Cross-Channel in Northern and Southern Europe

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In recent years, two factors have left their mark on the European energy market. Firstly, since the 1st of July 2007, this market has been liberalized, which has resulted in a serious battle for customers, especially in the Northwest of Europe. Secondly, modernization has contributed to more powerful and more empowered consumers. Technological developments in the field of media and communication have brought more knowledge to the consumer and have created many opportunities to interact. This has rendered him more critical and more demanding, not only in terms of the price he pays, but particularly in terms of services offered to him. Therefore European energy companies have adopted a different approach towards consumers.
 
North versus South: self-sufficiency versus personal contact

We see that companies are developing a cross-channel strategy to enable a service level that corresponds to the needs of the modern consumer. This cross-channel strategy differs  among the various energy suppliers however. What do these differences consist of and can it be concluded that one strategy is better than the other? Two main streams can be distinguished. The first stream focuses on efficiency, self-sufficiency and little or no personal contact between the company and the customer. This approach is seen especially in the UK, Germany, Belgium, The Netherlands, Luxembourg and Scandinavia, i.e. the Northern European countries. The second stream could be described as more personal, with intensive customer contact both to win customers as well as to retain them. This strategy has been adopted by companies in Italy, Spain and France, i.e. the Southern European countries.

Overview Cross-Channel Stratgey North vs South

Comparison North South

Frequency of channels used/offered by companies: high, medium, low

* benchmark performed by Eurogroup Consulting during Autumn 2012

 Possible explanations for the different approaches: culture and competition

Culture may play an important role in the differences between the Northern and Southern approach, Personal contact might be more embedded in the Southern culture than in the Northern one. This seems to be anticipated by the energy companies in the South who offer physical stores and one-on-one conversations on the phone.Also the strategic environment of the companies seems to contribute to the differences in customer contact approach. In the North, the high level of competition compels companies to become more innovative and creative in order to develop customer loyalty. This could be an explanation for the emergence of advanced websites, mobile applications and other innovative communication tools which enable a customer to arrange almost everything by himself. Another aspect of this competition level, is cost savings. To be able to offer low prices, costs must be cut. This may explain the loss of personal contact between customers and energy companies in the North. In the South, it seems just the opposite. Most of the time, only one or two companies within a country are actually calling the shots. This could mean that these companies are not really forced to be innovative, which could lead to a lack in technological developments and range of services offered to the Southern customer. In addition, lower income levels might be a second reason. The average income and the number of internet and smartphone users are much lower compared to the North and therefore the demand for channels might be less exigent as well.

 What does this mean for Europe-wide operating energy suppliers

It is clear that there are several differences in the cross-channel strategies for energy companies in Northern and Southern Europe. Isn’t it much more interesting and relevant, instead of explaining the rationale of the differences, to anwer if one strategy is better than the other? And are company results in the North better than in the South, or the other way around? Actually, a deeper question lies behind: how do international companies cope with the cultural specificities of each country in which they are located? Is it necessary to adapt themselves each time they enter the market in another country or not?

This article was posted on Eurogroup Consulting Energy earlier this year