Big Oil and customer relations

by jean Marc Rommes on May 5, 2010

John Hofmeister, former President of Shell signs an article in Strategy+Business titled Why we hate the Oil Companies about how the big oil companies overlook the customers – a remarkable statement from a (now retired) former top oil man.

Some points mentioned:

  • Buying the product is unappealing for consumers
  • Consumers don’t understand the price they are paying for the product (nor, for that matter the highly complex pricing mechanisms)
  • Oil companies spend vast resources on the long term to ensure supplies and Shell does 100-year forecasts and scenario planning, but present time cost management and (surprisingly low) returns drive aggressive pricing and other business decisions.
  • Most oil companies don’t care much about their retailing business and because its low profitability have mostly shifted ownerships to local business owners or groups (car retailing comes to mind)
  • The industry has often failed to build meaningful relationships with government and other stakeholders and it makes its image predicament worse by not addressing its poor political and bridge building skills

His concluding line could well apply to many other industries (and he does mention utilities).

“… the place to start is within their own companies: toward transparency, better collaboration with outsiders, and more attention to understanding their customers.”

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