EDF Energy's Martin Stead on brand love, Zingy and being outgunned by rivals
The energy supplier's marketing director wants to instil love and two-way loyalty in its relationship with its customers.
Love is not a word that springs to mind when you think of the energy sector. However, such unbridled affection is exactly what EDF Energy is seeking – and marketing director Martin Stead has been cast in the role of Cupid.
The marketer is no stranger to matchmaking, having set up what he believes was the UK's first gay speed-dating company, during his time at Procter & Gamble.
Pinkspeeddating.com is no more, but Stead's desire to bring love to the British public remains, albeit in a different guise. 'We want our customers to be able to love their energy company at last,' he proclaims.
Battling negative sentiment
Such an ambition seems most unlikely, considering the discontent, if not contempt, consumers have shown in the face of repeated energy price increases. On the day of Marketing's interview, Scottish & Southern Energy became the latest to put up prices, by 9%.
Nevertheless, Stead remains adamant that EDF Energy can become an object of affection, and cites the company's 'Blue +Price Promise' (BPP) as evidence.
'Love is a really big word, but I think if you do the right thing and tangible stuff that is in the customer's interest, yes, you can be loved,' he says.
He reels out several statistics to prove that the 'Feel better energy' positioning for BPP is hitting the mark. EDF launched the nuclear-backed BPP tariff in April, with the proposition that it would be one of the best fixed rates in the market, offering low-carbon energy without the usual price premium.
Since launch, about 545,000 customers have signed up to the tariff, which Stead says is 'particularly gratifying' as it is not the cheapest on the market. This, he believes, proves its success is 'about more than price'.
Stead argues that EDF is beginning to 'decommoditise' energy, while picking up brand advocates along the way, including personal finance guru Martin Lewis. Nonetheless, the scale of the marketing investment behind the product has certainly played its part in helping EDF acquire customers. Its high-profile 'Feel better energy' campaign, featuring dancing brand character Zingy, proved an instant hit (see 'The Campaign', below).
'The level of engagement we are seeing with this ad campaign is truly remarkable – it's gone through the roof,' says Stead. 'We have customers sending us pictures of Zingy cakes they've made, and Zingys they've created and taken on holiday with them. We are inundated with fan mail and requests for people to have their own Zingys - people are even starting petitions for us to start selling toys.'
Sitting in the London office of the company's direct agency, Archibald Ingall Stretton, which works alongside ad agency Abbott Mead Vickers BBDO, Stead reveals that EDF has just carried out the 'biggest door-drop in energy-company history', to 19.5m households. To support this level of activity, Stead is expanding his marketing team from 100 to 120 people and hiring a new head of direct marketing.
However, there are signs that this increased focus on marketing and customer acquisition has been outpacing the company's capacity. Following our interview, it subsequently emerged that EDF has withdrawn the existing version of BPP from sale because a 'surge in demand' meant the cap on the number of customers the tariff can support had almost been reached.
According to one source, the marketing team had hoped the tariff would be on offer for longer, but company bosses decided it was losing too much money. Instead, EDF will have to introduce a new BPP tariff that is likely to have a more expensive fixed rate.
In addition, the aggressive acquisition drive coincided with a meltdown at its call centres caused by the implementation of a new system. In March, statutory consumer organisation Consumer Focus awarded EDF an ignominious zero-rating for its performance in the last three months of 2011, after its research found it was the most complained-about energy firm, with 188.5 complaints per 100,000 customers.
Stead admits the transition to the new system 'has been a bit painful' and the company is falling short of levels of service its customers should expect. 'We have a long tradition of being rated one of the top for customer service. Right now we are experiencing one or two call-volume issues, which means there is a longer waiting time than we would normally like,' he adds.
Not to be deterred, the company's continued customer-acquisition push can be explained by its ambitions to make its supply business profitable. That arm of the business, which supplies energy to consumers, is losing money, and is currently supported by its nuclear-generation business unit, which generates almost 95% of EDF's profits.
One of Stead's first tasks on being promoted to marketing director in 2010 was to draw up a profitable growth strategy for the supply business. 'We have to turn our business into profit [because] it's not sustainable to run a business that loses money.'
Despite the need to drive profits, EDF hopes to reassure consumers of its pledge to offer 'fair value' through the 'Our Customer Commitments' scheme it launched in March.
Stead cites a 'really strong track record of doing the right things for our customers' as evidence of its sincerity, highlighting EDF's winter price freeze of 2010/11. The brand was the only major energy supplier not to raise prices during the coldest winter on record, despite all the big six predicting harsh conditions through long-term weather-forecasting systems. The price freeze, a 'multimillion-pound commitment', was rewarded with customer loyalty; EDF's customer account numbers also surged by 300,000 last summer.
The company hopes to drive further loyalty through its 'Thank yous' programme, which gives every customer the chance to enter a monthly prize draw. Stead says EDF's sponsorship of London 2012 provided it with the unique opportunity to offer customers 'money can't buy' prizes, including a ride on the London Eye attraction with former Olympic rower James Cracknell.
The multimillion-pound outlay on Olympics sponsorship has seemingly proved worthwhile, with spontaneous brand awareness hitting an all-time high of 55% in the Games period, according to Stead.
EDF played the long game with its Olympics tie, launching Team Green Britain in 2008 to combat the huge spending power of other sponsors. 'We always knew we were going to be outgunned in terms of firepower by the other Olympic sponsors like McDonald's and Coca-Cola. We knew we had to be smart,' he adds.
The lack of 'firepower' also applies to its rivals in the energy sector: EDF claims market leader British Gas outspends it three to one in terms of above-the-line activity.
However, Stead insists marketing spend is not an issue when EDF's low-carbon nuclear energy offering means it genuinely has 'better' energy through which it can create an emotional connection with customers. 'We need to prioritise our investment behind loving our customers, as opposed to just trying to woo prospects,' he says.
Love may be blind, and EDF's marketing progress noteworthy, but it is hard to imagine any outpouring of affection being returned by consumers any time soon.
Lives Borough, London.
Hobbies Running, walking and travelling. Preparing for a three-week trek in Nepal with Sherpas.
Favourite brand BBC. 'Not only does it have the mother brand, but it has also developed huge global brands including Doctor Who and Top Gear.'
Odd jobs Previous jobs include paperboy and finance director.
- Assistant brand manager (at P&G UK) rising to global brand manager for Oral-B, Procter & Gamble (2000-2007)
- Brand director, rising to marketing director, EDF Energy (2008-present)
THE CAMPAIGN - 'Feel better energy'
EDF introduced its dancing brand character, Zingy, to coincide with the launch of its 'Feel better energy' brand positioning in April.
The wobbling blob appeared in a TV campaign created by Abbott Mead Vickers BBDO, which pushed the fresh positioning alongside EDF's Blue +Price Promise, the brand's first 100% nuclear-backed tariff.
Zingy is based on the YouTube sensation 'dancing robot' character Keepon, which has been licensed to the brand, and dances in the ads to a range of 80s pop hits.
EDF now claims fans are clamouring for the character to be released as a toy, much like Comparethemarket.com's meerkat brand ambassador, Aleksandr Orlov.
THREE CHALLENGES FOR STEAD
- Trying to manage the brand's reputation amid growing discontent caused by the energy sector's above-inflation price hikes.
- Balancing the need for customer acquisition, to create a profitable business, with capacity constraints.
- Maintaining brand awareness now EDF Energy's multimillion-pound sponsorship of London 2012 has ended.
Shares of product accounts: % point changeEDF Energy 0.9%
British Gas -0.4%
Scottish Power -0.6%
Source: EDF Energy Period: 30/11/10-02/09/2012
This article was first published on marketingmagazine.co.uk
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