Ben Quigley
Ben Quigley 15 January 2019

How functional brands can challenge the challengers by creating stronger communications strategies

Finding a distinctive voice in a functional market has always been a struggle. But never more so than now. From FS to insurance, telecoms to utilities, challengers have stepped in to shake up the status quo, leaving established brands reeling. Consumers are switching service providers more than ever, reticent to commit to lengthy contracts when there are a host of new challengers on the block. In the face of this competition getting brand communications right has never been more important.

More than 630,000 of energy consumers in the UK switched to new providers in October 2018, marking the highest switching surge since 2013. This was hardly a shocking move. In 2017, almost a quarter said they’d be seeking a new provider in the new year. The entire utilities market is facing major disruption with customers abandoning traditional providers in favour of shorter contracts and competitive rates from smaller brands.

Challengers have infiltrated everything from FS to insurance, telecoms to utilities, leaving big brands in the functional markets finding it hard to increase revenue in previously fool proof ways. Disruptors understand how different channels offer different opportunities to communicate with existing and prospective customers and therefore are ahead of the game in creating content that will cover the touchpoints to guarantee high returns. Established brands on the other hand tend to revert to cutting costs, which in turn tends to damage their reach and undermine their possibilities for growth.

Our recent consumer research into utilities communications revealed that significant numbers of consumers feel their needs are misunderstood, one in ten consumers report receiving no communications at all, in spite the breadth of channels available. In fact, the channels used by the sector are severely limited, with only 16% of consumers having been contacted through radio, SMS, print, direct mail and outdoor advertising. Key findings include:

  • Large inconsistency in life stage targeting, with almost a fifth of pensioners facing a marketing blackout by utilities companies
  • Almost half (46%) of empty nesters remain indifferent towards marketing from the sector
  • Only a mere 7% of pensioners feel their needs are understood

These statistics are a clear indication of how important a role communication plays in laying the foundations for success in functional markets. So, how can brands overcome the challengers? We have identified seven steps to success, based on our experience in helping brands across a variety of sectors, underpinned by the findings of our research in utilities marketing.

  1. A strong brand goes a long way

Challengers understand the power of a strong brand. Think of how dull insurance was prior to the arrival of Sergei and Aleksandr and their ever-growing meerkat family. Finding a distinctive voice is key to remaining memorable. Price is of course a key factor for functional brands. But livening up a category that has historically been seen as less than creative can liven up consumer interest. Not only this, but a strong brand can help create much more lasting connections.

  1. Content is king…

According to our recent research, a quarter of all respondents feel they do not receive enough guidance from utilities companies. Customers need better insight into what they’re spending to help them in future purchasing decisions to choosing the right tariff. This can only be achieved by creating the right content and serving it to relevant audiences. Discounts and promotions (34%), advice on sticking to budget (25%), better customer service (22%) and help in choosing products and services (20%) were all requested by respondents.

  1. …but nothing without context

Content without context, however, isn’t enough. What sets a brand apart is its capacity to achieving the perfect balance between messaging, frequency and channel used. Were companies in the utilities sector to communicate the right message at the right time, consideration across all life stages would increase dramatically. Overall, a fifth of all respondents said they want clearer communications on packages, with a similar percentage reporting they do not receive relevant content. Segmentation is everything in order to achieve this. Brands that are after building stronger bonds with consumers need to ensure the right message reaches the right audience at the right time.

  1. Scale sets brands apart

In order to be successful, brands need to reach all buyers in a particular category – that includes nurturing existing customers with a great experience, while also speaking to consumers looking for an alternative supplier. The greater the number of people brands target, the more successful they’re bound to become.

  1. Paid media is necessary

Sharp and Ehrenberg have outlined the key five things that successful brands abide by: capture attention and focus on brand salience to prime the user’s mind; build memory structures around strong associations (e.g. Virgin broadband and Usain Bolt = super-fast speed); create and use distinctive assets; remain consistent by avoiding unnecessary changes while keeping the brand interesting; and make the brand easy to buy by communicating how it fits with the user’s life (e.g. disruptor Creative work should be emotionally engaging. Paid media is generally a necessity to draw attention to content despite opinions to the contrary, that is if you want your brand to be known to your customers.

  1. Data analysis sharpens focus

Data analytics is pivotal to effect behaviour change. By unlocking common customer behaviours, motivations and preferences, functional brands can create personas to help them understand their customers and their needs. If utilities marketing is anything to go on, our research has outlined the need for a shift in marketing strategy. Older consumers feel utilities companies don’t know what they want. In order to reach, engage them and help them resolve any issues in order to make the customer journey as friction-free as possible, brands will need to rethink their comms.

  1. Customers’ preferred touchpoints is where you should be

Thanks to programmatic advertising, brands can reach specific audiences with different messages at scale. By identifying audience splits and triggers, brands can develop specific messages for each split; this allows them to customise the central campaign with different aspects that will appeal to different splits. This helps optimise campaign performance by communicating with a range of audiences without the need to run multiple campaigns.

With this in mind, functional brands need to dial up relevance of messaging, matching the right content with the correct channels and the right frequency in order to remain connected to their target audience. In a landscape populated by traditional brands and disruptors alike, getting comms right has never been more important.

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