Energy companies search for a spark

Record oil prices last summer led to a huge spike in prices and much rancour from a baying public, only exacerbated by stories of British Gas profits multiplying six-fold in the midst of the worst global recession in living memory.

There is little doubt that the likes of the Royal Bank of Scotland and HBOS now attract the lion share of the mud slung at UK PLC, but energy suppliers are still not immune to the public’s ire.

EDF Energy recently attracted controversy, copping a £2m fine for poor customer service as well as being at the centre of a marketing storm after rivals questioned its green positioning.

YouGov data seems to show that the double-whammy has had an adverse effect on brand perception. The firm’s “Buzz”, a measure of whether people have heard negative or positive things about a brand, dipped from 1 on 14 July to -8 on 28 July.

The supplier is not alone in suffering from a dearth of positive Buzz. British Gas’ rating is currently languishing at -9 (although an improvement on the -19 deficit seen in April).

And despite basking in an Ashes glow, title sponsor npower’s brand perception is still stuck in the red, at -5 this week while rival E.On fares only slightly better at -1.

The YouGov data mirrors recent research conducted by energy regulator Ofgem that found that fewer than one-in-four consumers were satisfied with the service they received when registering a complaint with their supplier.

Graeme Crossley, managing director of Brand Reputation recently said that energy companies need to make a “concerted effort” to focus on customer longevity in a marketplace that is now almost exclusively made up of ‘brand switchers’.

He added that brands need to be look for ways to improve brand reputation beyond “fuel discounts and direct debit savings and look at engaging with customers on a far deeper level”.

Kevin Peake, marketing director at npower, agrees with the sentiment, adding energy companies need to find ways of communicating with an often “sceptical” public beyond just talking about energy efficiency because “customers think energy is of low interest and not very engaging”.

This in mind, npower is currently trialling customer retention programme “Select” that offers dual fuel monthly direct debit customers a choice of £100 off their annual energy bill or alternative offers from brand partners including M&S and the RAC.

British Gas was also the subject of some positive PR recently when it announced that the firm was to create 2,600 new jobs by 2012 to lead the roll-out of smart meter technology. This move followed the announcement of a £15m six-year sponsorship of British swimming, with the emphasis on developing grassroots swimming facilities.

Both are examples of an industry attempting to tell a more compelling story.

Yet the energy sector still faces a number of challenges, as Peake puts it; it is a “complicated” industry under pressure from both the Government, in terms of reducing carbon emissions, and consumers with regard to prices.

Under Ofgem rules, all energy companies have to offer so-called “social tariffs” to help their most vulnerable customers cope with the high costs of gas and electricity, a requirement, Peake argues, that is unique to the energy industry.

“Tesco do not give free food away,” he adds.

Energy companies do face unique challenges. It is the only industry that is forced by the Government to get people to reduce consumption of the product it offers via Carbon Emissions Reduction Targets. It is also an industry that needs to improve service and find better means to connect with its customers.