CAMPAIGN DIRECT: Agencies help utilities make the most of a lucrative market - Since deregulation, utility services have had to fight harder to secure customer share. Ken Gofton reports

By KEN GOFTON, campaignlive.co.uk, Friday, 18 December 1998 12:00AM

Goldfish, it is generally accepted, has been one of the most successful credit card introductions of recent years. When it was launched in 1996, two new credit cards a day were hitting the market, but of all those taken up by the public, one in five was a Goldfish.

Goldfish, it is generally accepted, has been one of the most

successful credit card introductions of recent years. When it was

launched in 1996, two new credit cards a day were hitting the market,

but of all those taken up by the public, one in five was a Goldfish.



The marketing effort behind the brand has also been applauded. A year

ago, the work of TBWA GGT Simons Palmer and DP&A took the top award in

the Direct Marketing Association/ Royal Mail Awards. At this year’s

awards, Goldfish took the prize again for best integrated campaign.



It is no secret that British Gas is a shareholder in the company behind

the credit card, Goldbrand Development.



But what has that involvement got to do with its core business of

supplying fuel?



The official line is that financial services has been a successful and

profitable diversification for the once-nationalised energy giant.

Others say it has been even more successful as a cunning ploy to get

round unrealistic restrictions on its marketing activities in the newly

deregulated utilities market.



Look at it in this way: as a monopoly, British Gas faced losing millions

in revenue to new competitors. Yet, the regulatory body, the Office of

Gas Supply, ruled that it could not use overt discounts or incentives,

’monopolistic’ database marketing, or loyalty schemes which might work

against its competitors.



But, as Goldfish mailshots pointed out, ’this credit card could save you

up to #75 on your British Gas bills’. The case rests, m’lud.



It’s just one example of marketing ingenuity in an industry still caught

up in civil-service thinking. In this week’s DMA/Royal Mail awards,

Judith Donovan’s Bradford agency, JDA, and its client, Norweb, won the

innovation award for finding a way round a similar problem.



Here they were up against a Data Protection Registrar ruling (since

lifted) that electricity companies moving into the gas market could not

sell their service to existing customers unless those customers had

given prior permission.



To send out a letter asking people to write back if they’d like to hear

about the new gas service would be costly and self-defeating.



So, JDA developed what it calls a ’Russian doll’ mailer, to go out with

electricity bills. In essence, the covering letter said, ’We’re putting

you on your honour. We’re enclosing a sealed envelope containing details

of how you can save money on your gas bill. If you’re interested, sign

this acknowledgment before you open it.’



This not only got round the regulation, but also proved to be a highly

effective recruitment device. Norweb had budgeted #25 for every new

contract signed, but the actual cost from this route was an amazingly

low #2.90. The response rate was 4.3 per cent against a forecast of 0.25

per cent.



All this, of course, is in the context of a competitive marketplace.



About 80 companies are now battling to supply gas and/or electricity to

consumers and/or industry. Direct response ads, mailshots, telemarketing

and door-to-door calls are all being used extensively.



The advantage lies with the established suppliers, the former

state-owned companies. But they are having to learn fast about consumer

marketing.



Currently, everyone is selling at least partly on price. To survive in a

market in which there will have to be rationalisation, branding and

long-term strategies will be crucial.



’A lot of people are focusing on blitzing as many consumers as

possible,’ says Richard Marshall, a director of the direct marketing

agency, Tullo Marshall Warren. ’Many electrical companies want to supply

gas and, in theory, British Gas has a lot to lose. What they have not

realised is that British Gas has been slowly exposed to increasing

competition and, just like BT before it, will have win-back strategies

in place. They will have to develop from being supply companies into

marketing organisations.’



The point is acknowledged by Simon Carter, London Electricity’s head of

marketing on the residential side and a former marketer with NatWest.

’It is only in the past two years that people like me have joined the

industry to try to build brands,’ he says. ’Through research we’ve

identified the three things our brand should stand for with consumers:

competitive pricing, trustworthy and easy to do business with.’



The latest step in its campaign came in the first week of this month,

with a mailing to a million households to promote London Electricity’s

Premier service: ’Buy your gas from the same place as you buy your

electricity and you could save over #210 a year.’ Developed by the

direct marketing agency, CMB, it is aimed at users both within the

traditional London Electricity region and at very specific targets

outside.



Clearly, most suppliers want to promote the ’dual fuel’ concept, because

that’s where they can maximise their administrative savings. Scottish

Power, working with the Edinburgh-based agency, Navigator Responsive

Advertising, has adopted a fishing theme, with the line, ’How much will

you net with Scottish Power?’



Utilities, in fact, are providing much work for the direct marketing

industry. Agency examples include WWAV Rapp Collins working for British

Gas Trading to sell both gas and electricity, with Evans Hunt Scott

underpinning those messages while working for British Gas Services, the

maintenance and insurance arm. Tequila Payne Stracey has East Midlands

Electricity, while Tomahawk handles industrial business for Eastern

Electricity.



But it’s not just the agencies that are benefiting. The battle in the

marketplace has also brought business for companies such as the

lifestyle database specialist, Claritas, which has been monitoring

consumer attitudes in its massive surveys for the past two years.



’As consumers’ understanding has grown, they have become increasingly

interested in switching suppliers,’ says the company’s data applications

consultant, Stuart Hopwood. ’Now, the question is why - is it price or

service that interests them?



’The reality is that price plays a huge part. But at the end of the day,

companies are interested in customers who will be profitable to

them.



It’s a question of identifying people who are likely to switch, use a

lot of electricity and gas, and are willing to pay by direct debit,

because that can be a good indication of loyalty once you’ve got them.’



This article was first published on campaignlive.co.uk

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