Milliband vs the Big 6

So its on! Mr Milliband has declared a challenge for the utilities pricing belt on behalf of the consumer (voter really) – Kid Customer (Mr Milliband) versus King Shareholder (The Big 6 Utilities) - the current, undisputed champion of the utility company boardrooms.

I am perhaps doing a bit of a Hollywood on this, but it is a timely reminder that virtually none of those big public companies have ever really been driven to deliver value to paying customers. Instead they are driven by shareholders who would probably be gleeful to see us all pay twice as much as we already do, so long as it returned them a better dividend.

If you read my blog regularly you’ll know that in my view the boardroom domination by shareholder value has left customers out in the cold and very definitely second class. To give you an example, I used using figures derived from the BBC to calculate that in 2012 the big 6 energy companies generated more than £150 profit for every household in the UK. A little down on 2011, but almost twice as much profit as the two years before. That’s a lot of profit especially in very difficult economic circumstances.

So, do you care a jot what the shareholders get now that you know how much profit they make from you? Or would you rather your utility bills were cheaper?

Thought so. 

What if I suggested that if the 'Big 6' delivered more value to customers, they would very possibly also be able to pay a bigger dividend to their customers?

Apple, the most valuable (regularly) company by market capitalization in the world is also one of the best customer service companies in the world. It focuses heavily on customer value and delivering the best possible customer experience it can. Guess what? It is such a good experience the consumer is often prepared to pay more because it’s a superior product. Its not just Apple either, Rackspace the cloud hosting provider is another similar company leading its market by focusing on delivering excellence to its customers. Again it is not the cheapest, but it is regarded by the market as probably the best there is.

So here is the real point of this little blog. Both Apple and Rackspace are more valuable because they deliver more to customers. As a result both customers and shareholders win.

It’s really obvious isn’t it when you think about it. Delight your customers and they help you attract more customers. This is essentially the old fashioned basis on which businesses grew – they did a good job for their customers, knowing that it would help them get new customers.

So here is a simple little idea for the folk at the ‘Big 6’ if you don’t want to face the challenge from ‘Kid Customer’ in 2015 why not start really thinking about the people that pay your bills, they are at least as important as your shareholders. What's more if you look after your customers you'll probably be able to pay your shareholders a bigger dividend.