Utilities seek the power of catalogs

Dec 01, 1998 10:30 PM  By

As in the telecommunications and aviation industries, deregulation among utilities is forcing some electric, water, and gas companies to focus on brand building. Several utilities, such as Detroit Edison, have chosen catalogs to boost their brand.

So far, 31 states have deregulated or have legislation pending to deregulate their utilities, letting customers shop for utility services regardless of geographic boundaries. Utilities companies are turning to catalogs as an offensive measure: They figure that the more frequently customers buy goods or services from them, the more likely these buyers are to remain loyal even after deregulation hits. Indeed, “catalogs meet a major need typical of utilities,” says Jack Schmid, president of Shawnee Mission, KS-based consultancy J. Schmid & Associates. “They’re a vehicle to keep in touch with customers.”

That was Minnesota Power’s rationale for launching The Electric Outlet last year. “We wanted to build on brand recognition, as well as develop an added revenue stream so that when deregulation comes, we’ll be ready,” says Lori Collard, president of the Duluth, MN-based catalog. The initial mailing went to 155,000 Minnesota Power customers and shareholders. The company used overlays to determine which of its customers were mail order buyers.

Now The Electric Outlet is expanding from beneath the umbrella of Minnesota Power. This fall it partnered with Illinois Power to produce a 36-page, 155,000-piece mailing. The Electric Outlet stores and ships the appliances, housewares, and gifts for children sold through the catalog; Illinois Power provides the database. According to Collard, The Electric Outlet is in discussions with “about 10 other utilities around the country” to produce similar catalogs.

In addition to encouraging loyalty among current customers, utilities are using catalogs as prospecting devices. Since launching its catalog two years ago, Detroit Edison has begun mailing beyond its southeastern Michigan borders. In its fall catalog, for instance, Detroit Edison included an offer for energy services to nonregulated consumers in Pennsylvania.

“Our company had anticipated deregulation,” says Marie Wayman, vice president of DTE Edison America Catalog Sales. “We wanted to start doing business beyond our territory to let customers know that we are a full-service entity. Catalogs are a way to get into households beyond our own territory.”