Brand purpose in the utilities category: when everyone’s questioning your motives, you need a higher purpose

You don’t even have to have read the news recently – with Eon and Age UK accused of pushing ‘rip-off’ tariffs onto pensioners, or Scottish Power and SSE only cutting gas prices once Spring has sprung – to point out that public trust in the utilities category is in short supply.

In 2014, the respected Edelman Trust Barometer annual survey stated that just 35 per cent of UK adults trust utility companies ‘to do what is right’. This is way behind the corresponding score for business overall (56 per cent) and only slightly ahead of the figure for banks (32 per cent). People in the UK are less trusting of utilities than those in any other country surveyed – with the sole exception of Russia, which may not be much of a consolation.

In the past, this trust deficit, while undesirable, has not necessarily been a major barrier to ongoing commercial performance. As a low interest product, with a very low frequency of customer engagement, utilities fell firmly into the ‘set it and forget it’ category of brand choices for most consumers.

However, the arrival of two enabling technologies is set to change that trend – smart metering and the Internet of Things (specifically ‘connected home’ systems such as smart thermostats) – promise both a step change in the frequency of customers’ engagement with their utility providers and a corresponding shift in their relationship with these brands from entirely passive to rather more active.

As a result, utility companies must face the challenges that come with being a true service provider – or instead risk having their customer relationships usurped by a consumer tech brand, leaving them relegated to commodity status, where they’re just one name on a long list of indistinguishable, interchangeable suppliers.

This is where a brand’s purpose comes into play. If consumers are starting to think of their utility provider as a service brand, and begin to interact with that brand on a more regular basis, then the question of trust can no longer be left parked to one side.

At Naked, we believe that consumer expectations have shifted dramatically in the past two decades. In an age of near-total transparency, people now expect more from the brands they buy. They will routinely question how a product is made, how it’s supplied and, more fundamentally, they will judge the motives of the company behind the product. Is the brand simply a marketing tool – a cynical ruse to increase free cash flow and shareholder value – or is there more to it?

It’s our belief that those brands with a genuine purpose, with a reason to exist beyond just generating profits, are the ones that will thrive. A clear purpose signals the brand’s motives to customers and employees alike – irrespective of how emotional or rational the category may be. Put simply, if every provider supplies an identical product, then we’d generally prefer to spend our money with a company that we feel is in business to change things for the better (whatever form that may take).

Applying Insights on Brand Purpose to Utilities Brands

1. A clear purpose acts as a North Star

Changes in the wider category – wholesale input prices, changes in the regulatory framework, even unforeseen weather events – can throw the best-laid plans into disarray. Which is why defining and keeping sight of the brand’s purpose is so important: it helps a brand maintain consistency in its stance, even as it reacts tactically to changing market conditions.

2. A compelling purpose keeps a brand true to itself

As all utilities within a given sector essentially sell the same basic product, there is an ever-present risk of losing distinctiveness and becoming seen as just a different logo at the top of an otherwise identical quarterly bill. That is why a compelling brand purpose is so relevant within the utilities category. Even if a brand’s product is the same as its competitors’, it can have a very distinctive underlying purpose as a business.

3. A strong purpose opens up the ‘adjacent possible’

Technology is transforming the nature of customers’ relationships with utilities, as the service evolves from one of a supplier where the only touchpoint is the bill and (maybe) the contract renewal, towards becoming a service provider with regular and more engaged customer contacts. Increasingly, utility firms will also offer in-home technology and digital apps alongside the basic offer of fuel and water.

A strong brand purpose can be the rationale for consumers that make sense of why a brand is expanding from its original area of operations – because it exists to address a need that’s broader than just that one service type.

4. A shared purpose unites an organisation

Utility companies can have an almost tangible divide between ‘operations’ people and ‘head office’ people: engineers out in the field versus the white-collar desk jockeys in finance, marketing and HR. And that’s before you factor in the customer contact centre. It’s all too easy for different perspectives to take root and become more like out-and-out disagreement.

This is where a commonly understood brand purpose can play a vital internal role, by providing a shared belief system that sits above individual job roles and can help unify disparate teams.

5. A deeply held purpose holds a brand to a higher standard

As utility businesses look to broaden and deepen their relationships with customers by introducing new technologies into the home and offering new services as a result, the issue of trust becomes ever more important and the reputational stakes are raised higher. Flames of controversy, which can be sparked by a relatively minor decision in one product category, could also be fanned by press and social media, tarnishing brand trust across the board.

When a brand diversifies its service, the number of risk areas is multiplied, and the number of decision-makers whose choices impact brand health increases. In such circumstances, a brand purpose that’s deeply held can help these decision-makers avoid making expedient choices that risk damaging long-term value – whether in their product line or elsewhere.

Will Collin, founding partner, Naked Communications