UK utilities feel the heat over sales tactics
Following the UK Advertising Standards Authority's recent decision to uphold complaints about energy utilities' misleading advertising slogans and sales tactics, consumers may become more apathetic about energy providers and their brands, according to industry analysts, Datamonitor.
Martin Yuill, utilities analyst for Datamonitor, says that the most recent decision by the Advertising Standards Authority (ASA) to uphold a customer complaint regarding a particular utility's misleading advertising slogan is the latest in a long line of examples in which utilities have upset customers, consumer watchdogs, and regulatory bodies by over-stepping marketing boundaries while trying to win more residential customers. The National Citizens Advice Bureau (CAB) has also recently filed a complaint with the Office of Fair Trading, citing ongoing doorstep sales abuses linked to the utilities industry during August 2002.
Dangerous tactics Competition is naturally intensifying as the battle to survive within the consolidating utility market becomes more desperate, added to which is an apparent customer apathy which encourages utilities to be increasingly daring in their advertising campaigns.
According to Yuill, "Utilities should beware of playing with customer affections in such an aggressive manner. Although the resultant bad publicity has had little impact upon switching or acquisition rates within the field of energy provision to date, this approach smacks of short-termism."
The damage that such bad publicity generates in relation to the industry in general, and company brand perceptions in particular, could severely damage utilities as they move into multi-service provision, particularly when competing against companies from industries that are viewed by consumers in a more positive light.
To achieve success outside the field of energy provision, a strong and transferable brand is of paramount importance, according to Yuill. A utility that invests heavily in brand awareness for its cross-selling and up-selling activities may jeopardise that investment in the long term by generating bad publicity from a misleading campaign.