Our nation’s suspicions around “getting what you pay for” may now be a thing of the past. With most families feeling the financial pinch, consumers are looking for value and ways to make the housekeeping go further in previously uncharted waters.
Retail has seen a seismic shift with shoppers showing less loyalty to established players, the supermarket brand snobbery of even a few years ago is washing away with people happy to pay less for “unbranded” produce.
Can this approach work in energy? Numerous new entrants to the market have pushed pretty hard on prices, citing the “cheapest” tariff in the market to snare the transient energy consumer. But is this sustainable and do these customers stay with the supplier long enough to be economically viable?
The general consensus is that given the seasonal nature of energy usage, having a customer on supply for a full 12 months is the minimum period to truly assess not only the saving to the consumer but also the accuracy of the suppliers trading and forecasting.
Investing in acquiring a customer, only to lose them a few months later to the latest “cheapest tariff” generates turbulence and instability for the supplier and ironically impacts their ability to price competitively.
The opportunity for new suppliers and existing suppliers is to engage with their customers on more than a pure price play.
Emerging trends suggest that once a household chooses to switch they are as open to moving back to a more established supplier as they are to move on to the next “best price” provider.
There are parallels with the financial services market where consumers constantly move credit card balances to the best interest rate. The main difference being that the card provider is exposed to delinquency alone rather than the combined risk of delinquency and collateral risk faced by energy providers.
Price will always be attractive for those consumers looking to switch, but in the Energy sector, price alone is not enough to ensure lasting customer engagement and portfolio growth.
