Why are energy consumers switching at a rapid rate?
Aug 09, 2018
Despite the collapse of an independent supplier and a CMA report citing a distinct lack of competition, the energy market is as buoyant as ever, with 7.7 million consumers switching supplier last year – a 28% increase on 2015, and the highest its been in 6 consecutive years.
In terms of media coverage, last year was another tough one of the energy sector:
“The new government has […] made it clear that industry is in a last chance saloon” – Ofgem senior partner for consumers, Rachel Fletcher
“UK consumers overpay staggering £18.7bn on energy bills” – The Independent
“GB Energy collapse raises fears of more failures” – The Financial Times
Yet despite all that bad press, it appears that the level of competition – which the CMA report last year highlighted as a key concern – continues to be on the rise. With 2016 representing one of the best years for switching on record, it’s clear that consumers are beginning to re-engage with the industry.
The question is, what’s behind the increase in engagement?
There’s a multitude of factors affecting a customer’s decision to move supplier; price, customer service, technology… the list goes on. But at the heart of all this is agility – specifically the supplier’s ability (or inability) to act and react quickly to market changes and customer demands.
Last year 47% of all switches were a move away from the big 6 to a small or medium supplier. What this tells us is that these smaller suppliers are using the negative media attention as a differentiator, reaching out to customers with a cure to what ails them. They’re able to do this because they’re smaller and more nimble than their big 6 counterparts, which is where the challenge comes for the big 6 themselves where agility isn’t something they’re renowned for. But it’s a lesson they’ll need to learn quickly if they’re to keep pace with the independents that are rapidly gaining market share.
The key to agility?
The key to agility is data. Suppliers work with millions of data points every day, so without a proper handle on that data it can be nigh on impossible to act and react quickly.
At ENSEK we help new entrants, independents and established suppliers to be more agile; our core data reconciliation engine ‘Libra’ cracks open this vast data set that suppliers work with every day, allowing them to dynamically interpret and interrogate their portfolio’s data from a single source.
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