From KING PRICE To KING DAVID
by Tom Pinnock
Gas and electricity markets will be fundamentally transformed over the next five years. We can help to drive this transformation. If we care enough.
Every Spring, the same things happen with metronomic, Biblical inevitability.
The temperature rises. My dog remembers the river and decides he’s Michael Phelps in fur. And I have an uncontrollable urge to buy a Nest.
What Nest have done — combining hardware, design and UX with an implicit philosophy that your home should be intelligent and connected — to make the dumb thermostat desirable is ambitious, courageous and incredible. I wonder whether the same transformation could be applied to Nest’s less attractive cousins: electricity and power.
The UK energy market is the definition of an inert, commoditised market. According to Opinium’s latest research into the UK Energy Market, only 30% of the market claim to be likely to switch provider in the next 12 months. Price is the core driver of switching, though customers would need to save between £98 and £120 a year in order to do so. Despite the importance of price, two thirds of respondents had little or no understanding of price cap legalisation or how it might affect them. This reflects an unexpected side of their inertia: satisfaction. Supplier satisfaction rates hover between 83% (rising) for independent producers and 70% (slightly falling) for the Big 6. The White House would love to have those approval numbers.
The most alarming figures concern the need for renewable energy. Three quarters of Energy Decision Makers think that a 100% renewable energy supply is important for them, their children and their future. But only 61% would pay more for such a supply. Unsurprisingly, this percentage is higher amongst 18 — 34 year olds (79%) and lowest amongst those aged 55 and over (48%).
If you believe Malcolm Gladwell that a brand is a vote for a particular kind of world, this is depressing. Energy choices are an important and literal vote for the kind of world our children will inherit, yet category behaviour remains mercenary: pay me, then I’ll care.
What can be done to improve this situation? I believe strong brands, with all their intangible and irrational promises can help. There is a simple case both for transformation and the increasing importance of brand in the category:
First, as the proportion of the energy wholesale market that is renewable rises, being “green” will become the norm not a differentiating idea;
Second, price capping legislation, and education around it, should lessen the impact of price as a key driver and differentiator and create the need for brand-based differentiation;
Third, with fungible energy bought on the wholesale market, the brands who sell it don’t have to be or act like engineers, chemists or miners. They can represent ideas reinforced by customer service and experience, not technical expertise;
Fourth, advances in battery technology (including product design) will empower us to sell our surplus energy back to the grid: a passive market in which the consumer has zero economic power, will become an active income stream in which brand has a tangible economic benefit;
Fifth, there is latent emotion in gas and electricity that few utility brands have ever captured. These seemingly dumb, invisible utilities keep our homes warm, connected and safe and shape the world our children will inherit. These elements were once considered magic, even if they have now lost their sense of wonder;
Sixth, every survey I have seen of “Millennials” — soon to be the largest generation on the planet — suggests that they care deeply about environmental issues and want brands to do more to resolve them.
If this case sounds far fetched, consider the following thought-experiment:
David Attenborough launches an energy brand called “David”. You hear David’s voice on the automated portions of their phone lines. You see his signature on every letter you get sent. Every member of staff who is recruited shares David’s love of and respect for the planet. And most important of all, rather than framing the quarterly cost of power as a bill, David follows a subscription or charity model.
In return for your money you don’t just buy power. You buy extra Planet Earth content. You buy entry into a prize draw to accompany David on an expedition to the North Pole.
You are a shareholder who gets invited to an annual general meeting to discuss and vote on the environmental projects that David should support — with money, publicity or protest. And so on.
My argument is not that such a brand would be attractive to everyone. It won’t be.
It would be a premium, exclusive proposition that over time moves from being a fringe, odd choice to a mainstream virtue signal - the equivalent of a Toyota Prius on your drive or a Nest on your wall.
Neither is this an argument that David deserves to exist. It’s more a plea to creative agencies around the world to treat utility clients with imagination and verve, rather than settling for average work on the assumption that no one will ever care enough to notice better, braver, more thoughtful ideas.
We should see utility brands as a challenge, a test of our skills and abilities to make people care. It’s an important challenge. Bring it on.
Tom Pinnock, Strategy Director,