European utilities: size isn't everything

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By: Wise Marketer Staff |

Posted on November 18, 2001

A new Datamonitor report reveals that most of Europe's leading energy utilities are failing to satisfy their industrial and commercial customers. 

Does it surprise you that small utility companies in Europe often satisfy their industrial and commercial customers better than their bigger cousins? Or that most of Europe's utilities are failing to meet customers' expectations over a wide range of criteria? And that, despite this, the trend towards consolidation continues? I thought not. Nevertheless, it is sometimes comforting to learn that what you have thought is correct.

Datamonitor's Major Energy Users' Survey, carried out across nine leading European markets and involving some 1,200 major energy users, confirms these assumptions and more. It found that small utilities often outperform their larger competitors by concentrating on managing the relationships with their customers rather than on ambitious international expansion plans. It also found that big fish in small ponds generally performed well, as did small fish in big ponds.

Small fish and big fish
In most western European newly-liberalised industrial and commercial markets, the service from the large suppliers didn't match up to their size. However, Austria's regional utility, EVN, (a big fish in a small pond) has the most satisfied electricity customers in Europe. Datamonitor suggests that customers in small markets may get a better deal because, in the larger seemingly more competitive markets like the UK and Germany, the leading utilities have pan-European ambitions which may distract them from the needs of their domestic customers.

An example of a small fish in a big pond succeeding is that of  Italy's Energia S.p.a., which boasts much higher customer satisfaction ratings than its much larger, dominant rivals.

According to Mikhail Masokin, Senior Utilities Analyst at Datamonitor: "Many large suppliers are getting carried away with territorial expansion plans, at the expense of paying proper attention to customer needs. In an era of increased switching and disappearing customer loyalty, utilities would be ill advised to strive for size while neglecting their relationship with existing customers".

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