In late 2017, almost a quarter of energy consumers in the UK said they’d seek a new provider within a year. Fast forward to October 2018 and more than 630,000 customers switched to new providers, the highest level since 2013. Customers are fast abandoning the ‘Big Six’ in favour of competitive rates from smaller providers. This is by no means unique to the energy sector, with the switching surge disrupting the entire utilities market and beyond.
Brands in functional markets have always struggled to find and maintain a distinctive voice, but this has never been as evident as it is now. From FS to insurance, telecoms to utilities, challengers have entered the ring and shaken up the long-standing status quo, leaving more established brands reeling. Reticent to commit to lengthy contracts when innovative alternatives are at their disposal, consumers are switching providers more than ever.
The truth is, big brands with high market share find it hard to increase revenue – so they focus on cost cutting. But this is no longer a guarantee, as cutting budgets can destroy the foundations for success by undermining other sorts of growth. It’s also certainly not what the challengers are focusing on as they build their cult-like communities of dedicated customers. It needs to be more strategic than that. And in an era of overwhelming numbers of channels and content that is no mean feat. So, what role does communications play in this? Well, it should be a significant one if you take our recent consumer research into account.
The research unveiled key failings in utilities communications despite the wealth of data and tech tools at their disposal, brands in the sector are still missing the mark. Not only do significant numbers of consumers feel their needs are not understood, but life stage targeting is inconsistent, with up to one in five older customers receiving no comms at all. The breadth of channels used is also limited, with fewer than 16% of consumers recalling being contacted through radio, SMS, newspapers/magazines, direct mail and outdoor ads. The findings should be a lesson and call to action for brands across the functional sector – particularly when it comes to targeting inconsistencies across consumers in different life stages and marketing channels. A few of the most startling findings include:
- One in ten consumers reporting receive no communications at all
- Almost a fifth of pensioners face a marketing blackout from utilities companies
- Almost half of empty nesters remain indifferent towards utilities marketing (46%) and 42% report they receive too much marketing communication
- Pensioners are by far the most dissatisfied, with 15% feeling angry. A mere 7% of pensioners surveyed feel their needs are understood.
So, how can functional brands get their comms right and fight back against the challengers to retain and obtain new customers? Drawing on the research and our experience in helping brands grow across multiple sectors, we have identified a number of ways for functional brands to use comms as part of their strategic efforts for success.
Strong brand = strong comms
Price has and will always be a key factor when choosing a utilities provider. And the same applies across other functional brands. Consumers are unlikely to form strong and lasting connections with brand names thanks to the functional role that they perform. It’s not a surprise and it’s long been the accepted status quo. However, challengers have come in and tipped this on its head. They know the power of a strong brand and know that focusing explicitly on cost overlooks the power of a strong brand. Finding a distinctive voice in a functional market in order to become memorable throughout the customer journey is vital. Insurance companies woke up to this fact some time ago with the introduction of Sergei and Aleksandr and their growing meerkat family almost a decade ago. Livening up an otherwise dull category is key to grasping consumer attention.
Content is King
Customers need better insight into what they’re spending and why this is justified. It plays into a wider trend towards transparency. Not only this, but our recent they’re keen to receive support to choose the right tariff. With a quarter of respondents stating they’re not receiving enough guidance from utilities companies, with the figure rising to 31% for new parents and 30% for home movers, serving content that will help them out in their purchasing decision is key – something that must be observed across all functional categories. Switching between different providers continues, but the data involved in this will help understand a customer’s needs so providers can serve up content that can help them. Offering discounts and promotions (34% on average), advice on sticking to budget (25%), better customer service (22%) and help choosing products and services (20%) were all requested by respondents when it comes to utilities.
But it’s nothing without relevance
Content alone isn’t enough. Getting the mix of messaging, frequency and channel is what truly sets brands apart. Our research revealed that there would be a marked increase in positive sentiment and consideration across life stages if companies were communicating the right message to the right audience at the right time. In fact, a fifth of all respondents said they want clearer communications on packages, with a similar proportion reporting they wish content was more relevant to them. This means that brands need to establish a deep and structured strategy to ensure the right message reaches the right people at the right time and helps build greater brand bonds.
Effectiveness is driven by scale
Functional brands must fuel a dual approach of nurturing existing customers with a great experience, whilst reaching out to consumers in the market for an alternative supplier. Brands, after all, grow when they increase the number of people they target, therefore, to be successful brands must reach all buyers in a particular category.
As most functional brands have remarkably similar (and low) levels of loyalty, it should be increasing penetration and not customer loyalty that they should be aiming for.
All these are effective, research-based ways to help functional brands fight back against the challengers but what can brands in other sectors can learn from this?
Make your brand known to your customers
Creative work should be emotional and engaging, but also easily comprehended and branded.
Owned content still generally demands paid media exposure to draw attention to it, contrary to popular received wisdom. Content without anything to draw attention to it is like building cathedrals in the desert. Sharp and Ehrenberg have found that successful brands do five things. Get noticed (grab attention and focus on brand salience to prime the user’s mind), build memory structures around strong associations (e.g. Virgin broadband and Usain Bolt = super-fast speed), create and use distinctive assets (cues that get noticed and stay top of mind – like the British Gas penguin, Wilbur), stay consistent (avoid unnecessary change, whilst keeping the brand interesting), and make the brand easy to buy (communicating how it fits with the user’s life – disruptor Troocost.com, making business energy services fairer are examples).
Data analysis can unlock common customer behaviours, motivations and preferences that form a persona
In order to effect behavioural change, utilities brands must first identify key triggers for their customers. Personas help understand customers and their needs. So, what does this mean in practical terms? Our research shows us that older consumers feel utilities companies don’t know what they want. A shift in marketing strategy is therefore required to reach them, engage with them and help them resolve any issues in order to make the customer journey as friction free as possible. Whether you’re looking at what links people click in emails, social media conversations and tonality, or browser activity, data offers valuable insights into consumers’ interests. This can be applied across multiple sectors.
Occupy the same spaces as your customers
Programmatic advertising, if done right, can enable brands to reach specific audiences with different messages at scale. What this means is that by identifying audience splits and triggers, brands can then develop specific messages for each split; the central campaign then can be customised with different creative aspects for each split, which only boosts and optimises campaign performance by communicating with diverse audiences without the need to run multiple campaigns that can be a financial drain and possibly risk diluting the brand.
In the age of social media, it is easy to just be on constantly. But that won’t help customers. Ultimately, providing simple, clear advice that can support customers make the decision most right for them is what it really comes down to. O2 recognised that people were fed up with the aggressive acquisition-driven marketing typical of the mobile phone category. And so, they decided to do things differently. Overtly, their new comms strategy was to focus on their existing customers, highlighting the improved, service, loyalty rewards and other benefits that they were offering to them. Results were spectacular with an ROI of 80:1. However, this wasn’t really and profitable loyalty marketing campaign as such. The campaign ran in mass media and so most of the people who saw it were not O2 customers. Loyalty metrics like churn and willingness to recommend improved, but the main effect was to recruit new customers. O2 concluded ‘Talking to existing customers proved to be a more effective acquisition strategy than the previous acquisition approach.’
What this all demonstrates is that in the face of a competitive business landscape – densely populated by legacy brands and challengers – the right sort of comms strategy has a very key role to play. Brands from across multiple sectors would do well to dial up relevance, match the frequency of communications with the correct channels, and crucially create content relevant to its intended target audience.