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Choice is not the issue

Aug 08, 2018

Written By

Chris Broadhurst

Director of Business Development

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In relation to many comparable markets – telco, broadband and the like – the choice of energy suppliers available to UK households and businesses is both significant and diverse.

With this week’s CMA suggestions and the lukewarm response they have received, we look at the supplier landscape and what is required to drive a quantum shift in the appetite for consumers to “Switch”.

With 35 licenced suppliers currently operating in the market, and a clamour of entities and entrepreneurs looking to further disrupt the market over the next 18 months, there hasn’t been a better time to shop around for your energy. With all that said, the resounding message from the CMA is that customer engagement just isn’t there. Choice alone is not the issue.

For those home and business owners open to the concept of moving their supply, the array of energy suppliers catering for the full spectrum of offerings is there. Price, Environmental, Technology and “local” options are already well established, and innovation around new propositions yet to be seen in the market will inevitably resonate with those who have yet to switch.

But for those that haven’t come around to the idea of switching, and this is the large majority, what’s holding them back? For many households, the promised “£300+ per year savings” are dismissed as “too much hassle” or “not worth the aggravation”. The reality is that for most energy users the measurement of their energy usage is how much they pay by direct debit. This is by no means a reliable gauge of usage but for many is the only real barometer on what savings they could make. Complex billing, tariffs, and pricing structures all cloud a customer’s judgement – it’s simply prohibitively difficult to interpret and materialise the cost/benefit of switching.

What’s more, negative coverage around “bills from two suppliers” adds to the fear factor and apathy, along with the fact that the saving is not realised as a tangible lump sum but through a reduction in future bills. For many people there is even an inherent fear of the “lights going off” should the transfer of supply go wrong.

Despite that bad press, suppliers are engaging more with their customers – social media has been a key proponent in this, helping build a dialogue between the consumer and the hitherto faceless corporation that’s gone a long way in repairing the reputational damage sustained by supplier’s over the years. Supplier engagement has definitely been a good thing, but it’s unfortunately been a one sided affair, and the stark truth is that a large portion of the population are simply not interested in engaging. Apathy, driven by decades of perceived over charging and profiteering will not be overcome overnight.

Fundamentally, then, it all comes down to customer engagement. The desire to switch needs to be there right from the start. So what’s holding customers back? Data. The choice to change needs to come from the customer, and before they can make that choice, they need to be equipped with the right information. In the information age, it’s data that’s empowering consumers to make better choices, but 20 years on from deregulation the energy industry is still in the dark ages.

It’s well known in the industry that data is the energy industry’s bad apple, but if supplier’s really want to overcome the challenge of winning over the hearts and minds of energy consumers, they need to ensure that their customers feel able, willing and empowered to secure the best deal for their home or business.

This will not be achieved through a communal “prospecting trough” database for suppliers to sift through for potential new customers.

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