Utilities: maximising customer value

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By: Wise Marketer Staff |

Posted on February 8, 2002

A new report from Datamonitor looks at some ways in which European utilities can maximise profits � but one size doesn't fit all.

Utility companies in Europe are facing up to the fact that they cannot attract new customers, or retain their existing customers, on price alone � particularly when the prices they charge are so similar. Instead, they will have to concentrate on making more money from the customers that they already have. One way of doing this is to bundle additional products and services alongside their core offerings. This not only brings in extra money, but also helps tie customers in.

Analyse profiles
However, in order to develop these bundles, utilities will have to analyse their customers' profiles. This will help them present the right products to the right customers, using the right channels and most effective sales techniques.

What consumers think
Market analysts, Datamonitor, asked the people who really count � the consumers � what they think. Across Europe, 61% of respondents believed that they would save money by buying bundles from one supplier. The bad news, for the suppliers, is that 72% of them would expect better service if they did. The message is plain � utilities would have to offer savings and would have to ensure that their service improved.

Countries differ
Datamonitor found that a significant proportion of consumers would accept bundling: one in four would take telephone services and one in five would buy banking products, consumer goods and even new or used cars from their utility. However, this willingness does vary from country to country: in Italy, Spain and France consumers were more open to the idea than those in Germany, Sweden and the UK. For example, only 6% of UK respondents would consider buying banking services from their utility, but 39% of French respondents would. According to Anne Marie Davis, utilities analyst at Datamonitor, "Offer UK consumers a credit card with their utility brand stamped across it and they are unlikely to take it. However, if EdF tried this idea in France, coupled with some clever marketing, the potential for uptake is much greater."

Another factor to consider is that customers are more likely to accept other products that they associate with the utility's core offering: say gas and water from an electricity supplier � and this varies from country to country. Datamonitor reasons that in countries like Spain, France and Italy it would be easier to make the leap from one core offering to a wide range of other products � in the UK, Germany and Sweden it would be harder.

Similarly, it would be easier to stretch to familiar and trusted branded names than to lesser known ones.

Own the customer
According to Davis: "A bundled services strategy creates an opportunity to 'own the customer' and increase the value of the customer base, but this opportunity can only be exploited if the bundled services strategy is formulated in consideration of customer opinion. This means fulfilling their expectations of price savings, improved service, a single point of contact and an ability to itemise their expenditure."

Stretching the Brand � Multiple Service Offering in the Residential Utility Market is available from Datamonitor for US$4,500. For details please contact ensales@datamonitor.com 

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