The Sun

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Customer loyalty, a literature review& analysis

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Marketing Strategies & Consumer PolicyWorking Group....................................................................................................................

December 1998Ref : 1998-330-0018

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Customer loyalty, a literature review & analysis

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Working GroupMarketing Strategies & Consumer Policy

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Paper prepared by:

Jacques Rossat (CH), Jan Larsen (NO), Drahomir Ruta (CZ),Manfred Wawrzynosek (PL)

Copyright © UNIPEDE, 1999All rights reserved

Printed at UNIPEDE, Brussels (Belgium)

EXECUTIVE SUMMARY

This report on Customer Loyalty comprises of a first part devoted to a theoreticalapproach of customer loyalty and a second part focusing on the electricity sector.

“Customer satisfaction is not customer loyalty” warns this report so as to highlight therather complex, -not to say elusive-, nature of customer loyalty. If a loyal customer is nodoubt a satisfied customer, this does not entail that a satisfied customer is loyal. In fact, asatisfied customer remains very likely to switch to other competitor’s products.

One of the main insights provided by this report is to point out that the loyalty questiondoes not just consist in looking at the customer in relation to products / services on offer,but implies a whole virtuous management of the company, the employees and theinvestors.

Though underlining the difficulty to define loyalty, the report analyses in practice howprofitable loyal customers are, and how important it is to retain them, namely throughzero defection schemes or by carrying out studies on defections and complaints.In other words, customer loyalty creates value and anything that might undermine itshould be identified and eliminated.

With regard to the electricity sector, the authors of the report endeavour to establish whatare the needs and wants of the electricity customers. In doing so, they also emphasise thatelectricity companies need to improve their understanding of their customers. In aliberalised electricity market, a database storing customers’ names, addresses andelectricity demand is no longer sufficient. Special attention should be paid to thesubjective component of the customer, his emotional reactions and feelings.

It emerges from market research studies that price is the main driven criteria ofcustomer’s needs and wants but it would be hasardous to only take into account thisaspect. It clearly arises from a number of studies that customers are very sensible to thequality of services (reliability, simplicity, guarantees, etc). Therefore, it is worthwhile formarketers to explore the range of services that can be developed in view to meetcustomer’s needs.

The report also examines the propensity to switch in fully liberalised electricity markets,in particular in the UK and in Norway. The propensity may appear rather low in the firstyears following the opening as a result of “a wait and see” syndrome. It might also belimited due to the hassle caused by switching. In the UK, it seems that the percentage ofcustomers that are switching is now fixed at a steady 25-30 % rate.

Finally, the report addresses the incentive issue that can be successfully used to attractcustomers, such as cash back incentives, price reductions, tariff options, payment optionsand dual or combined packages of fuel and electricity services.

Part I: Brief Survey of Current Trends and Theories

1998-330-0018 1 December 1998

Customer Loyalty, a literature review and analysis

Working Group Marketing Strategies & Consumer Policy

CONTENTS

Part 1: Brief Survey of Current Trends and Theories1. Introduction____________________________________________________ 2

2. Definitions _____________________________________________________ 22.1. Loyalty ___________________________________________________________________ 2

2.2. Customer loyalty ___________________________________________________________ 2

2.3. Customer satisfaction _______________________________________________________ 3

2.4. Satisfaction-Loyalty link ____________________________________________________ 4

3. Loyalty model __________________________________________________ 4

4. Consequences of customers loyalty________________________________ 6

5. Toward "zero defections" ________________________________________ 7

5.1. Target the "right" customers ________________________________________________ 8

5.2. Analysis of defections and complains __________________________________________ 9

5.3. Defection costs ____________________________________________________________ 10

6. Measure of loyalty______________________________________________ 10

7. Conclusion ___________________________________________________ 11

STATISTICS____________________________________________________________ 13

BIBLIOGRAPHY _________________________________________________________ 14

Part II: Customer Loyalty in the Electricity Supply Industry1. Introduction___________________________________________________ 15

2. Needs and wants ______________________________________________ 15

3. Propensity to switch____________________________________________ 17

4. Reasons for switching __________________________________________ 20

5. Barriers / Incentives ____________________________________________ 21

5.1. Barriers _________________________________________________________________ 21

5.2. Incentives ________________________________________________________________ 22

6. Conclusion ___________________________________________________ 24

BIBLIOGRAPHY _________________________________________________________ 26


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Part 1: Brief Survey of Current Trends and Theories

1. Introduction

Loyalty is dead, the experts proclaim, and the statistics seem to bear them out. On average,the U.S. corporations now lose half their customers in five years, half their employees in four,and half their investors in less than one (Reichheld, 1996). No, loyalty is not dead; it remainsa dominant key of success. In fact, the corporate leaders in loyalty – that apply a strategicloyalty-based management – have enduring records of productivity, solid profits and steadyexpansion.More than a limited customer approach, the loyalty effect should be viewed as a wide contextin which all the key players of a firm are far more powerful, further reaching, and moreinterdependent than we have ever imagined. There would be no customer loyalty withoutloyal employees as there would be no loyal employees without long term investors. We willlater focus on the customer side, but the employees and the investors problematic should bekept in mind during the entire process. We will also, now and then, show the implications ofsuch a three dimensional environment in which creating value for customers has become astrategic issue. The advantages of loyalty are numerous, but the implementation of such aculture does not go without posing problems. What should be done, who should beresponsible for these changes, who should be targeted, and how should these changes beconducted are some of the questions we will try to answer in this compilation of someclassical theories of the day (1998).

2. Definitions

2.1. Loyalty

Reichheld opposes loyalty to the actual profit-theory. This theory gathers the firm's resourcestoward one unique goal: creation of profit. Reichheld views loyalty as a value-creation theory.The fundamental mission of a business is oriented toward the creation of value for thecustomer and profit becomes a consequence of value creation. It turns out to be a mean ratherthan an end. This theory will be developed in the loyalty model described in chapter 3.

2.2. Customer loyalty

Customer loyalty is not always easy to construe and many definitions have been proposed.Let's first settle what customer loyalty is not (Prus & Randall, 1995):

Customer loyalty is not customer satisfaction. Satisfaction is a necessary but not sufficientcriterion. We know that "very satisfied" to "satisfied" customers sometimes switch tocompetitors.


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Customer loyalty is not a response to trial offers or incentives. Customers who react toincentives are often highly disloyal and they often leave as fast as they came. They are verymuch inclined to respond to a competitor's incentive.Customer loyalty is not a strong market share. High level of market share can also beinfluenced by other factors such as poor performance by competitors or price issues.Customer loyalty is not repeat buying or habitual buying. Some of your consumers chooseyour products because of convenience or habits and they can be tempted to defect for anyreason.

Prus & Randall then describe customer loyalty as follows: "Customer loyalty is a compositeof a number of qualities. It is driven by customer satisfaction, yet it also involves acommitment on the part of the customer to make a sustained investment in an ongoingrelationship with a brand or company. Finally, customer loyalty is reflected by a combinationof attitudes (intention to buy again and/or buy additional products or services from the samecompany, willingness to recommend the company to others, commitment to the companydemonstrated by a resistance to switching to a competitor) and behaviors (repeat purchasing,purchasing more and different products or services from the same company, recommendingthe company to others)".

2.3. Customer satisfaction

Satisfaction is often confused with loyalty. Satisfaction is an emotional or feeling reaction(Westbrook, Newman, Taylor, 1978). It is the result of a complex process that requiresunderstanding the psychology of customers. The range of emotion is wide with, for example,contentment, surprise, pleasure, or relief. Satisfaction is influenced, in the end, byexpectations and the gap between perceived quality and expected quality, called "expectancydisconfirmation". The figure below shows the predominant linkage of this process.

Source: Rust, Zahorik, Keiningham, 1996

Expectations

FutureExpectations Satisfaction

Disconfirmation

PerceivedQuality

"Objective"Quality


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2.4. Satisfaction-Loyalty link

High-quality products and associated services designed to meet customer needs will createcustomer satisfaction. This high level of satisfaction will produce increased customer loyalty.According to conventional wisdom, we would be tempted to believe that the link betweensatisfaction and loyalty is a simple, linear relation. But reality proves us wrong: it is neitherlinear nor simple (see figure "The effect of satisfaction" below). The relation reactsdifferently according to time and circumstances. Unless they are totally satisfied, there isalways a chance you will see your customers be lured away (Jones & Sasser Jr., 1995).


3. Loyalty model

Most present-day strategic plans focus on a profit target and work backward to arrive atrequired revenue growth and cost reduction. Time spent on studying loyalty leaders hasconvinced Reichheld to develop a totally different model (see loyalty model below). Thedecisive key in this model is not profit but, instead, the creation of value for the customers.The three forces - customers, employees, and investors - that play an important role in theenterprise form the forces of loyalty. Since a linkage between loyalty, value, and profits exists,these forces can be measured in terms of cash flow. "Loyalty is inextricably linked to thecreation of value both as a cause and an effect." (Reichhled, 1996)As an effect, loyalty measures permanently whether or not the company has deliveredsuperior value. Defects can doubtlessly be explained by a lack of value for the customer. As acause, loyalty creates a chain reaction. Reichheld describes it as follow:

ü Revenues and market share grow as the best customers are swept into the company'sbusiness, building repeat sales and referrals. Because the firm's value proposition isstrong, it can afford to be more selective in new customer acquisition and to concentrate

Satisfactionscale

Dissatisfied

Delighted

Impact


1998-330-0018 5 12/98 – MS&CP WG

its investment on the most profitable and potentially loyal prospects, further simulatingsustainable growth.

ü Sustainable growth enables the firm to attract and retain the best employees. Consistentdelivery of superior value to customers increases employee's loyalty by giving them prideand satisfaction in their work. Furthermore, as long-term employees get to know theirlong-term customers, they learn how to deliver still more value, which further reinforcesboth customer and employee loyalty.

ü Long-term employees learn on the job how to reduce costs and improve quality, whichfurther enriches the customer value proposition and generates superior productivity. Thecompany can then use this productivity surplus to fund superior compensation and bettertools and training, which further reinforce employee productivity, compensation growth,and loyalty.

ü Spiraling productivity coupled with the increased efficiency of dealing with loyalcustomers generates the kind of cost advantage that is very difficult for competitors tomatch. Sustainable cost advantage coupled with steady growth in the number of loyalcustomers generates the kind of profits that are very appealing to investors, which makesit easier for the firm to attract and retain the right investors.

ü Loyal investors behave like partners. They stabilize the system, lower the cost of capital,and ensure that appropriate cash is put back into the business to fund investments that willincrease the company's value-creation potential.

Source: Reichheld, 1996

The RightNew Investors

Employee Loyalty

The Right NewEmployees

Customer Loyalty

The RightCustomers

Investor Loyalty

SuperiorCustomer

Value

Surplus CashReinvested

Growth

CompensationAdvantage

SuperiorProductivity

CostAdvantage

Profits


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To sum up, this model demonstrates that a company willing to follow a loyalty-basedmanagement should concentrate its resources in order to offer a superior value.

4. Consequences of customers loyalty

Businesses with high customers' loyalty rates have proven to reach great financial results.Buchanan & Gillies identified six reasons explaining why long-term customers are moreprofitable than others are:

ü Regular customers place frequent, consistent orders and, therefore, usually cost less toserve.

ü Long-established customers tend to buy more.ü Satisfied customers may sometimes pay premium pricesü Retaining customers makes it difficult for the competitors to enter a market or increase

their share.ü Satisfied customers often refer new customers to the supplier at virtually no cost.ü The cost of acquiring and serving new customers can be substantial. A higher retention

rate implies that fewer new customers need be acquired, and that they can be acquiredmore cheaply. In fact, the acquisition cost of a new customer is three to five times moreexpensive than retention cost.

We could also add that a loyal customer is more willing to give feedback on hisdissatisfaction and becomes this way a sort of quality controller. Finally, loyalty is anexcellent weapon, since it is almost impossible to measure a competitor's retention rate.

All these explanations become evident on the figure below. The same ascertaining can bedemonstrated for the employee or investor's point of view.


-10

0

10

20

30

40

50

60

AnnualCustomerProfit

0 1 2 3 4 5 6 7Year

Price premiumReferralsCost savingsRevenue growthBase profitAcquistion cost


1998-330-0018 7 12/98 – MS&CP WG

5. Toward "zero defections"

Any way, loyalty has to become a strategy and should be applied to customers, employees,and investors. Because of the interconnection of these key players, it is not possible to operateon only one. For example it would be a non-sense to concentrate on customer loyalty ifemployees were not formed to do so, or if the investors reacted only to short term profits. Ithas to be considered as an indivisible system.We have now seen the numerous advantages of having loyal customers. In fact, the process ofacquiring new customers and retaining the old one can be illustrated by the image of a bucketof water (see the figure below).


This scheme is quite easy to understand. A hole in the bucket causes a loss of water. The samehappens with customers. In order to keep at least the same level of activity, we now have tocompensate by attracting new customers, or customers who are currently linked to acompetitor. There are two ways of reacting if you ascertain a leak. The first one would be tofind more customers coming in than those going out. The second tactic consists in pluggingthe leakage. It's exactly what a zero-defection program aims. But zero-defection does notmean there will be no further loss of customers. The objective is to target the good customersand retain them.

Market share

Customers thatswitched to usform competitors

New to marketcustomers

Customers that switchto the competition

Customers thatleave the market


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5.1. Target the "right" customers

Before retaining all the customers at any price, it is very important to identify your corecustomers. There are three easy questions you can ask yourself (Reichhheld, 1996). First, whoare your more profitable and loyal customers? You will look for those who spend more, paypromptly, require less service, and prefer stable, long-term relationship. Second, whichcustomers place the greatest value on what you offer? Those for whom the product fits best totheir needs. Third, which of your customers are worth more to you than your competitors?The more customers fitting one, two, or three of these groups you attract, and the more youincrease the chances to have loyal customers. All customers are not good to keep. That's whyit is critical to know the characteristics of the customers you target. Jones and Sasser haveidentified four different ways consumers behave. A resume is proposed in the frame below.

The Loyalist and Apostle. In most cases, the loyalist is a happy customer who has had goodexperiences with the company and who is ready to return on a regular basis. This customerhas a need and the company provides exactly the product or service that fits him. It explainswhy this customer is so easy to serve. Even more enthusiastic than loyalists, the apostle is sooverwhelmed, his experience brings him so much more satisfaction than he expected, that heshare his strong feelings with others.The Defector and the Terrorist. Defectors' ranks include very dissatisfied, quite dissatisfied,neutral, or even satisfied customers. The number of merely dissatisfied customers or satisfiedcustomers who have encountered failures and defect can be quite impressive. It would be ahuge error to let them go since the company has the tools to turn them into highly satisfiedcustomers. The worst defector a company can dream of is called the terrorist. This customerhas endured a bad experience and he cannot wait to communicate his frustration and anger toothers. These people are angry because no one was there to respond, listen or correct thefailure they encountered.The Mercenary. This is a kind of customers having no rule and reacting in unpredictableways. Even if they are highly satisfied, they will show almost no loyalty. "These customersare often very expensive to acquire and quick to depart. They chase low prices, buy onimpulse, pursue fashion trends, or seek change for the sake of a change" (Jones & Sasser,1995).The Hostage. These customers have endured the worst the company has to offer and stillhave to accept it. These individuals are stuck in a monopolistic environment.From there, Jones & Sasser enact what should be every company's ultimate objective:"Turning as many customers as possible into the most valuable type of loyalist, the apostle,and eliminating the most dangerous type of defector or hostage, the terrorist".

Source: Jones & Sasser, 1995

Satisfaction Loyalty

Behavior

Loyalist/Apostle

high high staying andsupportiveDefector/Terroris

tlow tomedium

low tomedium

leaving or having left andunhappyMercenar

yhigh low to

mediumcoming and going; lowcommitmentHostage low to

mediumhigh unable to switch;

trapped

Individual Customer Satisfaction, Loyalty, and Behavior


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5.2. Analysis of defections and complains

"Any defection is the result of a lack of value". (Reichheld, 1996)The defection analysis has a double purpose. First and before anything, it is a very convenientand reliable indicator of customer loyalty. Customer loyalty is often calculated in terms ofsatisfaction, repurchase, but none of these rates give the results retention rate has. Second, bycreating a data base on the reasons expressed by your customers for leaving, you give yourcompany the means to correct the mistakes done while processing with customers. Thereasons a customer invokes could lead other customers to defect too. View it a warning signaland take advantage of it. One way to collect this information is to listen to the customer andanalyze his complains. Most of the time, listening, showing you care, and find a way to repairthe damages can transform a rather unsatisfied customer into a loyal one. But paying attentionto complain is not enough. You should now that "only 4 % of customers complain. Thismeans that a company will probably never hear about 96 % of her clients, and from the 91 %of them who will defect because they think it would be of no use to complain". (Gerson,1995) This gives us a good justification to conduct interviews with defectors.

You are maybe one of many skeptical who thinks most of the defections are natural andcannot be controlled by a company. You will be surprised to see what has been found byGerson.Your customers stop buying your products because:1 % die3 % move5 % look for replacement solutions or develop other relationships9 % go directly to your competitors14 % are not satisfied with the product or the service68 % are displeased with the way they have been treated.If you look closely at these numbers, you will find out that you can indeed overcome 96 %of the reasons why a customer stop buying your products or services.

De Souza, on her side, has identified 6 types of defectors:Price defectors. They switch to a lower price.Product defectors. They switch to superior product.Service defectors. They switch because of poor service.Market defectors. These customers are lost but not to a competitor since they leave themarket.Technological defectors. They switch to convert to a product offered by companies outsidethe industry.Organizational defectors. These customers are lost because of internal or external politicalconsiderations.


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5.3. Defection costs

No existing accountable system can measure the costs of a customer defection. Of course, aloss has to be compensated by the acquisition of a new customer. We know these costs can bevery expensive (advertising, promotion, recruitment, establishment of a personal file, etc.).But companies often forget to consider the potential profit a loyal customer represents. Whenhe leaves, he takes everything with him. During the time a relation lasts, the customer spendsmore each year and the costs of processing diminish in regards of experience and volume.Nevertheless, the company will not benefit of the free advertising and recommendation aloyal customer can make. The figure below illustrates the case of a credit card company thathas a return rate of 2 or 3 % for direct marketing. This company sends 30 to 50 thousandsletters in order to record 1000 adhesions. This figure also shows that the company will notmake any profit if it does not keep its customers for at least two years


6. Measure of loyalty

"Measurement turns vision into strategy and strategy into facts" (Reichheld, 1996). Measureis a necessity in every system, it allows the company to identify its weaknesses and control ithas reached its objectives. Measure also establishes the feedback loops, which are essentialfor any organizational learning.This task is not easy. How can we measure what drives customer value? First it is importantto understand the cause-and-effect relationships between loyalty and value creation (seemodel at page 4). The mission that consists in delivering superior value can be measured bycustomer loyalty, best expressed by retention rate, share of purchases, or both. Indirect effectcan also be stated with indicators such as revenue growth (increases as a result of repeatedpurchases and referrals), costs (declines as a lower acquisition expenses and from efficiencies

-80

40

6672

7987

Age of account (years)

0 1 2 3 4 5


1998-330-0018 11 12/98 – MS&CP WG

of serving experienced customers), employee retention (increases because job pride andsatisfaction increase, creating a loop that reinforces customer loyalty and reduces costs ofhiring and training and productivity rises). We could also be tempted to measure a third ordereffect, that is profit (increases as costs go down and revenues augment).Reichheld suggests building a reporting system that will focus on a couple of factors andwould send a warning signal when the indicator leaves a certain range. It would be composedof two basic reports for each of the three sectors (customers, employees, and investors),analogous to balance sheet and income statement in financial accounting, but more centeredon human capital. In this system, all the data converge toward one main focus, Net PresentValue (NPV). This system offers the advantage to measure all three factors: customerduration, lifecycle cash flow, and new-customer gain rate (see figure above).


7. Conclusion

As a conclusion, we could imagine a wise Chinese man discharging some of his favoriteproverbs on customer loyalty. His sentences would be close to these: a business should serveits customers. People are your most important asset. Choose your associates carefully and besure you share the same important values. Learn the lesson of each and every one of yourmistakes. You can manage only what you measure. Treat the others as you would like to betreated. Profit is not everything. Even if these clichés are known by all, it is worth repeatingthem one more time. They seem obvious but surprisingly, they seem to be forgotten withincreasing frequency as companies look for short-term profits (Reichheld, 1996). Loyaltyleaders have found the way to put it in practice and with their zero-defection program theynow climb the hill for consistent superiority. Loyalty is not a strategy decided by themarketing department, loyalty is a commitment, a culture made by the entire company,

Lifecycleprofits

Cost

Value drivers

Customerduration

New-customerGain rate

Investment

Volume Price

Referral

Customer-baseNet Profit Value

New customerQuality

(yield rate)

Level 1

Level 2

Level 3

Level 4


1998-330-0018 12 12/98 – MS&CP WG

focusing on the creation of superior value. By developing a loyalty-based management, theseleaders have entered in the ascending spiral of profit, growth, and lasting value.


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STATISTICS

For each complains your company receives, there are 26 other customers with unknowncomplains or non-solved problems – and 6 of them have serious problems. They arepeople you will probably never hear about. But they are also people who can tell you howto improve your business. (Gerson, 1995)

Most of the customers who complain (54 to 70 %) will do business with you again if yousolve their problem. If they feel you react quickly and to their satisfaction, 95 % ofthem will do business with you and there is a great deal of chances they will talk aboutyou in a positive way around them. (Gerson, 1995)

One unsatisfied customer will communicate his feelings to approximately 10 personsaround him. These 10 persons will then talk to another 5 people. (Gerson, 1995)

Happy customers, for whom you have found a solution to their complains, will talk to 3to 5 people about their positive experience. (Gerson, 1995)

You will need 5 to 6 times more time to acquire a new customer than to retain old ones.Customer loyalty and his long life value can be 10 times greater than the price paid for asingle purchase. (Gerson, 1995)

In most business, 60-80 % of customer defectors said they were 'satisfied' or 'verysatisfied' on the last satisfaction survey prior to their defection! In the interim,anything can happen, and often does. (Reichheld, 1993)

It has been found that a decrease of 5 % in defection rates can increase profits by 25to 100 %. (Reichheld, 1993)

Disloyalty at current rates stunts corporate performance by 25 to 50 %, sometimesmore. (Reichheld, 1996)

Success is Getting the Right Customers…and keeping them (Cawley Charlie, founder ofMBNA1)

Unless you have 100 % customers satisfaction – and I don't mean that they are justsatisfied, I mean that they are excited about what your are doing – you have toimprove. And if you have 100 % customer satisfaction, you have to make sure that youlisten just in case they change… so you can change with them. (Jones & Sasser Jr., 1995)

1 Maryland National Bank


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BIBLIOGRAPHY

BARSKY JONATHAN, "Guarantee; Warranty; Loyalty", Marketing Tools Magazine,September 1995

CSR, "Loyal customers- Fact or fiction?", Customer Service Review, 1996FORNELL CLAES, JOHNSON MICHAEL D., ANDERSON EUGENE W., CHA

JAESUNG, & EVERITT BRYANT BARBARA, "The American customer satisfactionindex: nature, purpose, and findings", Journal of Marketing, Vol. 60 (October 1996),pp. 7-18

GERSON RICHARD, "Fidélisez à vie vos clients", Les Presses du Management, Paris, 1995HARVARD L'EPANSION, "Fidéliser le client", Groupe Expansion Magazines, Paris, 1991HENNARD DANIELLE, " Comment fidéliser vos clients", Bilan, 2/98, pp. 70-74JONES THOMAS O. AND SASSER EARL W. JR., "Why satisfied customers defect",

Harvard Business Review, November-December 1995, pp. 88-99KEAVENEY SUSAN M., "Customer switching behavior in service industries: An

exploratory study", Journal of Marketing, Vol. 59 (April 1995), pp. 71-82LOWENSTEIN MICHAEL W., "Keep them coming back", Marketing Tools Magazine, May

1996NAUMANN EARL, "Creating customer value", Thomson Executive Press, Cincinnati, 1995O'BRIEN LOUISE AND JONE CHARLES, "Do rewards really create loyalty?", Harvard

Business Review, May-June 1995, pp. 75-82PAYNE ADRIAN, CHRISTOPHER MARTIN, CLARK MOIRA, PECK HELEN,

"Relationship marketing for competitive advantage. Winning and keeping customers",Butterworth Heinemann, Oxford, 1998

PINE II JOSEPH B., DON PEPPERS, AND ROGERS MARTHA, "Do you want to keepyour customers forever?", Harvard Business Review, March-April 1995, pp. 103-114

PRUDEN DOUGLAS, VAVRA TERRY G., SANKAR RAVI, "Customer loyalty: thecompetitive edge beyond satisfaction", Quirks Marketing Research, April 1996

PRUS AMANDA AND BRANDT RANDALL D., "Understanding your customers",Marketing Tools Magazine, July-August 1995

REESE SHELLY, "Happiness isn't everything", Marketing Tools Magazine, May 1996REICHHELD FREDERICK F., "Learning from customer defection", Harvard Business

Review, March-April 1996, pp. 56-69REICHHELD FREDERICK F., "The loyalty effect. The hidden force behind growth, profits,

and lasting value.", Harvard Business School Press, Boston 1996REICHHELD FREDERICK F., "Loyalty-based management", Harvard Business Review,

March-April 1993, pp. 64-73ROMAN ERNAN, "Customer for life", Marketing Tools Magazine, July-August 1996RUST ROLAND T., ZAHORIK ANTHONY J., KEININGHAM THIMOTHY L., "Return on

quality", IRWIN Professional Publishing, Chicago, 1994WESTBROOK ROBERT A., NEWMAN JOSEPH W., TAYLOR JAMES R.,

"Satisfaction/Dissatisfaction in the purchase decision process", Journal of Marketing 42(October), pp. 54-60

Part II: Customer Loyalty in the Electricity Supply Industry

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1. Introduction

The aim of this paper is to review and to extract the teachings of open electricity and gasmarkets experiences in the field of customer loyalty. At this writing (autumn 1998), a fewcountries such as England and Norway have passed through all the different stages andchanges that will become unavoidable for most other developed countries in a very nearfuture. As we assumed, customer loyalty is very often in the middle of the preoccupations ofthe industry since competition gives numerous opportunities to newly freed customers. It isthus particularly interesting to compare the similarities and differences that may exist betweentheoretical knowledge and reality.

In the UK, the first customers to access the opening electricity market in 1990 were thelargest industrial users who had installed power of 1 MW and over. This first step concernedabout 5000 sites. Later in 1994, customers with a demand of 100 kW and over (about 52'000sites) were also offered the chance to choose their electricity provider. The final phase ofliberalization took place in 1998, giving supplier's choice to 1.5 million businesses and 24million households.

In Norway, "deregulation" gave household customers complete access to the market in 1995.All the remaining obstacles such as supplier switching fee were finally removed in thebeginning of 1998.

Please note that the observations being exposed in this document have to be taken with a lotof circumspection and are by no mean a prediction of what will happen in other countries. Thevery competitive nature of first hand information about customer loyalty makes access to thisinformation difficult to those outside of the circle of the studies' owners. Therefore, even if itgives a valuable background, this small number of information available does not allow anybroad-based generalization.

This report focusses on customer loyalty of household customers. Obviously, customerloyalty of small, medium and large size customers has to be analysed differently, as also theneeds of these customers are different from those of domestic ones.

In contrast to almost all other industries, the technical quality of the product "electricity" doesnot have an influence on domestic customer choice. This choice is therefore based on otherfactors that will be outlined below.

2. Needs and wants

The first topic that should be explored in a customer loyalty's perspective is customers' needsand wants. This may seem evident but which company in the industry can truly state itpossesses this information? Knowing what customers' expectations are and who thesecustomers really are is the basis of the choice of any strategic option. Even if electricalcompanies have the advantage to know every single customer by her/his name, it looks likethey often don't know anything more. The databases used by most of electricity companies


1998-330-0018 16 12/98 – MS&CP WG

still in monopolistic environment can be summarized to name, address, electricity demand,the kind and age of the meter, the date of the contracts, the tariff, the amount of the last bill,the bank details, etc. Yet often nothing about real needs and wants of the players who willdictate the market. This is perhaps due to the fact that building such a base requires time,sophisticated IT equipment and experience. However, this lack of customers' knowledgeseems to be also found in some companies operating on an open market. How can therefore acompany create value for its customers? Offering a product without taking into accounts whatcustomers want is a bet nobody can take anymore.

The "electrically correct" common wisdom on the "real" needs of consumers in an openmarket is that these consumers want a good price first, then a good price and, finally, agood price. This saying carries a lot of truth. Two hours spent with the salesman of aNorwegian utility, working his phone with potential customers is the best confirmationof this wisdom. Is this corroborated by available researches and studies?

On the UK gas market, a research (Lias, 1997) concluded that customers needed familiarity,security, value for money, good customer service but more precisely a range of services, newproducts, and attractive brands.

Another research2 illustrates the fact that large customers are more sensible to reliability thanto price, as presented in the graph below. The problem faced by the supplier is the difficultyto communicate this reliability and turn it into a decisive strategic advantage. All competitorswill claim they are reliable but it is extremely hard for customers to compare unless somekind of guarantee is proposed. Offering a guarantee is an approach commonly used withproducts but it also applicable to services. In fact, it can be a strong competitive advantage.The implications are numerous. It builds trust and loyalty, reassure skeptical customers, givesa warning signal in case of problem within the organization, shows you care about yourclients, forces your company to give a perfect service and help to identify weaknesses. Wecould add to the list, but the result would be to emphasize on value creation for the customers.This value is worth paying attention to a few simple rules that assure the success of thisstrategy.Subjects like responsive emergency repair, uninterruptible power or protection against spikes,ranked as important by customers would suit perfectly to a guarantee clause.The next ascertaining we can bring to light at the reading of the figures below concerns theadvantage established suppliers have on new comers. It shows the importance accorded to thetrack record and industry experience. Of course, the impact can be negative for suppliers whoneglected their customers before the opening.

Yvan Laroche, in his report3 at the recent UNIPEDE Lisbon convention identifies the basicdemands. First, comes price (more or less important depending on the segment) and thenfollow: quality, simplicity, flexibility, choice, and quite often ecological preoccupations.

But in our opinion, none of these results is fully satisfactory. The data collected do not godeep enough in the reasoning process of customers. In addition, most of the time, customers'characteristics and segmentation are not taken into accounts. This lack of data is responsible

2 DIAMOND M.S. (BOOZ·ALLEN & HAMILTON), "Large customers. A misunderstood market opportunity",Lisbon: Conference on Customers & Markets, session 2, 19983 LAROCHE YVAN, "Nouvelles opportunités de développement à 5-10 ans", Lisbon:Conference on Customers & Markets, session 4, 1998


1998-330-0018 17 12/98 – MS&CP WG

for making difficult the building of marketing strategies. A great deal of efforts should bedirected toward creating databases that could be used to add value for customers.

Source: Survey (Diamond, 1998)

3. Propensity to switch

We know the opening of electricity market creates a leakage in companies' reservoir ofcustomers. We will now examine how big this hole is, how many customers are tempted toleave, how many actually put their threats into acts, and what is the rhythm of this defection.Defection is often compensated by acquiring new customers, but at what cost!

In Norway, the 2 million household customers have the right to choose their supplier since1995. Numbers for 1997 show that this trend is now slowly taking off; the figures for 1998confirm an acceleration of the process. It corresponds to the time needed for those whoadopted a wait and see method to gently consider switching. The second factor of influence isundoubtedly the recent free of charge switching policy. In April 1997, 4200 changes wererecorded; this figure was of 7100 in July. The total number of customers with a differentelectricity supplier than the dominant provider reached 13'900 in July, of which 81 % hadchanged in the last two quarters. In January 1998, around 89'000 customers switched.Reported in percentage of the total of households, these numbers still look rather meagre sincethey represent 1,75 % of the total population of household customers. However, theacceleration pace is impressive. Companies offer simplified switching formulas on which the

6.27 6.13 6.06 5.97

5.26 5.17 4.99 4.884.42 4.41

4.12 4.123.86 3.76 3.73 3.73 3.54

0

1

2

3

4

5

6

7

Responsiveemergencyrepai

Uninterruptiblepower

Protectionagainstspikes

Electricsupplierwithatrackrecord

Electricsupplierwithindustryexperience

Customizedcontracts

Lowestpossibleprice/kWh

Fixedpricecontracts

Regularsalesrepaircontract

Benchmarkinformati

Riskmanagementto

Oneregionalsupplier

Onesupplierforenergycommoditiesand

services

Onesupplierforgasandelectricity

Billconsolidation

EDTforpayingbills

Onenationalsupplier


1998-330-0018 18 12/98 – MS&CP WG

customer only has to write down the date, the numbers indicated on his meter, choose a newcontract and sign. The company will then take care of the rest.The Norwegian market is quite complex as it is divided into approximately 200 sub-markets.The figures show that 20 % of customers live in areas where the market share for thedominant electricity supplier is below 99 % and 10 % live in an area in which no one haschanged supplier. These figures prove that the traditional supplier still holds a dominantposition and that customers' switching has not really started yet.

In the UK, figures (Electricity Association) for industrial market (100kW) show that over athird of customers has changed supplier since April 1994. Answering the survey, 7 % ofhouseholds have said they were "very likely" to "likely" to switch supplier and 31 % remainedundecided. This would give us a maximum of 40 % potential switchers. However, theexperience lived in the gas industry seem to suggest a far lower potential, probably around25 %.

Another research conducted in 1998 on "Customer attitudes in the UK domestic electricitymarket" (MarketLine International, 1998) gives us more details. These figures are expressedin the table below. We see that 16.6 % of household customers declare they will switchbefore the end of the first year of liberalization. 24.3 % are not sure or did not know thisopportunity was offered. Finally, 59 % claim they will not switch. Again, the overallmaximum switching prognoses is estimated around 25-30 %. But these numbers are notstatic; the market, or more precisely the difference between the expectations of the market andreality will influence switching rates. For example, important disparity in prices couldencourage people who said they wouldn't switch to change their mind, just as a small gapcould dissuade others. Going deeper in the analysis, we verify that little variance has beenobserved on the basis of sex segmentation. A slight difference of 3 % (higher will to switchfor male) seems to predict there will be no major behavior contrast for these segments. Agehas a greater impact: Customers in the 25-34 age group are more inclined to switch. They aretypically considered to be early adopters and embrace new ideas and technological changesfirst. The older the customer is and the more reticent to switching he is. The 65 and more agegroup is very reluctant to switch with a rate of 74.4 % saying they will not exchange theiractual provider. A significant difference has been reported according to the region. Workingstatus also plays its role. Part time and full time workers are more receptive to switching thenany other group (retired or others) and make us believe they will behave in very similarmanners. Other groups such as retired are far less enthusiastic.

MarketLine International has tempted to draw a profile of the most likely and the least likelyto switch:

ü The most likely person to switch is…A male, 25-34 years old, living in Wales or The Midlands, belonging to a well-to-dosocial class, and working part time.

ü The least likely to switch is…A female, 45-54 years old, living in Scotland or the North, belonging to less favoredsocial class, and being neither employed part nor full time.


1998-330-0018 19 12/98 – MS&CP WG

Source: MarketLine International

In the US, 33.2 % of residential customers declared in a recent survey4, they would considerswitching with no price difference, and 24.2 % additional would definitely switch with"significant" cost savings.

In Germany, people were asked the question: "if you could freely choose, would you chooseyour existing electricity supplier again?" 5. "Convinced" customers said "definitely" at 35.5 %and "probably" at 18.9 %. "Satisfied" customers answered "definitely" at 24 % and "probably"at 18.1 %. Finally, "disappointed" customers responded "definitely" at 11.9 % and probably at6.4 %. This confirms that a complex link exists between satisfaction rate and loyalty, but it isworth repeating it cannot be the only explanation.

This is even better demonstrated in a survey (British Gas, 1997) realized on the UK gasmarket: The relation between customer satisfaction and likelihood of switching supplier andthe relation between value for money and likelihood of switching were opposed. It showedvalue is undoubtedly a more reliable indicator of switching propensity.

4 McINTOSH H.E. (ANDERSEN CONSULTING), "Customer service. Satifying andsaving", Lisbon: Conference on Customers & Markets, session 1, 19985 Source: Das Deutsche Kundenbarometer – Qualität und Zufriedenheit, Jahrbuch derKundenzufriedenheit in Deutschland, 1995

59

0.9 1.53.2

11.1

3.5

20.9

-5

5

15

25

35

45

55

65

No Yes, alreadyswitched

Yes, immediately Yes, after a fewmonth

Yes, after year Unaware I would beable to switch

Don't know / Notstated

%


1998-330-0018 20 12/98 – MS&CP WG

4. Reasons for switching

Studying the reasons that push customers to switch from one supplier to another gives yourcompany the tools to comprehend and measure its performance. As Reichheld claims in hisbook6, "any defection is the result of a lack of value". Knowing what is going wrong alsoenables the company to take corrective actions. It can also be a good indicator of thecompany's global performance or its performance in a special domain in comparison withcompetitors.

On UK's gas market, the identified reasons for switching were listed as follow (Lias, 1997):

- Price only 15 %- Dissatisfaction with British Gas 5 %- Innovators 1 %- Early adopters 9 %

On the electricity market (MarketLine International, 1998), price was the dominant answerwith 61.7 %. Still, over one third of respondents did not mention price as a dominant factor.Once more, the other options were far behind. The second most popular choice, customerservice, gathered only 23 %. Clear information allowing comparison of suppliers ranked thirdwith 10.6 %. All the others, such as combined gas and electricity, combined utilities,switching bonus, other discounts, were under 10 %. Let's note the high degree of uncertainty,probably coming from those who did not know at the time if they would switch or not.Broken down by sex, this survey indicates that female respondents were far more sensible toprice and service (around 6 % higher than male). The younger age groups show a high degreeof uncertainty that can be explained by the fact they are not often decision-makers and thus donot feel too concerned. The importance of service declines with the age. Disparities betweenworking status are greater than in any other segmentation. Price is particularly decisive forpart time group (82,9 %, 20 % more than full time workers). This information enables us tomake a new customer profiling for each of the reasons that can lead to switch:

6 REICHHELD FREDERICK F., "The loyalty effect. The hidden force behind growth,profits, and lasting value", Harvard Business School Press, Boston 1996


1998-330-0018 21 12/98 – MS&CP WG

Sex Age Working statusPrice F 35-44 Part TimeService F 25-34 Part TimeInformation M 55-64 RetiredCombined gas and electricity M 25-34 RetiredCombined utilities F 45-54 Part TimeSwitching bonus F 15-17 RetiredRecommended offer through a non-utility M 35-44 Full TimeDiscounts on other products and services F 18-24 Part Time


After having considered these results, it is tempting to raise the problem of over-simplification often observed in such studies. It seems to us it is quite dangerous to say thatprice and only price is the determinant factor that explains most of switching behaviors. Priceis a more complex notion than what we usually imagine. Price is an interaction of manydifferent elements and is the result of a long personal process. It involves psychology as muchas economy. Prices influence products as products influence prices. So we should not forgetto consider all the elements when we "simply" speak of price. This concern is also relevant inthe case of service because it is not necessarily clear what service means in customer's mind.

5. Barriers / Incentives

5.1. Barriers

The main purpose of deregulation and opening of electricity market is to introducecompetition in a domain that was until now in a monopolistic situation. But we now knowsome dysfunction may occur in a liberalized market and may be the sign competition does notwork exactly as it should. Some of these barriers can also be due to other factors inherent tocustomers rather than to the market. Let's look at these barriers through practical examples.

On the UK gas market, four barriers have been identified (Lias, 1997). These barriers forcethe suppliers to go out and win customers via direct channels. Barriers create inertia, mostlydue to the risk perceived and to the low involvement of customers who have adopted a waitand see attitude.

ü The first obstacle that slows customers down is ease. Customers ask themselves questionslike "do I have to sign a contract", "are there a lot of documents and paper work", "do Ihave to pay an exit or entry tax"?

ü The second difficulty is the level of simplicity. Is the contract clear and do I really see adifference with my old supplier? Am I going to save a significant amount of money? WillI see an improvement in the relations and a better understanding?


1998-330-0018 22 12/98 – MS&CP WG

ü Third, brand will be a handicap for newcomers and companies working outside of theirusual perimeter. New entrants will lack, in customers eyes, the background and theexperience other companies have built over the years in a rather complicated and technicaldomain. Customers will more easily trust brand they know.

ü Finally, the reputation, created by the numerous errors some of the new entrants made,could cause prejudice to others.

Still in UK, but this time on the electricity market, another research (MarketLineInternational, 1998) also approached the subject of barriers. People were asked to give themain reason responsible for not willing to switch electricity supplier. The answer is quitesurprising. The reason 76.9 % of non-switchers invoked is just that they are happy with theircurrent supplier. The second most popular answer, but far behind happiness, is the hasslecaused by switching. 14.9 % of non-switchers do not want to be bothered by what they feel isa long and complex process. In fact, hassle should not be an obstacle since it is easilyremedied as door-to-door or telephone sales people make most of the efforts on behalf of thecustomers; the problem is having the latter know of this service!The difference between male and female behavior is rather small. Male customers seem to bemore preoccupied by the hassle caused (17.3 % vs. 12.7 %) while female seem a little happier(78.5 % vs. 74.7 %). Again, we observe small distinctions by age, the 65+ age group beingthe most satisfied and the 35-44 group most concerned about hassle (probably a time issuesince it is at this age that family and work ask for a lot of time and energy). People workingfull time showed more concern about hassle (20.2 %), about twice as much as part time orretired. They are also less happy by 10 %. These people feel they don't have that much timeavailable and don't want to waste time on choosing a new supplier.

5.2. Incentives

Customers are waiting for the companies to give them good reasons to switch. Theseincentives can vary from one company to another, but in order to attract new customers or justretain the existing ones, they must be decisive in customers' mind.

On the UK gas and electricity market, some suppliers propose to join a loyalty club thatgives points and can later be used to reduce shopping bills. Energy providers have concludedalliances with all kinds of non-utility companies. This solution seems to be liked bycustomers because of its convenience. It looks like it is a win-win strategy since both side aretaking some advantage out of this offer. Suppliers touch a larger population and at a muchbetter price than what they could do on their own. In addition, they create a better retentionrate and have found an ideal ally. Supermarkets are great candidates for alliances for anumber of reasons. First they have stores nationwide and are visited by most of the populationon a regular basis. The loyalty schemes provide a database and a mean for joining marketinginitiatives. Finally, energy suppliers benefit from the stores "one-stop" principle. In the UK, itseems that energy companies try almost frantically to make alliances with non-utilities. Thesealliances concern airline companies (miles), credit card and financial service companies,media industry, building societies, and so on.We believe the arrival on the electricity market of new entrants such as non-utility companieswill have an indirect impact on customer loyalty. The resulting side effect could leadcustomers to be more receptive to switching opportunities. These newcomers could carry amore "neutral" image and reputation in buyers' eyes and therefore speed up the switchingprocess.


1998-330-0018 23 12/98 – MS&CP WG

Others have given welcome cash back incentives. This tactic may be quite dangerous sincenothing guarantees that the new customer will stay loyal long enough to pay off theinvestment. This solution is risky in a world in which people are used to take advantage ofthis kind of deals and run away at the first occasion. They will also respond to yourcompetitors' incentives!

A research led by MarketLine International in UK focused on the additional components acompany can offer as an incentive. Beside the traditional supply package containing price,tariff structure, service undertakings and dual or combined fuel discounts, suppliers can offerincentives linked to non-utility companies. Three main methods have been used:

ü Offering a preferential price or tariff to an affinity group. This method is mostsuitable for financial services, banks, insurance, charities, unions, and media.

ü Continuous reward schemes and sign-up cash bonus. These methods are most suitablefor supermarkets and high street stores with reward schemes.

ü Sign-up vouchers. Suits to any company, but especially charities, unions, high streetstores, energy goods, retailers, and building societies. Usually used when transactions areless frequent.

The main package has been thought over again too. Suppliers offer price reductions andtime-of-day tariff options since most of the competition is based on this matter. The marginsbeing already so tight, no real significant drop is expected (some say it will be below 10 %and probably even below 5 % for domestic electricity). This explains why companies try tooffer lower bill by playing with tariff options. Reduction is expected through the offering ofa tariff closely related to consumption pattern. In this system, prices vary according to theload profile of customer. The problem is that the more complicated the tariff and the morecomplex and expensive is the meter. Other tariff options such as tariffs on payment method(see below) and on overall consumption will also aim to reduce customer electricity bill.Product based tariffs will focus more on people having strong believes about environment(green tariff) or wanting to save the British coal industry (Eastern's Lionheart) for example.Payment options are also being considered as a key for customer acquisition and retention.Both sides particularly appreciate direct debit. Suppliers incur a far lower credit risk andbilling costs are lower. Customers see their transaction simplified and do not have to botherabout their monthly bill any more. Since the costs are lower, direct debit users are oftenoffered a lower price. But what are the figures for direct debit? 26.8 % already use thismethod and 32.7 % stated they would be happy to switch to direct debit to save money while26.2 % stated they would not switch. The main reason for this refusal is the fear thatelectricity companies have access to their bank account.

Another trend has emerged some time ago with the offer of dual or combined fuel packages.Many companies have chosen the option to offer gas and electricity. Some have even linkedgas and electricity so tight that they offer a price reduction only if customers take bothproducts. The range of offers is very wide, but in any case, the goal the suppliers are aiming atis to acquire and keep customers by offering them an easier solution to their energy problem.They bet on time saving, ease, effort reduction, and unique interlocutor in order to do most ofthe job for the customer. But in a rather short-term perspective this advantage could besubstantially annihilated since most of competitors are on their way to offer dual-fuel.


1998-330-0018 24 12/98 – MS&CP WG

We until now have listed what kinds of incentives were available on the market. Let's look atthe customer point of view. What incentives will he/she react to? The figure below confirmswhat we had already guessed.Cash back is the preferred customer solution but it does not mean a company should do it atany cost. As discussed earlier, both sides should be winning on the long term when such adeal is concluded.

6. Conclusion

The reading of those researches made on liberalized utility markets leads us to make a seriesof final comments.

First, and as a residue of the monopolistic situation that characterized the electricity industryfor years, we discover we know very little about our customers. We miss the essential. Notonly what his needs are, how he reasons when he has to make a complex decision, but evenwho he is. It is therefore urgent to build databases gathering the most relevant information oncustomers. These information can then be treated and used to refine our positioning and reallywork toward the creation of value for our customers, and consequently for ourselves.

Measures have to be taken as soon as possible since the years preceding the opening areessential to consolidate the position and the image of the company. Once the market isliberalized, everything goes very fast. It is true a wait and see attitude can be observed in thefirst months, but as the trend takes off, it becomes harder to inverse the tendency. With thefall of the psychological as much as the real barriers starts a real struggle for survival.

The reasons invoked for switching were first price (two third) and then service (one third).These results are confirmed in a number of studies but are not satisfactory enough. Theysuffer from a simplification effect and too often forget to correlate these factors with otherelements. A service can be cheap or expensive, but always in comparison with what isoffered, with what guarantees you get. So let's not resume everything to price just because it isconvenient to do so.

Barriers exist. The more persistent are in customers' mind. Customers have a lot ofpresumption (that are sometimes not only presumptions!) due to the fact electricity has a longhistory. But what is important is that companies have the tools to guide, help, and do most ofthe work in order to facilitate customer's life.And if suppressing the barriers is not enough, companies can always fight customers' inertiaby sending incentives. The options are numerous and they range from cash back incentives,tariff offers, combined fuel packages, to alliance to non-utility companies. But let's forget thatthese actions should always result in long-term benefits, for customers as much as forelectrical companies; and this is not an easy task when margins on electricity sales shrink asthey do in fully open markets.


1998-330-0018 25 12/98 – MS&CP WG


29.3

27.2

5.9 5.74.2

2.4 2.4 1.8 1.4 1.1 0.50

5

10

15

20

25

30

Cashbackonswitching

Dual-fueldiscount

Shopvouchers

Banksupply

Supermarketloyalt

Highstreetstor

loyalty

Noneofthese

Donationtoschools

Charitabledonatio

Financialservices

supply

Insurancecompa

%


1998-330-0018 26 12/98 – MS&CP WG

BIBLIOGRAPHY

BRITISH GAS, "Residential gas. Relation between customer satisfaction and likelihood ofswitching gas supplier", December 1997ELECTRICITY ASSOCIATION, "European & overseas relations. Switching supplier andcustomer loyalty in the UK electricity market"KOBER MAGNUS & HJELLE ANN-KRISTIN, "Electricity market survey 1997", NVE,August 1997KOBER MAGNUS & HJELLE ANN-KRISTIN, "Supplier change January 1998", NVE,January 1998LIAS ALAN (Managing director Beacon Gas Limited, Presentation by), "What has madedomestic customers switch? Analyzing the critical success factors for profitably attractingnew customers", European Utilities Conference, November 1997MARKETLINE INTERNATIONAL, "Domestic electricity competition. Customer attitudesin the UK domestic electricity market", 1998MOORE KATHERINE, "Split affinities", Utility Week, 16/page 20-21, January 1998MOORE KATHERINE, "Talking tactics", Utility Week, 20/page 14-16, March 1998OFFER, "Competition in supply", OFFER Annual Report, 1996REICHHELD FREDERICK F., "The loyalty effect. The hidden force behind growth, profits,and lasting value", Harvard Business School Press, Boston 1996UK GAS REPORT, "Marketing: Tesco teams up with ENERGI to offer gas customer loyaltypoints", 102/page 12-13, February 1998UNIPEDE, "Conference on Customers & Markets", Speeches & Slides, Lisbon 1998

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