Business zen: Corporates should look after their current customers

Electricity is just one of the competitive markets. Photo / Bevan Conley

In amongst the hustle and bustle of life there are a number of things that we take for granted, and many of these are things that we pay for. Such "core" services are seldom thought about but essential to daily activities.

Take electric power for example, it's there from the moment we wake up until the second we go to sleep. It seems like only yesterday that I was living in Auckland and consulting into network companies and wholesalers and retailers of electricity and gas.

Some of the most fascinating aspects of my work back then was understanding the generation processes (hydro, co generation and geothermal), how demand moved throughout the day and the pricing models which set the structure of the market here in NZ.

Now, apart from one or two engagements, I am a consumer and observer of the market. Which is why, this week, I am writing about a "retail" experience which has left me a bit dumbfounded.

I get that there is strong competition between the electricity retailers, I actually support it because it has created an environment where the consumer can go out and get the best deal.

Indeed, this is how we have operated in our household – moving from Mercury to Genesis and back to Mercury over the years.

Recently a letter came in the mail from our then "incumbent" Mercury, full of the usual bright colours and "marketing spin" language.

However, this letter was also to notify us that our current contract was coming to an end and an almost biblical price rise awaited us.

There was no "if you call us we can do you a deal" or "you are important to us" language – it was basically "suck it up Bells of Whanganui [who also happen to be shareholders]".

So, what does any consumer do faced with this information? They head to an informative website and change their supplier – achieving the same power cost structure as that which existed in the previous arrangement with Mercury (who we jettisoned as our provider).

Mrs Bell, who is a far better negotiator than me, sorted everything out.

I spent about three seconds in mourning, consoling myself that our departure would be unlikely to cause diminution in the value of our shares and/or the Government's continued investment.

However, the whole process took a bizarre turn in the days following our departure from Mercury to Genesis (sounds like a Ridley Scott movie script).

We were regularly receiving phone calls from the Mercury Call Centre and right on dinner time. When finally they called as we were starting the dishes, Mrs Bell took the call.

In what was more like an interrogation as to our departure, I could see the tension begin to rise. The call was ended by Mrs Bell when, after she politely explained our fiscal reasons for departure the customer services "professional" said "no, you need to understand something Mrs Bell". A telling off is never going to win a customer back.

I cannot understand why major corporates such as this and (for example) Sky TV are so hellbent on giving deals to new customers rather than looking after those they already have.

This is particularly strange in these times of highly mobile and informed consumers with access to a large quantum of information about highly competitive markets.

Surely if customer "churn" is accepted then the businesses are also accepting the costs associated with converting leads into targets into new customers.

In our case, it wouldn't have taken as much effort, or cost, to convince us to stay.