When transparency becomes your product

Back in March 2007, I wrote about the now legendary Wired cover featuring Jenna Fischer, Pam from The Office, clothed and unclothed, holding up a board announcing “Get Naked and Rule the World”, the message being that transparency was the strategy that would define corporate success in the coming era.

I have been inspired to revisit the topic by the upcoming launch in Spain of PepeEnergy, an offshoot of Pepephone, a mobile virtual network operator (MVNO) set up in 2007 that buys bulk access to network services at wholesale rates, then sets retail prices independently. Last year, the company, which has close to half a million customers, made a profit of 7 million euros on a turnover of 50 million euros. Importantly, the company is one of the few in the telecom industry that also scores consistently high in customer satisfaction surveys.

Given certain minimum standards, telephone and electricity are utilities where customers see one supplier as pretty much the same as another. In the case of PepeEnergy and Pepephone, we are talking about a company that buys the service it sells from third parties: electricity distributors and phone operators, meaning that the only way they can differentiate themselves from their competitors is by the way they offer that service, which has been based on a philosophy of communication and transparency.

So what are the key factors to succeed in this type of business?

The first thing is to establish a really good relationship with the customer.

Communication has to be impeccably handled and based on the highest standards, which will have been set and applied in-house. This means people talking to people, and no subcontracting out to operators reading from a script and powerless to make any change. Each customer, each point of contact, is a story to be told, an opportunity to do so as well as possible, with the goal of surprising the customer, and thus encouraging him or her to tell others about the experience.

The best marketing channel is not advertising, but the customer who tells another person about their positive experience with a company. Each complaint, each problem, each question, is an opportunity to speak openly and honestly with the customer, and to try to improve the service. Customer satisfaction is a much higher priority than generating short-term profits. The goal is establishing sustainable relationships with customers who appreciate this approach. If the customer is looking for the lowest price, then perhaps we’re not the company for you. But if you are looking for a fair price, without hidden extras, not based on unbelievable offers, and with impeccable service, then perhaps we are.

Transparency has to be total, with everything spelled out, right from the start: who supplies us, under what terms and conditions we operate, and why we might change supplier, even if it costs us money, if we believe that said supplier is not allowing us to provide our customers with the level of service they demand. In the case of an electricity supplier, guaranteeing that the energy we sell comes from sustainable sources will appeal to certain types of customer, but it is also necessary to be able to demonstrate this over time. Supplying users with smart meters that allow customers to feel equally smart about their consumption is another logical step. Being able to show the client in detail how the process works is also vital. This is my price, and it reflects my cost structuring: here. This is your information, complete, and accessible at any moment through the appropriate technology and via any means of communication the customer wants to use.

According to the theory, a customer relationship based on these lines should provide a company with a sustainable competitive advantage, because the best way to provide a winning service is by knowing your customer. The big question here of course is… just how sustainable is such an approach? Are these types of companies setting a trend, or are they merely idealists doomed to disappear. In many ways, these types of companies stand out because transparency and treating customers as human beings are not the norm. Will the big players who have always dominated the market be able to respond by playing the same game? Or will it be difficult for them to make these kind of changes to the DNA, taking years to do so?

(En español, aquí)