You might have seen Cool Hand Luke, the classic Hollywood prison drama. Paul Newman is the eponymous hero, who simply won’t conform to the rules set by the warden, known in the film only as Captain.
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In a now iconic scene, the indefatigable and strong-willed Luke interrupts the Captain with a mock-ironic comment. The Captain savagely strikes him on the back with a truncheon, and Luke falls to the ground.
Standing over his prisoner, the warden intones the sentence which has become something of a meme: “What we’ve got here is a failure to communicate.”
As an academic and a branding expert, for the past 15 years I have been studying energy companies. I have looked at how they communicate with audiences both internal and external, and assisted them in developing their brands and branding strategy.
Aiming for greatest scientific rigour in my work, I founded a field of study I have dubbed ‘energy branding’. From my explorations of the subject one conclusion overarches all: the global energy industry – without wishing to sound the hard-bitten warden to a resourceful and indominable industry – does seem to have ‘communications issues’.
Two examples – one of which might strike you as somewhat bizarre.
When I was doing research for my first book some years ago, I spoke to representatives of energy companies across Europe. Many of these companies were former state monopolies, forced by EU legislation to divest and compete.
As it turns out, these businesses did not traditionally refer to their clients – meaning, retail customers either as customers or clients, but ‘meters’. That is, residential power consumers were thought of as individual metering device at the other end of the transmission line. And that is where energy companies’ customers service and client relations stopped.
Why worry about what is going on beyond the meter if you are selling a commodity that ultimately everyone must buy? And certainly why throw money at advertising?
The other example comes from the CMO (chief marketing officer) Survey from Deloitte, Duke University and the American Marketing Association. Now in its fourteenth edition, the report looks at corporate marketing spend and strategy.
In 2016, out of the 13 industrial sectors surveyed, energy came last in terms of marketing spend as percent of overall company budget. The result that year was far from unusual, and yet when it comes to rating their internal marketing knowledge, energy companies tend to be the most self-assured.
In the 2022 CMO Survey, executives polled awarded themselves an average grade of 5.4 for ‘quality of marketing knowledge’ (where 7 is ‘excellent’ and 1 ‘poor’), against a cross-sector average of 4.3. So, while energy companies are notoriously stingy marketing spenders, they seem to think that they know more about it than anyone else.
Now, all of the above is perfectly understandable in the old paradigm of centralised energy systems, powered by monopolistic or state-run utilities. Why worry about what is going on beyond the meter if you are selling a commodity that ultimately everyone must buy? And certainly why throw money at advertising?
But, the old paradigm is fast being consigned to the scrap-heap of history. Old monopolies have been replaced by legions of ‘space invaders’, new market entrants fighting for each customer – not just for each meter – in every subsector of the energy business, from generation and transmission to retail and service.
And although energy is a commodity, both as fuel and electricity, it now turns that some types of energy are far better than others. The energy transition from fossils to renewables is certainly inevitable, but the shift to production of clean power, however, will need to bringing with it a much greater degree of individual and social participation.
This means that energy companies need to get much better at communicating with customers. In marketing speak, they need to get ‘closer’ to customers, or move to a greater degree of customer-intimacy.
After all, the evolution into the next era of climate-benefiting power generation will require us to open our homes and communities to virtual power plants, storage devices and charging networks. It is a hearts-and-minds challenge, not necessarily an engineering one.
As Marc Jacobson’s recent book is optimistically titled: No Miracles Required. The world already has access to all the various technologies – wind, solar, hydro, hydrogen electrolisers and new-model energy storage – needed to fully decarbonise the planet. But, to accomplish that the energy industry can’t allow itself ‘communication failures’. It needs to learn to communicate – and learn quickly.
· Fridrik Larsen is on the faculty of the University of Iceland in Reykjavik. He is the author of three books on energy branding, including Sustainable Energy Branding – Helping to Save the Planet, published in February by Routledge