Tag Archives: electricity

Know you segments

market_sementation

Segmenting the market and the customer base has in a way followed energy companies since the start. Market segmentation for utilities used to be less complicated – the customer was everyone living in a certain geographic area over a certain age. In short: everyone was the customer and everyone got the same message in a form of a bill or announcement of outages.

Enter the competitive retail energy markets

The competitive energy markets require more detailed segmentation. It is almost no longer possible to deliver the same message and the same service to just about everyone. And everyone is not looking for the same service from an energy retailer. Some people are following the lowest price, others are looking for a pleasant user experience, a group of consumers are after green energy and sustainable energy savings… the list goes on and most consumers are after a mixture of everything mentioned but put different emphasis on different factors.

How to segment energy consumers?

First off, there are, broadly speaking, four different types of segmentation.

Geographic segmentation segments users based on their location. This might seem like an outdated segmentation tool but rural energy customers have different needs than urban users. There are even different needs for users in different cities.

Demographic segmentation is along with geographic segmentation the most easily understood methods of segmentation and most used. Segmenting users by age, gender, income and family size sounds pretty familiar to everyone.

But electricity is not something bought off the shelves in supermarkets located in cities of a specific population density – electricity is not an easy made meal for a woman aged 35-42, married with two-point-two kids aged 7-12.

That is why energy requires more detailed segmentation.

Psychographic segmentation looks at lifestyles, personal characteristics – attitudes and how consumers live their lives. Branding is after all about creating something intangible on top of the core commodity – a certain spirit or experience. Psychographic segmentation looks at how people look at life and that is where it is likely for a brand to succeed.

Geographic and demographic segmentation still play a part and one type of segmentation does not exclude another.

Your brand can speak to different groups. But you should not change the brand for each group your brand is speaking to but your brand can approach each group differently but with a coherent voice.

Moving from the macro-segmentation of the market to the micro-segmentation of your customers.

While speaking to the market at large, the brand also needs to communicate with customers and customers can usually be segmented. This is where behavioural segmentation comes in (remember – one approach does not exclude the next) to offer different types of customers different types of incentives. Big data and data analysis of your customers should be used to analyze their behaviour and see which groups of customers behave in a similar way.

Stakeholders

The energy sector is not only commanded by customers but also different stakeholders. For brands operating a regulated monopoly business and large energy companies with a global brand footprint – it is important to realise and map stakeholders in general. Stakeholder mapping helps utilities to visualise different stakeholders such as politicians, regulators, trade unions, environmentalists, large energy consumers and household consumers.

Tailoring the message for different segments

Building an effective energy brand and energy marketing is not only about customer engagement but also knowing who your brand is communicating to and how it should communicate at different points. Different segments are communicated to with a different type of message through different channels. One of the brand’s customer segments is price conscious while another is concerned about the environment. To make energy savings a point of brand value, the brand would approach the groups with a different message, the price savers would respond better to a message regarding how much money they would save from being energy efficient while environmentally concerned customers are more likely to respond to message regarding how they can contribute to saving the environment with energy efficiency.

Building brands is about building trust

Fintan Slye, CEO of the Irish Transmission System Operator Eirgrid, went over the case study of Eirgrid’s need of having a strong brand. Being a state-owned monopoly, Eirgrid is not at risk of losing customers or has any market share to gain – which is the second most common misconception of the role and importance of brands and branding. The biggest misconception is of course that people often mistake the creation of visual imagery such as the logo mark as being the only thing instead of one of many things branding is about.

As Mr. Slye told the audience at CHARGE 2016, the company was for months the topic of negative front page stories and tried to approach a public relation tasks with engineering solutions. The company was met with distrust and people did not know what Eirgrid was or what it did. The task ahead was to build trust by building a strong brand with people in the center.

Brand is critical to success and survival.

Fintan’s presentation shows an interesting challenge that many established utilities around the world are facing, lack of trust in a world that demands transparency.

 

 

Transforming from Utility to Energy Brand

Dr. Friðrik Larsen (FL), of LarsEn Energy Branding and KC Boyce (KCB) of Market Strategies International sat down for a chat on Energy Branding and marketing efforts of utilities. This is an excerpt, the article originally appeared on the Market Strategies International Blog. Both Friðrik and KC will be delivering keynote addresses at CHARGE Energy Branding Conference in Reykjavik, Iceland next September.

(KCB) In the US, we’ve identified six factors that drive consumers’ brand trust: customer focus, company reputation & advocacy, communication effectiveness, reliable quality, environmental performance and community outreach. How does this compare to what you see elsewhere in the world?

(FL) These factors are similar to my own qualitative research findings done throughout Europe, both in areas with a long history of liberalized energy markets as well as newly or soon-to-be deregulated eastern European markets. What differs between countries is what consumers expect from the utilities and consumers’ varied understanding of the underlying concepts. For example, consumers in Iceland are used to hydropower and consider nuclear to be a dirty energy source. However, Eastern European countries—that only know dirty coal (in terms of everything in the country being covered in a layer of ash)—consider nuclear to be a green source of energy.

(KCB) What can utilities do to improve their company’s reputation among consumers?

Utilities need a more brand-minded, customer-centric strategy. That can prove to be difficult, especially for bigger utilities, but it’s very important to be honest and credible in communications. For instance, oftentimes a utility tries to make connections to certain imagery in the consumers’ mind, but the consumer is given no choice to understand why that utility should be connected to that imagery.

Here‘s an example: Before rebranding in 2008, British Gas was losing 40,000 electricity customers each month. This old behemoth identified its strengths in the consumers‘ minds as well as its faults inside the organization. After a 2009 rebranding, British Gas saw lower churn rates among existing customers and was attracting new customers. The brand became more resilient towards bad PR as well. This was the result of increased customer affinity, positive perception and improved attitudes towards the brand. It is a really interesting market, and I find it fascinating to watch that energy branding ecosystem develop, with established players trying to evolve and newcomers trying new approaches to become dominant.

[…]

This is an excerpt, For the full article see the original post on the MSI blog 

The possibilities of branded energy

The possibilities of branding within the energy sector are enormous. Not only for retail but other aspects as the origin of energy, the natural monopoly as well as using the source of energy to create brand value for other products. Here are few of the areas we will cover in September in Iceland at CHARGE – The World’s First Energy Branding Conference.

From the merchant to the aisles of the supermarket

While most brands we know today used to be mere commodities sold by the pound over the counter by the merchant – electricity is still mostly sold by the kilowatt-hour by the utility. To understand why branding is a necessary step in evolution in energy, it is important to look first at branding in the general context. Though the basics of branding are the same for electricity and bananas, there are key differences needed to approach the consumer.

Active listening

A brand is never more powerful than its ability to communicate its meaning to consumers and decipher communication from consumers. Being able to talk to the consumer has been considered easier with new mediums and social media popping up everywhere but the task to deliver a relevant message that resonates above all the clutter has become more difficult. In a similar manner it has become easier to hear multiple stakeholders voices but the task of engaging in a relevant conversation can be a tricky task for energy companies.

Commodity and monopoly branding

Creative thinking can create engagement for consumer for once considered mundane commodities such as salt and water and how services such as telecommunications became the hottest thing since sliced bread. Branding applies to the natural monopolies as well. With the rise of the prosumer, the monopolies are not only transmitting to the end consumer but receiving from them as well and this two way relationship requires two way communication as well.

Energy Marketing requires a brand

For any energy marketing effort to be fruitful, a powerful brand is needed as foundation for efficiency. A brand that has full organizational support is proven to spill over to all aspects of the operation, be it payroll, the service center or attracting the most qualified candidates for open positions. Efficiency in energy can never be fully realized without a brand mentality.

The origin effect

Soon, electricity will be known for its origins, a city or province or even a country will give a stamp of quality for the energy produced there. How can the origin of electricity create more value for consumers?

Updating the utility

While most retail industries went through radical transformations in the last century, electricity is still mostly sold and delivered today as it was when Edison lit up the world. Groceries, media, music and airlines have all been disrupted and distributed in radical new ways with advances and innovation in technology and updated business models.

The utility of the 1900’s is still the dominant business model but will soon be run over by the energy brand of the 21st century. The energy brands are not only updating the business model according to advances in technology but are connecting to the minds and hearts of the customers in ways the utilities have not been able to think of.