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Don’t quote me on that…

Aug 09, 2018

Written By

Chris Broadhurst

Director of Business Development

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We are all used to the concept of quotes in modern life, be it a tradesperson for jobs round the house, a mobile phone contract, or the dreaded “teeth sucking” of a mechanic with your car bonnet open. Energy is no different when it comes to successfully navigating the quotation process, so this week, we take a closer look at the challenges associated with energy quotes, and examine some of the current trends in the market.

With most services the quote is likely to comprise a number of components that the supplier of the service needs to factor in to understand the overhead on them to deliver, plus a margin to keep the business profitable. Time, urgency, materials, travel, hardware, software, risk or the availability of other options with regards to that service will all ultimately play into and inform the quote, for both the supplier and the buyer.

In tandem with this, as consumers, our ability to challenge or haggle that quote is often informed by past experience, friends and family, or even “gut feel” on the prices ‘sounding about right’.

But, when it comes to energy, and deriving an accurate quote for the energy usage over the coming year, there are a lot more moving parts.

As a starting point, the sense of a “fair” or “right” price that the consumer brings to the energy market may vary significantly, from a clear and scientific view of their kWh consumption, to the more simplistic view based on whatever they pay their current provider.

In the latter example, a consumer with an unrealistically low view of their energy consumption and cost is going to find it difficult to identify tangible savings. The reality is that unless a consumer has an accurate view of their energy usage, then any “quote” is subjective.

The fact that the customer could unwittingly understate their consumption is due to the lack of consistent or proactive payment adequacy reviews with their incumbent supplier, and is a common challenge. This means that any “saving”, whilst still relative to the customer’s actual usage, is likely to be eroded or nullified once a true view of the customer’s usage is arrived at.

With a move towards “quick quotes” and “lite-quotes”, designed to capture the minimum information required to quote a customer, this underlying disconnect between a customer knowing what they pay and knowing what they use remains the key challenge.

In an increasingly competitive market, and with suggestions that independents market share could be 25% by 2019, it’s no surprise that suppliers are looking to make the quotation process as quick and painless for customers as possible. But, with the need to rebuild trust between energy consumers and suppliers, suppliers that take this approach need to ensure that their messaging is clear- or run the risk of customer service problems from day one.

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