Centrica [CNA.L] is offering its energy customers a telecoms package that boasts free evening and weekend calls. The company is responding to a difficult operating environment by leveraging the potential of bundled services, but it will not derive the full benefits until its back office is seamlessly integrated.
From March, British Gas energy customers will be able to subscribe to a telecoms package called 'British Gas Talk', which offers free evening and weekend calls. There will be no monthly charge for the package, making it GBP72 cheaper than BT's Option 2, although customers will still have to rent a line separately from BT or One.Tel.
Although the timing of the launch goes hand in hand with the fact that customers can now rent their phone line from One.Tel rather than BT, it is better understood in terms of British Gas's longer-term approach to home services. The Home Services division is British Gas' most profitable retail business, but the sector is getting more competitive. At the same time, British Gas has been losing customers in its energy division even though margins there are already tighter than is ideal.
In response, British Gas is developing its bundled services propositions in a bid to increase the value of its services to customers, also helping it to win back customers that it has already lost. It recently launched 'on-call assistance', which enables British Gas energy customers to call British Gas engineers even if they do not have a home service contract. Thus 'British Gas Talk' is the second in a likely range of service packages - one that benefits from being priced against another former monopoly, BT.
However, the skill will be in the execution. Centrica recently consolidated its telecoms brands and businesses, but One.Tel is still very separate from the energy division. Talk customers will in fact receive three bills, because British Gas does not yet have the capability to combine electricity and gas bills, but at least British Gas can serve electricity and gas customers from the same contact centers, whereas there will be an entirely separate service operation for the telecoms side of the equation.
Only when Centrica's Jupiter CRM system is fully operational will British Gas be fully able to exploit the service synergies in its bundled services and take the pressure off of its core energy business.