dm acquisition in the energy supply market

Challenging perceptions, changing behaviours

DM acquisition in the energy supply market

1 Mark Arnold, M-Cubed Consultancy, 2013. [email protected]

Energy supply market

Marketing communication challenges


Awareness is not the issue with switching

Consumers are well aware of the ability to switch… …and aware of enough of the suppliers to make a comparison.

3

Yes. 97% “Were you aware before today that it is possible for domestic customers to switch to different gas or electricity suppliers?”

“Can you please tell me what companies or suppliers you are aware of that can currently sell you electricity or gas?”

Mean no of companies 3

Source: Customer Engagement Survey, Ofgem 2008

Second highest mention after British Gas NPower 39%

Mark Arnold, M-Cubed Consultancy, 2013. [email protected]

Challenge – right audience, right time, relevant message

A complexity to the audience(s) that requires a high degree of targeting at household level

4

Triggers. E.g. moving

house/length of residency

Tenure. Renting or

home owner

Switching history & future

intention Attitudes Demographics

New build homes

Environmental/energy efficient

connection

Credit history/financial risk


Challenge – getting sales messages across directly

5

60% Used a price comparison site to switch

24% Used suppliers website

53% Had some contact with salesperson

46% 52% 63% 47% 53% 62%


2.5 times as many people may visit a price comparison site as opposed to your website.

Despite the bad publicity, the demise of this channel leaves a hole for direct sales, especially for lower/older demographics.

AB C1C2 DE 16-34 35-64 65+


0%

5%

10%

15%

20%

25%

30%

35%

0% 5% 10% 15% 20% 25% 30%

Bri+sh Gas Npower E.ON EDF Sco<sh Power Sco<sh Electric

Challenge – making an emotional connection with consumers

6

Dif

fere

nti

atio

n

Trust

Source: Home Utility Suppliers Report, Mintel 2009 Brand Elements Map

6% Agree that brands are engaging

A dis+nct lack of differen+a+on and trust, even around smart meter installa+on.

Agree a brand has a distinctive image

A brand I can trust

“Consumers failed to understand why power and utility firms would want to provide them with tools to reduce their energy bills.” Ernst & Young 2011


Challenge – how to make an invisible force, such as energy, real

7

With current meters hidden from view, there’s no connection with usage and the implications on efficiency.

Smart meters will alleviate this but another 7 years until full rollout


Challenge - overcoming rational fears and beliefs

8

Agree 39% There are no real differences

Agree 57% Savings only last a short while so not worth it

Agree 70% Tariffs are too confusing

Agree 52% Service will be worse

Agree 68% You can’t believe what their sales people tell you

Agree 58% Things will go wrong when switching



Challenge – turning customers into loyal advocates

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“Power and utility suppliers have an impersonal and transactional relationship with their consumers. Consumers categorised their relationship with their energy suppliers at best distant and at worst negative.” Ernst & Young report on Smart Metering 2011

Disagree 46% It pays to stay loyal to a particular supplier

45% % of consumers who have switched 2+ times

34% % of recent switchers who intend to switch again in the next 12 months



The issue - engaging, winning and keeping customers

10

Awareness

Interest

Evaluation

Adoption

Loyalty

Direct, relevant and personal engagement

Overcoming rational fears and beliefs

Real, emotional connection/ change perceptions

Personal, relevant and valued experience

As part of your media mix, direct mail can address all of these challenges

Conversion funnel


Direct Mail

Addressing these communication challenges


Connect data with messaging for targeted, personal & relevant content

Customer segments Propensity models based on value, risk, upsell/cross sell potential History/intention Switching frequency, future value/risk, likelihood to switch soon New movers At end of first 3 months when first bill received. Or end of first year. Wealth indicators Propensity to default, payment options Lifestyles/interests Overlay customer data to match loyalty rewards – e.g. National Trust Household tenure Renters/home owners (level of risk) Composition Number of people, house size – potential usage levels and value

12

Connections that stimulate real interest and motivation


If it’s relevant people will keep it and refer to it

13

Do you keep your direct mail for reference? Yes 66%

DM is the most authoritive marketing channel Agree 55%

A great information carrier to help make a rational decision

Source: From Letterbox to Inbox, DMA 2012


Direct mail can engage on an emotional and rational level

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Emotional Decision

TRUSTWORTHY

Rational Decision

RELEVANT

Consumers see trust and relevance as the most important attributes in marketing information and direct mail one of the best channels to convey them.

Most important attributes in marketing Agree 82% Agree 79%

Direct mail conveys these attributes Agree 56% Agree 47%

Source: From Letterbox to Inbox, DMA 2012

Addresses the issue of trust and reassures rational fears and beliefs


Building trust – O2 Bill Analyser case study

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Audience: Business customers. Product: Bill Analyser - quick, easy, free way to break down bills and work out expenditure. Creative: Demonstrated the benefit of the service by literally breaking apart in perforated

sections, reflecting how the tool 'breaks down’ bills e.g. 'by person', 'by call type'. Result: 2.2% response rate (target 1%).

Knowing what’s on customers minds can be used to build

trust


Connecting emotionally and relevantly – Sainsbury’s Plate case study

16

Audience: Existing online shoppers. Goal: An emotional connection with the new brand thought “try something new today.” Strategy: Nectar data to analyse and segment audience by shopping/purchase behaviour. Creative: Sequence of 5 postcards, tailored with enticing recipes and inspiring ways to shop,

money-off coupons and a reminder to shop online. Result: Response rates as high as 49.25% – 400% above target.

Turn something functional into

something interesting


Changing perceptions – Welsh Tourist Board case study

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Audience: Non-welsh water sports enthusiasts. Goal: Encourage more visits during the autumn months – the quiet season – when the

sea is warmer than the summer. Creative: Dramatised this message by delivering it on an actual piece of wetsuit neoprene –

the exact thickness of an autumn wetsuit. Result: Response rate of 9% requestng further information.

Tell customers something they don’t know and

make it real


In a digital world, consumers remain connected with direct mail

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51% % who would miss postal advertising from utilities

80% % of consumers who open their direct mail 20%

36%

Email equivalent

Web equivalent

Consumers are 4 times as likely to open post than email

Source: Marketing Gap Tracker, Fast.map 2012

42% more utility customers would miss DM than web advertising if the channels disappeared.

79% % of consumers who open DM, then act immediately

They also take it seriously


Engage with rich digital experiences that get shared & talked about

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And we know 44% of direct mail recipients will visit a brand website

Digital watermarks

Augmented reality

Video mail Image and sound


Why you should include direct mail in your media mix

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Engage Flexible, exciting and modern creative solutions - tangible/real

Win Sophisticated targeting, relevant & personal, information carrier

Keep Personal dialog – change brand perceptions

Direct mail places the power of your brand directly into consumers hands


Mark Arnold, M-Cubed Consultancy

[email protected]
