Written by Tom Reynolds, Account Director, Energy
With ‘Big Oil’ venturing into the energy retail market and smaller suppliers at risk of losing the confidence of their customer base, the time is now for companies to reassess their current brand and positioning in order to achieve success.
Commenting on tough conditions in the UK’s energy retail market, Shell’s CEO, Ben van Beurden recently said that such things “are challenges for the Big Six, not challenges for the people who take on the Big Six”.
For years, the ‘Big Six’ energy suppliers – British Gas, EDF Energy, E.ON, Npower, SSE and Scottish Power – have weathered an immense storm as the issue of consumer energy prices has become more politicised.
This has broadly been to the benefit of ‘challenger’ energy suppliers, which have exploded in number over the last decade – from around 11 to around 60 – wrestling market share away from the ‘Big Six’. In September last year, it was reported that the ‘Big Six’ suffered a record loss of more than 160,000 customers in a single month – customers who moved to smaller energy suppliers.
Likewise, it’s also the case that new market entrants have not been hamstrung by the same legacy issues affecting the ‘Big Six’, including the need to deal with coal-fired power plants, big bureaucracies and IT systems “from the wrong century”, as it was recently put by another Shell executive.
The evidence points to Mr van Beurden being correct. However, his comments do not tell the whole story. In the past few weeks’ public scrutiny has turned its focus to the very companies taking on the ‘Big Six’, arguably more so then ever before.
The collapse of two smaller energy suppliers in January – Future Energy and Brighter World Energy –has raised serious questions as to whether new entrants can legitimately hold their positions within the UK energy retail market. The collapse of both companies was, in part, due to their inability to handle the heat when it came to rising and volatile wholesale energy prices, something which larger suppliers are in a much stronger position to deal with.
What does this mean for ‘challenger’ energy suppliers that remain in the market?
Clearly there is a risk that the failure of a few smaller firms will leave others ‘tarred with the same brush’ – a potential crisis of confidence may leave smaller suppliers’ existing and new customer-base feeling nervous that they too could find themselves left in the lurch by the threat of their current supplier collapsing.
From a communications perspective, ‘challenger’ companies will now need to work much harder to gain and maintain a social license to operate. These companies may even go so far as to drop the ‘challenger’ tag all together.
Smaller energy firms may do well to reassess whether their ‘challenger’ status really can instil the confidence that current and potential customers are looking for. To put it another way, ‘if you want to play with big boys, you need to start acting like one’.
Van Beurden was of course talking about Shell’s purchase of the UK’s largest independent energy supplier, First Utility. With the financial backing of a multi-national oil and gas major, there is scant danger of First Utility becoming the next Future Energy.
However, a corporate takeover represents a different challenge altogether. The challenge for First Utility is how it can achieve growth and success whilst still maintaining its brand values – taking on the ‘Big Six’ without becoming one of them.
How does First Utility avoid becoming a ‘Wolf in Sheep’s clothing’?
Looking beyond the energy retail market and taking lessons from other industries might be one way to go – internet broadband provides a remarkably good example. Following a major cyber-attack in 2015, TalkTalk set about returning to its roots as a ‘challenger’ to the likes of BT and Virgin, by refocussing on why customers were attracted to what they stood for in the first place.
For TalkTalk, moving away from celebrity-driven campaigns, ditching separate line rental charges on all packages and moving to a single combined monthly price, were all part of the drive to reposition as a ‘challenger’.
How does this translate to energy suppliers?
Above all, stay true to the reasons why customers picked you in the first place and demonstrate this through the way you communicate – if innovative pricing, high quality customer service and cutting-edge technology are the reasons why customers choose you, then this is the story you should continue to tell.
While van Beurden is correct in that the challenges facing smaller energy suppliers are not the same as those facing the ‘Big Six’, the reputational risks are just as present. With the energy market landscape quickly changing, companies must always be looking to assess their reputation and reposition.
Madano is a fully integrated communications consultancy that specialises in advising clients in sectors where communications and positioning are critical to success. Our Energy Practice works for clients across the energy industry.
Written by Sarah Park, Head of Built Environment.
Gender Pay Gap Reporting couldn’t come at a more relevant time. We’ve just celebrated 100 years of suffrage and gender has been one of the major news themes and a subject of widespread commentary so far in 2018. From a strategic communications point of view it has been interesting to listen to the varied reasoning for a disparity in pay, from gender-make up to ‘accumulation of experience’ to those whose reporting is downright ‘statistically improbable.’
The widespread interest in the debate will make the April 18 reporting deadline a media and cultural milestone, when gender pay gap stats and figures from companies with over 250 employees will be in the public domain. The data will fuel the debate about equality and fairness and companies and brands will be held to account.
Alongside reports, companies will need to provide a narrative; to create statements and offer clarification that articulates disparities and sets their data within a truthful context; they need to know how to communicate the final report to their employees, their clients and yes, to the media if and when the media starts to scrutinise. As social media conversations span thousands of networks and followers in a second, it is important to have a strategy that will stimulate some control of the messages going out. Most business care what people think about them, it’s called reputation, and many fear the repercussions of their imminent Pay Gap Reporting.
It’s at this point we could simply shrug and say ‘so they should.’ As a woman I have a vested interest in the topic of equal pay.
What is interesting about the role of strategic communications today is narrative is no longer a well spun story or a thin veil aimed to distort the truth. Today’s communication strategies are the result of long conversations about what is fair, what is right and what we can do to make a difference in the future. Today’s communication strategies are impactful because they are a catalyst for business change. This is why the role communications is so often, and rightly so, part of the board level discussion and an integral element to the success, or failure, of a business or brand.
The decisions made in the past about equal pay are in the past, today we can all be held to account to deliver what we say we will deliver. If a business creates its Gender Pay Gap narrative with an assurance to implement changes about how it intends to conduct business in the future, then they will need to do so, communications is no longer simply about words but about action.
Madano helps clients define strategy and deliver their objectives through insight, creativity and communication.
Written by Oliver Buckley, Senior Associate Director, Energy
Blockchain is a fantastic case study for communications professionals.
The media has hyped it up, as is often the case for new technologies. Bitcoin, which is the most widespread and best-known example of blockchain in use to date, has had massive press coverage globally.
Tyler Winklevoss, the world’s supposed first bitcoin billionaire, said about the cryptocurrency: “We have elected to put our money and faith in a mathematical framework that is free of politics and human error.” A bold claim.
It has been reported in multiple well-respected publications that Bitcoin has a very hungry data-mining requirement. It has even been reported that Bitcoin uses more power in a year than the country of Ireland.
However, Bitcoin is just one application using the blockchain platform. What is less well understood is that Bitcoin’s power requirement is because of the data mining undertaken by people around the world who can earn money from these activities. Blockchain itself isn’t necessarily the issue. Even so, Samsung recently announced that it was developing chips designed specifically to harvest cryptocurrency coins, the theory being that these chips use less energy than traditional computer chips.
Another issue with Bitcoin is that so many people perceive it as an investment asset as opposed to something that can have actual applications in the real world. This could sully the image of investments being made in blockchain concepts, pilot trials and start-ups, some of which hold a great deal of promise. Moving the mindset away from this will be a challenge but will be necessary if blockchain is going to be accepted by the public.
Leaving aside the cryptocurrencies, the developing role of blockchain in sectors across the economy is clear to see. Applications are being tested far and wide: in healthcare, financial services and energy to name a few. Blockchain, alongside Artificial Intelligence and cybersecurity, were the hot topics at Davos in January.
What I hope to see in the public domain in due course is a narrative that seriously tackles the perceived weaknesses of blockchain. This is where start-ups, large corporates, government and thought leaders can step forward and ‘own’ the space.
Blockchain won’t solve every issue in every sector. Nor does it need to. If a simple Excel will do, you don’t need blockchain.
Furthermore, no technology is perfect and there will always be human error so solutions will inevitably be found to resolve common issues. It’s easy to get fixated on the downsides of a new concept, but faults can get fixed. Communications will therefore be required to set the positives in context against the negatives.
Ultimately, we don’t know how influential blockchain could be. Could anyone have imagined the speed and scale of change caused by the introduction of the internet? Or smartphones? Now people could hardly imagine living without them. It could be the same with blockchain.
The energy sector is one sector where blockchain is building momentum. A White Paper developed in 2017 by the World Energy Council and PWC concluded that ‘outside of the financial sector, the energy sector is seen as one of the industries where blockchain could have the biggest transformative and disruptive impact’. Interviews with senior executives in the energy industry showed that:
• 93% believe that blockchain will be able to disrupt the functioning of the industry and contribute toward accelerating the speed of the energy transition.
• 87% think that blockchain technology will start making the most disruptive impact within the next five years.
Take the following example: blockchain creates a much more direct relationship between energy producers and consumers. Individual households that generate power (via solar panels or battery storage for example) can buy and sell electricity with their neighbours, utilising smart contracts that transact automatically. The blockchain records when and where each kWh was produced and assigns this to a consumer, so the certificate of origin is guaranteed.
Such systems are being piloted now – the best known of which is the Brooklyn Microgrid project in New York – with the theory being that such a grid is able to function separate to the main national grid. Terms such as ‘decentralisation’ and ‘disintermediation’ have caught on in describing the benefits of such a system. If the pilots are successful, the systems are rolled out, and people buy in to the concept, then we’ll see a significant change in how the energy market works.
The blockchain journey has just begun. Whether you’re for or against it, there is momentum. The role of the communications professional isn’t to explain how it works, but that it works.
Madano is a fully integrated communications consultancy that specialises in advising clients in sectors where communications are critical to success. Our Energy Practice works for clients across the energy industry, including blockchain, grid technologies and renewables.