The marketing activities of electricity suppliers often appear somewhat desperate. Boring, interchangeable messages and temptations with uninspiring switching bonuses such as iPads, fitness trackers and co. rarely persuade customers to change their electricity contracts. Change of provider, cost comparison, security of supply are confusing keywords. Technically, everything is fine in the “engine room of life”, isn’t it? Tobias Kurth, managing director at Energy Brainpool and Eike Dehning, holder of dhng Consulting discuss what this means. Both have been observing the developments of the energy market for a long time.
Eike Dehning describes the basic understanding of the German population at the beginning of our interview: „As self-evident as running water, electricity is always coming from the socket. This fact is regulated in the engine room of our life and ideally it is supposed to stay there”. Saving is popular in Germany, special offers are welcome. In connection with the electricity supplier it is different: Unbelievable 75 percent[1] of the German citizens purchase their electricity from expensive utilities. The switching rate is surprising as well. Only 6.5 percent changed their electricity contract voluntarily. The range and variety of different suppliers is as high as never before and a change often pays of financially. Why does this imbalance exist? Tobias Kurth gets to the heart of it: “Plain and simple, there is no pressure and partially maybe the fear of having to manage the time period of the change itself without electricity.” In the year 2015 private households only spent three percent[2] of their total income for their electricity supply. This amount is dwindling small compared to the other costs that arise on a monthly basis. Why should people sacrifice their valuable time in order to deal with minor issues such as switching the electricity supplier?
Electricity stays electricity – it is irrelevant whether it is purple, yellow or vegan
Both suppliers and comparison portals invest millions of euros in diverse advertising campaigns. Eike Dehning perceives this fact in his private environment as well – watching television at prime time, online and in the print sector. Even though consumers are flooded with advertisement and premiums they are very slow in switching. He does not understand why this is the case: “Electricity, the mother of all commodities, is a product without recognizable attributes. Its quality does not depend on the supplier. In fact, a switch does not bear a significant risk, while price does vary. Hence, why is the switching rate not at 100 percent?” The same question asks Tobias Kurth and notices most preposterous ideas to convince people to change their supplier. Suppliers try to add emotion to electricity and describe it flowerily. They invent women-power electricity, neighborhood electricity, vegan electricity, electricity in any colour and much more. “In their advertising energy suppliers want to sell problems their customers are not facing. Actually, everything is fine in the machine room”, describes Eike Dehning the situation. He also critisises the fact that almost all marketing activities have one feature in common: “The advertising raises new questions and hassles the customers with topics they are supposed to deal with.” Instead, it is more important to meet the customers positively and optimistically by addressing their inner needs and feelings.
Creating real value for the consumer
What do customers really want when dealing with electricity? Not having to wonder and knowing that someone is taking care of the daily issues connected to their livelihood. Active price-optimizers who examine contracts regularly, who find the best tariff and switch when necessary, or providers who assist with moving, for example by offering a loan for the deposit or covering relocation costs proportionally. These examples are first pioneering ideas of how to create real value for the customer. They redefine the extent of service tasks. “Offers that facilitate my life are interesting”, desires Tobias Kurth, “and that allow me not having to deal with the processes in the machine room.” The experts agree that energy suppliers need a new way of approaching customers. The conventional marketing-blueprint – “There is a problem, we have the solution” – is not working anymore. One has to meet the customer differently than advertising discount campaigns or switching bonuses. “Time” is a valuable commodity and is the correct currency at this point.
The magic formula is the combination of creating time and personal proximity
Despite the progression of digitalization, offers and services “around the corner” provide a great opportunity in competition. Promising business models are based on regional proximity or physical presence. Making a contract on the internet, shopping online or transferring money quickly – unquestionable these services are helpful possibilities. Still, they cannot always replace personal advise on-site. There are first developments and projects against the megatrend digitalisation towards on-site assistance. The French concept “Lulu dans ma rue“[3], a kiosk in the center of Paris that acts as a broker for neighbourhood aid is a good example. This unique example kills two birds with one stone: It creates jobs locally and supports social interaction in the quarter at the same time. “Take care of your life, we take care of the machine room – that is how a slogan of the future may sound. The people are met at their inner needs and not being annoyed by unimaginative mainstream-marketing-campaigns”, proposes Eike Dehning. Creating value for the customer means making more time and personal proximity.
More courage for positive visions and new ideas
“Creating an imaginary problem and pushing it into the people’s heads is not expedient”, summarizes Tobias Kurth the conversation. “It is much more important to observe the issues that occupy the people in everyday life and to determine possibilities of offering specific support. Eike Dehning adds: “By many innovative technologies and the unstoppable digitalisation we are able to work with greater chance for value-adding. The substantial opportunity of an extensive supplier is to create more time for us and the important things in life.” One does not need great financial resources but courage to implement an idea like this. Both invite suppliers to try new ideas, if necessary according to the “trial and error” principle. It exceeds conventional power supply. We need daring pioneers who interpret service tasks newly – from supply with other commodities, mobility solutions, IT- and communication-offers combined with the needed infrastructure to compulsory insurance or the delivery of consumer products. Suppliers do not have to depend on their own. Cooperation often is key to success. In the highly competitive market this may be decisive for the survival in the energy market of the future.
Eike Dehning
Renewable energies, digitalization and mobility are key topic of Eike Dehning. Before founding dhng Consulting the economics and business development expert has been responsible for the sales department of a medium-sized solar company. He lives and works in Hamburg.
Tobias Kur
th
The market transformation with renewable energies – this is the focus of Tobias Kurth since more than 15 years. He is managing director of Energy Brainpool GmbH & Co. KG located in Berlin. Prior to that the industrial engineer led the European sales activites for sustainable energy products of a medium-sized solar company.
[1]https://www.bundesnetzagentur.de/SharedDocs/Downloads/DE/Sachgebiete/Energie/Unternehmen_Institutionen/DatenaustauschUndMonitoring/Monitoring/Monitoringbericht2016.pdf?__blob=publicationFile&v=2
[2] Energy Brainpool: eigene Berechnung
