Genesis replaces Contact as Fly Buys' only electricity provider

Genesis Energy is replacing Contact Energy in the Fly Buys loyalty scheme as the country's largest electricity retailer seeks to improve its attraction to existing and would-be customers.

The move is the latest of many in the fast-shifting New Zealand loyalty schemes market and follows Genesis's closure in 2015 of its in-house loyalty scheme, Brownie Points.

The company is increasingly focused on increasing the value of its customer base under recently appointed chief executive Marc England after a prolonged period in which Genesis focused more on the future of its generation plant, especially the ageing gas and coal-fired Huntly power station.

The switch will occur on May 7, with Genesis making an offer to both existing and prospective customers to register for Fly Buys ahead of that date.

Genesis claims about 26% of the retail electricity market and also offers reticulated natural gas and bottled LPG. Its most recent quarterly filings to the NZX show that it lost 1.6 percent of its electricity customers in the course of 2016, to total 535,438 connections at December 31. Contact had 421,000 electricity customers at February 28.

Mr England said at the company's half-year results briefing that Genesis preferred to build customer margins rather than total numbers and was willing to sacrifice low-margin customers.

Contact has offered Fly Buys since 2001 but there were indications late last year that the power company would leave the loyalty scheme.

In an interview for The Listener, Fly Buys owner Loyalty New Zealand's chief strategy and growth officer Hamish Mitchell said some departures from Fly Buys, which also includes Mitre 10, "are ... our doing rather than theirs," with more "proactive and enthusiastic" replacements to emerge in 2017.

"If you're not going to make the most of the assets of the programme, then you're simply tying up the category and preventing others from joining. You're not doing us or your customers any favours," Mr Mitchell said.

For its part, Contact has recently completed a $250 million IT upgrade that will enable it to do in-house 'big data' analysis on its customer base and which it is using to target value-enhancing offers to both new and existing customers.