?
“It is always challenging to secure investment,” he points out. “The systems investment has been in our computer systems as well as in our training, and a lot of it is about making things simpler internally. If you make things simpler then although it costs to invest, in the long run it is less costly to operate.”
Cocker is similarly balanced in his comments on the political situation. Asked about the select committee hearing, he allows himself a brief smile before replying: “I think that’s just part of the way that political discourse works in the UK. If you want to run a business or be senior in a business like this then that’s part of the territory.”
Dealing with the Byzantine minutiae of energy policy is also part of the territory, and Cocker has gone public with his concerns on the carbon floor price. Today he emphasises the importance of making sure contracts for difference run for long enough to balance price pressures with return on investment. He acknowledges that the recession has changed the dialogue around Europe’s carbon reduction targets, but believes it is too late to move the goalposts. “Five or six years ago, the debate was around whether we’re going to meet our sustainability targets. There was very little discussion of the cost of meeting them. Now it has flipped and the cost, the affordability for customers, is very, very important.” Could we move or change the targets? “It’s too late. From an investor point of view, consistency of policy is really very important – 2020 is really quite close.”
With that in mind, what does Cocker want to achieve in his tenure as chief executive, and how far has he come? “We set out on a three-year journey as a team to really simplify everything that we do and make it much easier for our customers. I would say we’ve made good progress, so come back and let’s have a chat in a year’s time,” he says. We’ll be there, eager to see if doing the right thing can really translate to a competitive advantage in today’s stormy energy market.
This article first appeared in Utility Week’s print edition of 27th September July 2013.
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