When every company is selling the same thing, how does a brand make itself stand out amongst the pack? And, not only stand out, but thrive.
For many years, Trustpower was a company that wasn’t particularly marketing-led, and it was quite happy to keep ticking along, maintaining its customer base, but not growing it.
New customers were acquired, but at a rate to replace much lower levels of customer churn than is now seen. These customers could be acquired through traditional direct sales channels without the need for any great investment in product development, customer insights or brand.
Yet, Trustpower knew it couldn’t continue in this manner. The Electricity Authority was actively encouraging new retailers into the market. And, as it stands, there are now around 40 electricity retailers in New Zealand, all fighting for the same customers. There are even websites like ‘Power Switch’ encouraging consumers to seek out a better deal.
And of course, with increasing competition, company churn rate also increased. The people who were likely to switch to Trustpower were also just as likely to switch to the next provider that offered an enticing deal.
Since power is a commodity, levels of consumer engagement with the sector are also low. As long as the lights go on people don’t tend to interact with their power company, except to pay their bill. Qualitative research shows that many consumers do not even know which power retailer they are with.
In 2007, Trustpower recognised the potential in offering telco services in addition to energy and it started retailing home phone and broadband under a separate brand – Kinect. At the time, energy and telco services were managed separately within the company.
Though the move into the telco market was good for Trustpower, it needed to find a way to stand out from the crowd and emotionally engage with its consumers.
In 2013, Trustpower found the answer and underwent a radical change in strategy.
Rather than offering its telco services separately, Trustpower opted to bundle its services together.
It believed this would have benefits for both Trustpower and its customers. For Trustpower, its customers would be more valuable and stickier than energy-only companies; and on the flip-side of the coin, customers would benefit from having only one company to deal with and one bill to pay each month for multiple services.
When Trustpower committed to bundling energy and telco services as its marketing strategy, it was unique in New Zealand. In fact, only a handful of companies globally were attempting this. It was a massive risk, especially when the company’s brand awareness wasn’t particularly high.
Trustpower’s visual branding was also tired, and if it was ever going to stand out with its new offering, its look would need a shake-up. So, it created a new, distinctive logo and visual identity that would build brand image and communicate the idea of bundling to New Zealanders.
In April 2014, the bundle proposition was launched in New Zealand cities. And while Trustpower had not used above-the-line media extensively for many years, in order to build the brand quickly, it used TV supported by outdoor, online and direct marketing.
Captain Energy and Broadband Girl were then introduced to build a brand personality and to communicate ‘Good things happen when power and broadband get together’. As a result, brand awareness and consideration rose rapidly.
To build a successful brand, it also needed to understand what its customers wanted a multi-utility brand to be. So, it carried out extensive research into the different segments’ needs, wants and motivations, and looked into attitudes towards Trustpower’s services and the role those services played in their lives.
It used this insight-led approach to better develop brand propositions and understand what was desirable to different groups. This research then led to the brand blueprint being re-defined in 2017 to reflect changes in the company, the competitive environment and consumer behaviour, to better position the company for continued growth.
Trustpower’s risk paid off. The company is now the fourth largest provider of fixed line broadband services in New Zealand and the rate of growth in the telco market was much higher than initially forecast.
Trustpower set a goal of growing the number of telco customers by March 2019. By March 2016, it had exceeded the target by 11 percent and three years ahead of schedule.
A new target was set for 31 March 2018 and it achieved 8.75 percent above target by this date. It also reached a milestone number of customers taking two or more services from the company, an increase of 11 percent in the last nancial year. Eighty percent of new customers now join Trustpower for two or more services. Bundling has proven to give Trustpower a competitive advantage over other power retailers. Between April 2014 and March 2018 it had the biggest customer number increase, compared to Mercury, Meridian, Genesis and Contact.
Further, Trustpower has disrupted the utilities sector. So much so that multi-utility has now become its own category, with companies including Slingshot, Orcon and Contact all entering the multi-utility space in the last 18 months. The fact that other utilities had to implement their own multi-product offers in order to compete is the greatest endorsement that Trustpower’s bundling strategy could have.
Gross margin per customer is 29 percent higher for customers taking electricity and telco than it is for electricity- only customers. For customers taking gas as well, it is 44 percent higher. And, incredibly, monthly gross margin from bundled customers has grown by 64 percent over the past two financial years.
Trustpower also managed to x its churn problem, as customers who take a bundle of energy and telco services churn at a rate around a third lower than customers who do not take telco. Overall, Trustpower’s customer churn is 10 percent lower than the electricity market average.
It’s also continuing to perform and outdo itself. For the financial year ending 31 March 2018, Trustpower increased net pro t after tax by 35 percent; and increased retail earnings by 33 percent and increased EBITDAF (earnings before interest, tax, depreciation, amortisation and fair value adjustments) by 22 percent.