THE BLOG
06/11/2013 06:41 GMT | Updated 23/01/2014 10:52 GMT

'Untarnished Transparency' Is the Only Way Back for Energy Companies

"I speak for a company that is proudly operating power stations and proudly investing in new power stations to ensure the lights stay on."

These are the words of Tony Cocker, the Chief Executive of E.On, attempting to justify the 10% rise in energy prices over the coming year. Perhaps his reasoning is valid, but the questions that immediately jumped into my mind were: have energy companies not anticipated the backlash from the price increases? And why haven't they prepared better to address consumer and regulatory concerns?

Perhaps, the answers to these questions have led to the following findings from a 2013 WHICH? Survey. According to the survey, only 15% of the general public trusts the energy sector to act in our best interest. This level of trust shown by the general public is now lower than the mobile phone industry (31%) and the banking sector (33%).

I think from a communications standpoint, energy companies could (and should) be doing a lot more to rebuild consumer trust:

A breakdown of the figures

Energy companies should be more transparent and structured in the way they justify price increases.

The disparity between what Ofgem and the energy companies have said has left the latter in an awkward position. The four energy firms that have announced price hikes so far, have said that the rises are due to increasing wholesale prices, and the cost of transporting energy to homes.

Ofgem statistics, however, tell a different story, showing that wholesale electricity and gas prices have risen by just 1.7% over the last year, while consumers face a massive 10% increase.

Furthermore, smaller energy companies such as Ovo Energy, agree that the claimed hike in wholesale prices is not what it seems.

Added to this, there is also the argument about carbon levies and how much they add to customer

bills.

The debate is getting complicated and that's where energy companies can claim a communications advantage by building a strong, cohesive and relevant strategy that clearly communicates why prices have risen. Energy firms shouldn't underestimate consumer intelligence either: the majority of the general public are acutely aware of how simple economics work and will be open to "hearing" an argument that is presented in a relevant and informative way.

All that it takes is for one of the energy companies in question to differentiate itself from the rest of the crowd through clear and transparent communications on the issue that actually addresses what consumers want to know. Competitors would then be forced to follow suit, or risk damaging their brand so badly that they begin to lose market share.

Keeping with the digital age

Energy companies appear to have missed the fact that we are operating in a digital age where transparency means everything. In an instant, we are now able to compare car insurance, home insurance, mortgage rates and transport costs - so why should the energy sector be any different? Consumers can now compare prices instantly and expect to be given information on every aspect of every transaction.

Energy companies ought to be taking advantage of the communication channels that the digital age offers and engaging with stakeholders in a way that leads to constructive dialogue. Videos and info-graphics, as well as participation in online forums that encourage two-way conversations with consumers are only a few examples of what energy companies can do to explain their reasoning behind the increases.

Communications relevant to the consumer

It's important to remember that communications cannot only be engaging; they must also be relevant. In the B2B space, this excellent McKinsey article highlights new research showing that there's a surprising gap between the brand messages that suppliers offer to customers, and what their customers really wants to know. Interestingly, 'Honest and open dialogue', which customers considered most important, was one of the three themes not emphasised at all by the 90 companies in the McKinsey sample.

A similar communication gap seems to have appeared within the energy sector where the big four have failed to anticipate what their stakeholders really want to know, and address it accordingly.

To me this is surprising. After all, it is well publicised that the annual spend of the big energy companies on communication related activities, such as advertising and PR, is astronomical. Perhaps, they should refocus their efforts by tracking stakeholders' sentiment and ensuring that their communications are in line with it.

There is no doubt that there is an increasing 'trust deficit' between energy companies and their key stakeholders - consumers and regulators. Reactive statements following public outcry and calls for political investigation is no longer enough. Energy companies need to take note from other industries, like retail, and proactively engage with their key audiences in a way that is transparent, relevant and creative.