CSR as a customer loyalty driver : Within the energy industry

Abstract: The need for adaption within the business world is critical to keep up with the rapidly changing pace due to the internet. The internet, among other things, provides customers with the advantage of transparency. It is constantly becoming easier for customers to gather information about companies and their products and services and compare this in the comfort of their own home. One tool they can use are comparison sites such as prisjakt.nu. These sites are also available to compare energy providers and it is free of charge. Customers can both compare and change energy providers without any cost. Furthermore, energy is a homogeneous product which mean that, until the energy bill arrives, the customer cannot tell where the energy comes from. Therefore, to make sure that customers will not change energy providers as soon as there is a change in price, something more has to be offered to make them loyal. Loyalty is one of the most significant contemporary strategies to ensure long-term customers. To identify customer needs before the customer even realizes it themselves, companies has to be proactive. They have to actively research upcoming trends and find out if these apply to their customers before their competitors does. Several trends appear every day, however, one of them which has been slowly growing during the twenty-first century is social sustainability. Consumers are becoming more informed and engaged in what products and services they buy and what social footprint it leaves. Therefore, this thesis will study corporate social sustainability (CSR) as a possible moderating factor to customer loyalty within the energy industry. Furthermore, willingness to pay (WTP) for CSR related activities will also be researched as a moderating factor to customer loyalty. This is of interest for the energy providers since customers can feel that CSR related activities are important at the same time as they do not wish to pay for it. WTP also contributes to a more realistic result since people have a tendency to answer highly on importance of sustainability questions since it is the ”right thing to do”. The method chosen to gather data for this study, besides doing a literature review, was to send out an electronic questionnaire to several energy providers customers. The survey included demographic questions as well as several questions on how highly customers value CSR, WTP for CSR and customer loyalty which were then analyzed in SPSS. The responses were both analyzed separately for each energy provider and as a full sample. Answering the research questions and hypotheses, the result provided four main points. First, it showed that men above 64 years old with an income of 10-15.000 SEK/month had a higher WTP for CSR related activities which did not add up with the theory. It was also the opposite to the customer groups who had the highest mean score for CSR value. Second, WTP for CSR related activities and value for CSR related activities did not rate the same activity as the highest one. There was, however, overall a positive, medium or high correlation between value and WTP for the different CSR activities. Third, there was a predicting relationship between value for CSR and customer loyalty as well as between WTP for CSR and customer loyalty. However, when meerging there toghether to one moderator, there was a weak and negative affect on customer loyalty. Finally, when conducting a status analysis it is clear that there are customer needs within CSR that most energy providers do not fulfill.