19 September 2002 – New research from independent market analysts, Datamonitor (DTM.L) finds that low prices are no longer enough to convince residential customers to switch to a new gas or electricity supplier. Utilities must tap into customer emotion if they are to secure custom and brand loyalty.

With consumers becoming increasingly cynical about companies ‘greenwashing’ their brands, utilities must now seek to form partnerships with trusted brands if they are to win their customers’ loyalty and prolonged business.

Datamonitor finds that customers are increasingly willing to pay a premium for their energy if the brand openly supports a charity or environmental group. If this marketing initiative is successful, brand could become a more important factor than price by 2007.

However, utilities cannot afford to be half-hearted about their branding – commitment to a good cause must permeate all areas of the company from advertising to the call centre.

New research from Datamonitor highlights the need for utilities to tap into customers’ emotions and establish themselves as compassionate companies who sympathise with their customer’s interests and passionate causes. In much the same way as in the 80’s, The Bodyshop positioned itself as the cosmetics company with a conscience, Datamonitor believes that in the not to distant future we will see utilities companies falling over each other to show their sensitive side.

Utilities must tap into customer emotion to gain consumer’s trust and business. British Gas has been developing the idea that “there’s no place like a British Gas home” in an effort to tune in with customers’ aspirations of comfort, security, belonging and safety. This is a real departure from the “No.1 price” and “service to delight” advertisements that UK utilities have used in the past, perhaps in recognition of the fact that most utility customers now expect competitive prices and excellent customer service as part of the deal.

BT successfully tapped into these very same emotions with their ‘It’s good to talk’ advertisements and it is clear that utilities are now set to follow this route.

Alex Patient, Utilities analyst at Datamonitor comments: “As disposable incomes have risen to the point where the average family already has luxuries, people are relegating materialistic goals in their minds with a consequent rise in emotional needs. Customer interest in everything from battery farming to sweatshop business practices and CFC gasses is already well entrenched. As the environment becomes an increasingly pressing question, we are likely to see customers questioning how their electricity was generated, and demand one type of generation over another from their supplier. These are truly emotional issues for some customers, and utilities must learn to play their part in customer involvement.”

Wildlife, green energy, and the elderly to the rescue Utilities have traditionally been homogeneously branded, their products dull,and their emotional appeal very limited. Now, however, the need to resist further downward price pressure has led to partnerships and re-branding to take advantage of brand emotion. By linking brands to passionate causes like wildlife, green energy, the elderly, and the family, utilities are beginning to show signs of developing the brand loyalty they have dreamt of since competition began.

Thus far, Powergen is working with Age Concern, Scottish and Southern Energy with the Royal Society for the Protection of Birds, Npower with Greenpeace,and Nuon with Natuurmonumenten – the Netherlands’ largest conservation organisation. Customers taking up these special tariffs are paying money, sometimes at a premium, to support causes that they believe in, or to gain the social benefits of being involved in such good causes.