CLIENT OF THE WEEK - British Gas' DM strategy: Channel choice, segmentation and a £15m revamp of its website

Legacy business such as British Gas are having to learn not to take customers for granted. And like all big utilities, the big push is customer retention and upsell, and to migrate customers online. The utility sends 100m direct mail packs a year, but it's ploughing investment into online too. At the helm is former P&G and British Airways marketer Chris Jansen, the British Gas group commercial director.

Q: Can you tell us about your remit? We hear it's pretty large ...
I'm the most senior commercial person in British Gas. I oversee marketing including direct communications, sales, pricing, strategy, hedging, online, corporate responsibility, customer insight. I'm also chair of Dinorod (British Gas' plumbing business) and MD of Premier Energy.

I have a team of 5000 people, including marketing director Rick Vlemmiks. Andrew Hogan, our director of advertising, has been with us two years - he developed the successful 'Planet Home' advertising this year.

Q: How involved are you with direct marketing?
Because direct marketing is so important to us as a business I’m actively involved in that. When we send off a letter to customers on prices increases, I personally them sign off because they represent the brand.

Q: British Gas is still a high volume mailer – why is that?
[Mail is part of our] ongoing relationship with all of our customers. It reinforces the benefits of British Gas in an increasingly targeted way. We send over 100m direct mail pieces a year, spending probably £40m on direct mail – that includes our bills and letters. In terms of acquisition direct mail, we spend £20m on sending 50-60m direct mail [packs], talking to customers about green energy and talking to schools about generation green.

Q: How targeted is your mail?
We have a very sophisticated propensity model and eight different categories, depending on their lifestage. We have 12 million households – we're almost omnipresent and we don’t want to take advantage of our position.

We're trying to become increasingly more relevant to our customers – it’s not about bombarding them but understanding those customers that respond to certain types of messages and promotions.

We also track. [As part of] the British Gas transformation that started two years ago, we track customer satisfaction – if people go online we know how they feel about our website and how satisfied they were with the direct mail.

Q: What’s your digital strategy when it comes to managing customers?
Our big focus is driving customers online – [if they’re buying] gas, electricity and home services they can manage those relationships online. The utility sector has been behind the curve in online development. [The] banking, retail and travel sectors are ahead but we’ve been slow adopters of recognising the potential of online in developing customer expectations.

[Customers will want to know] how can I lower my spend and be energy efficient and book my appointment online? We’ve invested £15m on improving our web site in the past year and we were recognised by Ofgem as industry leading web site across utilities.

Q: But with such a universal customer base, not all of them will want to go online.
What’s very important for us is the preferred channel of communication, which is picked up in our segmentations. We’re very responsible as a business. If customers want to transact with us online, we’ll keep that relationship online.

There is an age bias to it [online adoption] but we’re seeing online access growing across age profiles.

Q: Do you test DM in the traditional ways?
We have in the past two years taken a forensic approach to our communications. We test our communications continuously – either quantitatively or qualitatively. It’s done in part by our direct agency OgilvyOne and in-house. We have a closed loop test where we analyse every campaign – the targeting, the creative and the response rates. We test [both] direct response and brand campaigns – on how it changed the presentation of the brand. We’ve been finessing it over the past two years.

Q: And your most successful campaign recently?
Our most successful campaign was our Generation Green schools recruitment [by OgilvyOne]. On the back of a six month direct mail campaign, we recruited 9000 schools – a response rate of 40% – to be part of our generation schools programme where British Gas provides information on the environment and energy, and how schools can conserve energy. We think school children should understand their responsibility in conserving energy. It won the best direct mail campaign category in the Marketing Society awards.

Q: It’s a tricky one, pushing conservation, because you’re encouraging people to spend less with you
We don’t see it like that. We believe it's right to help our customers to spend less on our energy but compensate that with other services. There are 10,000 [British Gas] engineers across the country – we are very confident we can improve the revenue in other areas in boilers [sales and maintainence] and we’re the largest insulators in the country.

Q: How do you manage customer contact?
We’re developing an overall channel control mechanism called Air Traffic Control to manage customer contact and not bombard customers. We have 700 field sales advisors – we could potentially contact a customer via an outbound call, email and then direct mail them and that frustrates customers. We’re being more careful on managing that process. We have a big database of contact history called Midas.

Q: To what extent does your P&G training influence what you do at British Gas? (see CV, below)
My background at P&G is on the commercial side – sales and marketing – and at BA I learnt how to apply those principles in a service business. I combined those two experiences in British Gas.

Legacy businesses have not historically been customer-focused and you can understand why – at one time everyone was a customer of British Gas but I’m trying to ensure that customers are part of the DNA of British Gas. We’ve got to give customers a reason to choose us based on a combination of price, innovative products and great service.

Last month our Cardiff call centre won European Call Centre of the Year, beating off O2, RBS and Aviva. Little old British Gas won Call Centre of the Year! Attrition in our call centres is 13%, which is pretty good. Two years ago it was 50%.

Q: Your proudest achievement at British Gas - so far?
For the first time in 10 years the British Gas customer base is growing - more customers are coming back to BG than leaving us - that's hundreds of thousands this year. We're in 12m out of 25m households in the country.

Q: Do you think that clients are getting better service from their agencies now, thanks to the recession?
When I started two years, the view that might change some of the agencies. [But] I believe in partnership - OgilvyOne are great partners of ours and have delivered some fantastic work. You have a relationship with agencies and I expect to get great value the whole time - it shouldn't take a change in the economy to make that happen.

Chris Jansen's CV (with thanks to LinkedIn)
2009 – present Commercial Director, British Gas

October 2007 - January 2009 Managing Director, Premier Energy, Centrica

2004 - 2007 Managing Director, Air Miles (British Airways)

January 2002 - April 2004 Global Head Of Loyalty, British Airways

July 2000 - January 2002 Senior Manager Longhaul Brands, British Airways

1993 - 2000 Various sales & marketing roles, Procter & Gamble

(Education)

1988 - 1991 Cardiff University / Prifysgol Caerdydd