When will the Office of the Data Protection Registrar finally act? For months, as we have been pointing out since last summer (MW June 14 1996), it has threatened to take the utilities to task over so called “piggy-back mailings”. But, so far, with no result.
These mailings, which involve the exploitation of customer databases for the marketing of third-party goods and services, may seem an esoteric matter. But they represent hundreds of millions of pounds spent, or perhaps misspent, by the utilities companies on consumer databases, in pursuit of competitive advantage.
The reason for this feverish investment is, in a word, deregulation – which is both an opportunity and a threat to traditional utilities. On the one hand, their margins are being eroded by the advent of new competitors like Tesco and Sainsbury’s – and unsympathetic industry regulators who screw down consumer prices. On the other, new market flexibility enables electricity, gas and water companies to sell each others’ product – and potentially a great deal more besides. Mergers and acquisitions, for example, offer the prospect of improved efficiencies. Centralised meter reading, maintenance, payment schemes and customer service hotlines represent a few operational examples. But the same commercial logic can be applied, with longer-term benefit, to marketing in general and to third-party marketing in particular.
Unfortunately, exploiting customer databases for cross-selling in this way is illegal. Nor, in the opinion of the Data Protection Registrar, can the utilities circumvent the law by soliciting customer consent for third-party offers.
Why, in that case, are blue-chip companies like Scottish- Power (through its subsidiary Southern Water) and London Electricity flouting the DPR’s advice, while others such as British Gas’s Centrica and Sweb feel the need to play by the book?
The answer lies somewhere in a bank of fog more dense than that cloaking the opening chapter of Bleak House. Scottish Power believes it can proceed on the strength of legal advice; British Gas, likewise advised, does not (at least, not yet). Clearly, this situation cannot be allowed to go on much longer. It gives those with the stomach for potential litigation an unfair competitive advantage. It puts a pall over marketing activity in what is becoming one of the most dynamic sectors. And more tellingly still, it seriously discredits the authority of the Data Protection Registrar.
Perhaps taking the matter to court would be the best solution for all parties.