21 August 2002 – New research from independent market analyst, Datamonitor (DTM.L) finds that with France’s major incumbent utilities, EdF and GdF, expected to retain a considerable edge over new entrants in terms of cost for the foreseeable future.

It says that new players will need to find a way of shifting the main focus of their customer acquisition and retention strategies to non-price factors such as the quality of service.

Datamonitor’s recent survey of French major energy users reveals that SNET, whilst a relative newcomer, has emerged as the electricity company with the highest overall customer satisfaction levels. In the gas sector, the established utilities GdF and GSO have led the way in customer service, although even those two companies have fallen short of matching their customers’ expectations leaving a gap in this market for a new entrant who can fully meet their customer’s expectations.

The new report ‘Best Practice in Customer Service in France: The effects of developing competition on companies’ customer retention strategies’ examines the impact of competition on the customer service propositions of electricity and gas utilities in France.

Earlier this year, Datamonitor conducted an extensive survey of French major energy users. Covering over 16 per cent of the eligible electricity and 58 per cent of the eligible gas markets (by volume), the survey has identified the main customer priorities in their relationship with the utility supplier. As part of the survey, the respondents were asked to rate the importance to them of each aspect of service, as well as their actual experiences with their supplier, on a scale from 1 to 5.

SNET, the power generation subsidiary of the French coal producer Charbonnage de France, has emerged as the company with the most satisfied customers Datamonitor’s analysis shows that even a relative newcomer to the French energy supply market can put together an attractive customer service proposition, as illustrated by SNET. Based on the survey sample, the company has achieved the highest overall customer satisfaction level, including leadership in each of the four major categories of customer service.

SNET’s performance has been particularly strong in such crucial aspects as bill accuracy and the contract negotiating process. The company claims to have significantly shorter tender response times than the industry average.
In the gas sector, the established utilities GdF and GSO have led the way in customer service, although even those two companies have fallen short of matching their customers’ expectations. Most of the other gas suppliers have so far struggled to devise a successful customer service proposition, failing in some of the key aspects of service.

Pre-contract service is by far the main priority of French major energy users Results from Datamonitor’s survey show that bill accuracy is by far the most important aspect of service, followed by the supplier’s efficiency in contract negotiations. At the opposite end of the range, ongoing advice on products and services, as well as billing flexibility, were rated as the least important aspects. The respondents tended to be the most unanimous on the issues of the greatest importance to them. The responses given by the electricity and gas users were very similar.

Overall, pre-contract service (comprising contract negotiations and tender response) was viewed by all groups of respondents as the most important category of service, followed by the billing-related aspects. The absolute and relative importance of these two categories tended to be the greatest for the larger clients.

However, utility clients’ service priorities vary depending on size and consumption patterns The report also analyses customer preferences with respect to the average consumption per site, grouping together those respondents who had similar average consumption levels per site regardless of the total number of sites. As could be expected, the structure of customer priorities varies between different categories of users.

For those with lower average consumption per site, day-to-day support and the quality of account management tend to be more of an issue compared with pre-sales service and billing. This may be the case because the smaller clients have fewer in-house resources for managing their energy purchasing function, and therefore require greater support from their supplier.

Mikhail Masokin, Senior Utilities Analyst at Datamonitor comments; “By concentrating on the key aspects of their relationship with their clients, French utilities can dramatically improve their customer satisfaction and therefore customer retention levels. At the same time, utilities should remain mindful of the differences in their clients’ service priorities in relation to size and consumption patterns.”