Paul Holmes 22 Oct 2002 // 11:00PM GMT
Shell Energy was formed by its parent company, the Royal Dutch/Shell Group of Companies, to take advantage of business opportunities created by the deregulation of electricity and natural gas in states across the country. Shell Energy chose to enter the Ohio marketplace just as the state’s electric deregulation law was going into effect. However, Shell Energy found that the Shell name had been tainted due to circumstances beyond its control. As a result, Shell Energy was essentially precluded from entering its most important target market, the city of Cleveland.
This program is worthy of an award because it rehabilitated Shell’s image and made it possible for Shell Energy to gain a substantial share of the area’s electricity and natural gas customers in a very short period of time.
When Shell Energy decided to enter the Cleveland market, its management had no idea that its parent company was a defendant in a lawsuit brought on behalf of residents of the primarily African American, economically depressed east side. The lawsuit (which had been quietly pending for several years) alleged that Shell charged more for gasoline at its east side locations than at its stations on the west side.
The city’s mayor had struck an agreement for Shell Energy to provide electricity to city residents when deregulation took effect. However, when the mayor, who is African American, was told of the lawsuit by a prominent African American city councilman, he rescinded the agreement.
At a public meeting, the councilman declared that he would vigorously oppose any attempt by Shell Energy to do business in the city in light of the way its parent company had (allegedly) treated residents. He also threatened to mobilize his constituents and hold demonstrations against Shell Energy.
Shell Energy stood to lose the substantial investment it had made in its Northern Ohio business strategy because of the negative reputation of its parent company among a key Cleveland demographic. Rather than simply leave the marketplace, the company decided to embark on an aggressive campaign to restore its corporate image, enlisting Dix & Eaton to assist in the development and execution of the campaign.
Before embarking on its campaign, Shell Energy needed to know the extent of its image problem. While it was clear that the image had been a deal-breaker in the city of Cleveland, it was not clear whether the same issues would hamper the company’s ability to do business in Cleveland’s suburbs—particularly the inner ring suburbs that have substantial minority populations.
Opinion research was conducted to determine the extent of awareness of the lawsuit and the impact of that awareness. The research found that the majority of respondents were not aware of the lawsuit but that, if made aware of it, a large majority of respondents would be less likely to do business with Shell Energy.
Shell Energy knew there was a risk of people being made aware of the lawsuit because of the city councilman’s prior threats to mobilize his constituents. Therefore, the company knew that if it was to pursue its goal of doing business in Greater Cleveland, it had to rehabilitate its image.
Shell Energy knew that in order to create a positive public image, it first had to demonstrate its commitment to the Cleveland community and to establish itself as a good—and inclusive—corporate citizen. This was a challenge in part because, although its parent was a major multinational corporation, Shell Energy itself was just getting established. Headquartered in Houston, the company had no office or physical presence in Cleveland. Dix & Eaton served as the company’s eyes and ears and strategic partner.
To assist with our initial analysis of the situation, we enlisted the help of a non-profit organization dedicated to promoting inclusion and diversity in Cleveland, and partnered with an outside consultant who had significant connections among Cleveland’s minority community. We built our strategic plan (Sample A) around identifying opportunities for Shell Energy to demonstrate its good corporate citizenship and commitment to inclusion.
1. Corporate Giving
The first major opportunity we identified for Shell Energy was a $200,000 donation to the Cleveland Municipal School District for computers to be used by students. This donation was chosen for several reasons:
· The education of children is one of Shell Energy’s core values.
· Shell Energy was seeking to position itself as an innovative and technology-oriented company.
· Improving the Cleveland Municipal School District is a major priority for the mayor of Cleveland
· The District’s CEO is closely aligned with the mayor and highly and universally respected by all important audiences.
· The Cleveland Municipal School District is primarily comprised of minority students, so Shell Energy’s donation would directly help minorities.
· It would be difficult for the city councilman to publicly criticize Shell Energy for making a donation that had the support of the mayor and the schools’ CEO.
2. Targeted Community Involvement
We also identified other important civic organizations for Shell Energy to support, either through attendance at or sponsorship of significant events. This served to raise the visibility of Shell Energy at important community functions and to further establish its corporate presence in Cleveland. Photos from the events were later used in a display to illustrate the company’s involvement in the community.
3. Relationship Building
We drew upon our own personal relationships and those of our outside consultant to arrange meetings between Shell Energy’s marketing manager and influential members of the community. These relationships helped to put a human face on Shell Energy and demonstrate its commitment to the people of Cleveland.
4. Media Relations
Once the corporate image campaign was under way, Shell Energy began a parallel campaign to market electricity and eventually natural gas. Dix & Eaton arranged numerous opportunities for company representatives to be interviewed by print and broadcast media to help clear up consumer confusion around the issue of energy deregulation which resulted in numerous media hits over several months. Shell Energy used those interviews to help position itself as a diverse company and good corporate citizen. In addition, a media event was planned around the delivery of the computers to the Cleveland schools. Along with coverage in print and broadcast media, a full-page story about the donation was included in a district publication, prominently placing Shell Energy among Cleveland’s corporate leaders. The publication ran as a supplement to the city’s daily newspaper, The Plain Dealer. In addition, a feature story about Shell Energy’s Ohio marketing manager was placed in a magazine catering to the city’s minority business community. The marketing manager was also interviewed on local public affairs radio and television shows.
Dix & Eaton prepared various materials to support Shell Energy’s image-building campaign, including full page advertisements; a press kit, which received an award from the Cleveland Business Marketing Association; and a display. (Set on an easel, the large display included photographs of Shell Energy representatives attending various community events. It was used as a backdrop for community meetings.)
The image campaign began in January 2001. As a result, the threatened public opposition never materialized, and by spring, Shell Energy had emerged as the dominant independent marketer of electricity in the newly deregulated Northern Ohio marketplace. In June, Shell Energy was chosen to supply natural gas to the Northern Ohio Public Energy Council (NOPEC), the largest energy aggregation group in the country. NOPEC represents approximately 450,000 customers in more than 100 communities in Northern Ohio, including most of Cleveland’s suburbs.