This will require a more complex, more mature relationship with customers and one in which social media platforms such as Facebook, YouTube and Twitter look increasingly best-placed to handle.

Based on research reported in the Exelon 2009 Social Media Benchmark Survey approximately 93% of consumers believe that a company should have a presence in social media, and 85% believe that companies should adopt social media as the way of interaction with consumers. In addition 83% of utilities are interested in using social media and 60% are already using Twitter to a certain degree.

However, as the survey revealed, the impact of social media is currently very limited as most companies’ online presence does not correspond with their size and client base. This is particularly true with utilities. npower does not have an active Facebook page nor a Twitter profile. The company’s social media presence is focused on YouTube but has just 69 YouTube subscribers in spite of its 6.8 million customers. Elsewhere, EDF and E.ON do not have official Twitter profiles while SSE has a Twitter account followed by 640 people and ScottishPower has 136 followers, but has only 1 tweet posted on the 6th of February 2010.

British Gas is one of the most successful utilities in terms of online communication and client engagement with Centrica finishing top of the "Online Corporate Communication " survey by KWD for 2010. The company currently has 106 subscribers in YouTube and 2,086 followers in Twitter – still a fraction of its customer base, but substantially more than its competitors. British Gas uses its Twitter account for customer service queries, to promote its campaigns and to account for its decisions, such as MD Phil Bentley’s defense of its price hike last year.

Alva’s reputation analysis has identified that companies who regularly interact with consumers via social media score higher for the Stakeholder Engagement aspect of their reputation, which in turn has a positive correlation with customer retention. Indeed, British Gas parent Centrica was Alva’s top reputational performer for January.

Utilities should understand that the use of social media is no longer a choice; it is something that must be implemented in their fundamental operations in order to respond to the increasing need of customers for a fast and efficient interaction with their service providers. Companies that undertake this step change are likely to be rewarded by an improved reputation, more engaged customers and ultimately better customer retention.

 

—- By Nicholas Chrysanthou, Energy Consultant Analyst at Alva