What Can Cleangrowth Entrepreneurs Learn from the Story of Octopus Energy?
In May of this year, Australian energy company Origin Energy acquired a 20% stake in Octopus Energy. This deal, which gave Origin access to Octopus Energy’s Kraken technology platform, also saw the British company become one of Europe’s Clean Growth ‘unicorns’ – companies with a valuation of over £1 billion.
On top of this, Octopus Energy now supplies energy to 1.5 million homes in the UK and, through software licensing contracts with other energy suppliers, its Kraken platform now supports over 17 million energy accounts.
So what can Clean Growth entrepreneurs learn from the way Octopus Energy has used its story to attract customers, partners and investors?
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Octopus Energy has built its story around environmentally concerned customers who are frustrated with the ‘pricing trickery and poor customer service’ of the Big Six energy providers; regardless of whether they’re household or business customers.
Discovering a mindset common to all its customers means that Octopus Energy can be incredibly consistent in how it tells its story, focusing on the 20 to 30 percent of energy customers who will generate 70 to 80 percent of their profits – at least for now.
The Ordinary World for this target audience is the broken energy suppliers market created by the Big Six. The cracks in ‘business as usual’ are further deepened by customers’ awareness of climate breakdown and biodiversity from the media.
Priming is an effect, demonstrated by psychological research, where our decisions are often hugely affected by context.
Octopus Energy is unafraid of calling out the broken energy supplier market in their communications; which is powerful in reinforcing this Ordinary World, priming their target customers for change.
Octopus makes the general broken system of an energy market dominated by the ‘Big Six’ an immediate and pressing concern for their customers by showing that ‘pricing trickery and poor customer service’ is costing them time and money today.
The heroes in our stories have always been those who selflessly put the needs of the tribe above their own, and the villains have always embodied selfishness. Referring to the Big Six as ‘a handful of complacent dinosaurs’ instantly makes us side with the plucky, unselfish underdog in the market.
Call To Adventure:
To persuade people, an effective tactic is to cause them to experiencewhat is known as ‘cognitive dissonance’ (where two of the stories they believe or their ‘cultures of control’ come into conflict) and then quickly offer your solution as a way to resolve the discomfort this makes them feel.
Octopus Energy’s simple and memorable Call To Adventure reflects the fact that being ‘sustainable’ and a ‘smart consumer’ isn’t always aligned – sometimes getting a good deal, means not making the best choice for the planet.
They quickly resolve this by telling you that with them you can be both – sustainable and smart – and who doesn’t want to have their cake and eat it?
Crossing The Threshold:
Change is hard, so you need to try to make taking the first step as easy as possible.
For Octopus Energy customers, this is as simple as entering your postcode on the homepage of their website.
The three challenges for the customers of any business, tend to be trying the change, making the change work and living the change. For Octopus Energy they address these challenges by helping customers get a good deal without having to constantly switch, providing great customer service to help with problems, and by providing opportunities to upgrade to premium packages for carbon-neutral energy including gas consumption.
Mentor & Gifts:
People want things more when they feel scarce. One way to make your company feel scarce is to have a unique viewpoint on the Hero’s problem that can move a market, change a category or challenge the status quo. For Octopus Energy this is ‘bringing the same kind of platform that brought prices down and service up in retail, to the energy market’.
People will only come on a journey of change with you if they trust you. Credibility is a key factor. Octopus Energy creates credibility for their unique viewpoint by having a team with an e-commerce background.
People also prefer to say ‘yes’ to people they like. An effective way to do this is to show you’re similar to your customers in some way. Octopus Energy takes every opportunity to tell you that it’s as fed up with the Big Six as you are.
The three gifts that a mentor offers have to align with the 3 challenges that customers will face.
This is done through Octopus Energy’s key messages about what its Kraken platform delivers:
1. ‘Fair prices for everyone’ – over the past year, the difference between our fixed and standard price was less than 1%.
2. ‘We won’t leave you hanging’ – we’ve answered your calls within 2 minutes on average over the past year.
3. ‘100% green’ – all our electricity comes from 100% renewable sources (and tariffs that overset gas consumption).
Allies & Gifts:
When they’re uncertain, people will look to the actions and behaviours of others to determine their own.
Octopus Energy show endorsements from Allies throughout the journey to becoming a customer:
- We’ve been picking up 30,000 customers a month on average
- Rated 5 stars for customer service from 31,071 reviews on Trustpilot
- Which? Recommended Provider – Energy Companies 2020, 2019. 2018
- Uswitch Supplier of the Year 2020
- The Association for Renewable Energy & Clean Technology – Company of the Year winner 2019
Putting endorsements that reinforce trust, at key decision points, is powerful in securing customers.
Finally, to go on a journey of change the destination has to be worth the journey.
To paint a picture about how buying a product or service can improve a customer’s life, companies focus on showing how it will help people ‘get ahead’, ‘get along’ and ‘get meaning’.
- Get ahead – advancing or status in our tribe(s}.
- Get along – advancing our connections within our tribe(s].
- Get meaning – advancing our purpose in life (or at least for this chapter in our life). This last one doesn’t have to be world-changing – depending on your personality your purpose can be equally rewarding whether it benefits one other person or the whole world.
Octopus Energy paints an effective picture of the future for potential customers:
Get ahead -Saving time and money.
Get along – Can tell people who care (friends, kids, customers, employees) that I’m ‘a good person’.
Get meaning – Together with other Octopus energy ‘members’, I’m fighting against climate change.
You have to show this Better World to your customers; you can’t just hope that they’ll figure out how your product will make their lives better.