The report is based on a survey of 2,000 UK adults (18+) and reveals that good customer service is the biggest driver of customer loyalty, but confusing switching processes are leading to a prevalent state of inertia amongst a large group of customers.
These should be key considerations for all suppliers, in line with new Secretary of State for Energy and Climate Change Amber Rudd’s ‘energy policy reset speech’ late last year, calling for a more consumer-led and competitive market. According to Rudd, the way customers behave now, given the unprecedented level of choice and the relative simplicity of switching, will have a profound influence on how the energy market shifts beyond 2016.
Services comes out on top against price
£290 – the magic switching number
Understanding audiences for cleverer customer targeting
The report analyses these behaviours and attributes them to key groups that the customers of UK energy providers fall into: Inert Customers, Savvy Switchers, Spinners and Tariff Tarts. Energy suppliers must carefully consider these insights to engage different demographics more actively – critical for staying in control of the switching game.
Key characteristics of UK energy customer groups include:
Inert Customers: Unlikely to change suppliers. 27% don’t know how much they pay for their bills per month.
Savvy Switchers: 63% know exactly what tariff they are on. 47% are confident their current contract is the cheapest option.
Spinners: 35% of all UK customers are most likely to have switched to a new tariff within the same supplier within the past two years.
Tariff Tarts: A sub-group of Savvy Switchers, these are the 8% of the total population that switched in the past two years and also demonstrate a high likelihood to switch in the next 12 months.
Activating inert customers is key for creating a more competitive market
Populus’s Gary Muncaster notes: “Our research suggests that what is keeping many customers from switching is a lack of knowledge surrounding energy prices and common misconceptions relating to the switching process itself. Suppliers across the industry spectrum need to mobilise ‘Inert Customers’ to become active participants in a market that desperately needs their involvement if it is to become truly competitive.
“Inert Customers are an untapped audience, that, once engaged appropriately, have the power to shake up the market and challenge all suppliers to truly operate with the interest of the customer as their central focus.”
Given the impact that Rudd’s strategy is set to make on the energy market this year, surely the time has come for all suppliers, regardless of size, to crack the issue of audience segmentation, differentiation and relevant targeted engagement once and for all.
Download the full Energy Switching Report.