Building Loyalty in a Commodity Market

Customer Loyalty
Customer Experience
How do you make a company that sells a commodity like energy stand out? How do you get customers to recognize you, select you, and stay with you?

How do you make a company that sells a commodity like energy stand out? How do you get customers to recognize you, select you, and stay with you? TXU Energy focuses on four basic brand builders: be trustworthy and transparent, customer centric, innovative, and dependable."Let's do what we do best and tell customers about it, focus on customers, find innovative ways to engage customers, and be there when customers need us," TXU Energy CMO Michael Grasso said this morning during his presentation at Loyalty 360's Loyalty Expo 2012. This approach links closely with the company's customer value proposition: "Right Thing, Right Now." What this means, Grasso explained, is that the company focuses on interaction points like helping customers to understand what they're paying, staying connected to the company in ways they prefer, providing control over their spending (e.g., help them easily reduce their bill), and keeping them informed.

For TXU Energy, building customer loyalty begins during the acquisition stage of the relationship. "Acquisition is the first point of loyalty," Grasso said. "If you bring customers on for the right reasons you'll retain them." TXU uses its key areas of differentiation to attract customers. These include a cash-back program (or customer can get Southwest miles instead of a rebate) and communicating rates clearly in its marketing communications; the company doesn't use bait-and-switch plans that start with low rates and then quickly increase, Grasso said.

For existing customers, giving them control and keeping them informed are two key loyalty drivers. Consequently, TXU Energy provides several tools that help its customers do both. This includes interactive thermostats that customers can adjust remotely via their mobile device or by going online; a forecasting tool that shows customers past usage and helps predict future rates; a mobile app that customers can use to view usage and pay bills; and a Personal Energy Advisor tool online that provides advice on ways to lower energy spending. The company also sends budget alerts to customers that include links to relevant online tools and content.

According to Grasso, these tools align with customers' needs because they can better understand their bill and then have more control over their usage. TXU benefits, too. "They call us less," Grasso said, adding that customer service costs have decreased as a result. Additionally, three quarters of the customers who use these tools have become advocates.

"We're connecting with consumers in new ways that competitors aren't offering," Grasso said. As a result, engagement is growing. "One TXU customer tweeted, 'I just think my TXU app is freakin' cool.' How great is that, that a customer said anything about their energy company is cool?!"