An Educated Consumer Is Our Best CustomerMany of you have heard of Susan Powter, author of the weightloss book, "Stop the Insanity!" Well I don't think things are that drastic, but there is cause for concern about how states and electric companies are going about deregulation and facing a world of competition.
State by state legislation aside, PUC regulation aside (regulating a deregulated environment), public confusion exists.
The confusion stems from name changes, pilot programs, corporate hype and failures (EnergyOne) and the litany of news articles about stranded costs, mergers and how much the public will allegedly save once "your state offers choice."
Last November, Proposition 9 on the California ballot was defeated. The LA Times reported on Nov. 5: "The campaign generated a mind-numbing discussion of electric rates that left voters baffled after months of debate over such arcane issues as stranded assets and rate reduction bonds."
Public opinion is critical and cynical at this point.
While no one can predict the future of deregulation state by state, there is a need to make it easier to understand. Knowing the status of a supplier -- as well as knowing the options he may have from new suppliers -- is important.
In Peter C. Christensen's, "Retail Wheeling -- A Guide for End Users," he discusses the competition in New England, "The primary lesson learned in the New Hampshire pilot is that consumer education must be a cornerstone in any retail competition implementation plan".
DM News reported in October 1997 that "Energy…customers want facts by mail," as revealed in a survey by the Customer Development Corp. It is still true today. People want direct mail basics -- a clear informational message with features and benefits -- so they can make wise choices.
How can electric companies retain customers or attract new ones? This challenge is not new for traditional users of direct marketing. To the newcomers, however, changing their mindset from a revenue-based rate-paying residence to the consumer with choice, is a huge learning curve.
Several electric companies have developed strategic plans and are following their plans successfully by focusing on their current customers in the changing environment. Others are still fumbling.
If competition is coming to a state, it makes sense to begin leveraging the relationship between the supplier and the consumer. An electric company's identity exists now. This brand identity, however, needs to be developed further and nurtured. All of us open mail from our electric companies. Ninety-nine percent of the time it is a bill. This is a negative. The name recognition or affinity a consumer has with his electric company overcomes one of the basic fundamentals of direct marketing: getting the recipient to open the envelope.
Once they've accomplished that, the electric company needs to communicate a message to nurture loyalty, comfort and confidence from the reader. It may be an advisory about a future repair in the area or it may be about a public service event the company is sponsoring, but it is not a bill. Once a consumer sees his electric company is communicating with him, the relationship can be enhanced positively.
Successful relationship development leads to the ability to offer more energy-related services and products with greater acceptance. These communications also become a dialogue for electric companies to offer nonenergy related services and products to consumers in the future.
It is really simple: back to basics, less clutter, less hype.
Unlike the deregulation of the long distance industry, which occurred nationally all at once, consumers are being exposed to offerings by electric companies on a state by state basis. I experienced the gut of exposure in the Tri-State area of New York/New Jersey/Connecticut. Confusion still exists.
Regional and local consumers using investor-owned utilities need to know facts about their choices and when this will occur. Many will be required to participate in a pilot program.
On top of these less-than-clear communications to consumers, electric utilities are looking at bundling services, such as Internet access and long distance service. Conversely, telcos and cable operators are looking to offer electricity. Will bundling ever work? Maybe, maybe not. What is the benefit to the consumer other than getting one bill for several services? Was EnergyOne ahead of its time or was it a mistake?
Choice is control. Making a choice gives consumers freedom. Today, however, a confused market may not make a choice for electrons. Flip the switch and poof, the PC is humming, the lights are on and the TV is blaring. Why switch? This is the customer acquisition challenge.
My comments are simple. Leverage the brand with clear, concise information to consumers via mail to deliver the message. Develop loyalty and a relationship.
Sy Sims, the noted East Coast clothing retailer, goes on television (sometimes with his wife Marcie) and states, "An educated consumer is our best customer." Isn't electricity going to be a retail business?
Joe Dikdan is an independent direct marketing advisor based in Palm Desert, CA, who specializes in electric utilities and telecommunications companies.