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The guys over at Scottish & Southern Energy (LSE:SSE) have once again proven the theory that either they never took courses in psychology and public relations, or that they have got their heads buried so deep in the sand that they have long ago lost any sense of how their customers view them. Or, maybe they just don’t care. The release of SSE’s first-half results, including a 38% increase in profit, threw customers into fits, but it sure did put a smile on the face of investors who pushed the share price up 14.00 pence (1.01%) to 1397.00 midway through the noon hour.
A Simple Lesson in Customer Care
Don’t announce a 38% increase in profits only one month after raising customer rates.
Now, say that with me. Don’t announce a 38% increase in profits only one month after raising customer rates.
Why not? Because your customers already think you are gouging them. Now they will think that you are as evil as bankers! Good grief, Lord What’s Your Name of Kelvin! That was a nice explanation you published about how the benefit to the investors is so much more important for the company’s operations. Unfortunately, your customers don’t care. They care about how much they are paying out of their pockets to keep you in tea and crumpets.
I’ve got nothing against you or SSE, but you need to understand that when your customers flip a switch or turn a knob, they expect the electricity or gas to flow. They do not see the miracle of utility delivery for what it is. They consider it normal and they really don’t like paying more for something that they have been getting for a lower price all along. They see it as a switch a the wall. It turns off the electricity when they don’t need it, then turns it back on when they do. Why should they pay for that? It’s not a miracle to them. It’s an entitlement.
Are you starting to get it? You need to understand that they do not understand.
They do not hear what you are saying when you say, “While some observers may choose to criticise SSE for making a profit and paying a dividend, I believe that profit and dividend allow SSE to employ people, pay tax, provide services that customers need, make investments that keep the lights on and create jobs, while providing an income return that shareholders like pension funds need.”
One more thing before we move on — Don’t call them “some observers” when what you mean to say is “our customers.” That’s an insult of pompous proportions.
The Investor Side of the Coin
Actually, one would think that investors would have been more excited than they appear to be when you reported an increase in pre-tax profit of £110.1 million year-on-year, especially after posting an almost identical decline from FY2010 to FY2011.
As an investor I would also be extremely excited to see a 19.37% increase in operating profit. That tells me that the company is running more efficiently than it was a year ago and that all the profit is not coming from customer rates. Actually, it’s patently absurd to think that raising rates will generate a 38% year-on-year increase in pre-tax profits within 30 days, especially when the reporting period ended before the consumer price increase. But, as I was saying before, they don’t understand. Which is why it is so important for you to understand them.
The Upshot of Not Understanding
I fully agree with the actions that SSE has taken. It makes good business sense. I simply believe that the directors need to do a much better job of coordinating their customer relations instead of spending otherwise unnecessary time and effort doing mop-up PR. You still need customers. In order to do that, you need customer satisfaction just as much as you do investor satisfaction. Your customers don’t want to hear your justification. They want to hear an apology. Kind of like your investors would if you were losing money.
Maybe setting aside Boxing Day to think about these things would be a good idea.
