In our latest research report ‘The truth about Energy Customer Behaviour’, we explore how factors like service, price and incentives affect energy supplier loyalty and to what extent.

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.

Gary Muncaster, Managing Director of Populus’s Business & Consumer Insight division comments: “While energy suppliers all round are performing well on key areas such as customer service, there is evidently room for improvement. Companies should act on these insights to develop customer-centric strategies that reflect the behavior of the different groups in the market.”

Services comes out on top against price

Overall, Populus’s analysis of supplier performance against customers’ likelihood to switch reveals that customer service emerges as the strongest loyalty driver far ahead of price. Online services and website were the least important to customers of all variables tested, likely due to how in today’s device-centric world, being digitally savvy is now considered to be merely a hygiene factor.


£290 – the magic switching number

The importance of service may also explain why suppliers need to offer a yearly savings of at least £290 for the average customer to be motivated enough to switch. And when asked how much of a price increase it would take for customers to be prompted to switch to a new provider, they would have to see an average increase in their yearly bill of £280. Both figures are roughly a fifth of the average UK householder’s combined energy bill. The fact that it takes a reasonably high amount to trigger action from customers is no doubt evidence of a general lack of engagement and overall sense of inertia.


Populus’s findings also reveal that while 50% of consumers think they could find a better energy deal if they looked, 53% say it’s unlikely they will switch suppliers in the next 12 months and only 33% have switched tariff in the past two years. 46% don’t feel price comparison websites are ever neutral, making it difficult to research new suppliers – a key part of the switching process perhaps also contributing to the widespread inertia demonstrated across customer bases.

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.

The inertia revealed by the results is so widespread that in general, 67% of UK consumers can be classed as Inert Customers, while 33% can be broadly defined as Savvy Switchers. Large suppliers have the market share of Inert Customers (75%) while small suppliers’ customers tend more frequently to be Savvy Switchers (67%), highlighting the role brand awareness plays in this market. Brand loyalty, however, appears low for Savvy Switchers, with almost half (49%) considering yet another switch.


But energy suppliers should not mistake inertia for loyalty. Half of the Inert Customer group (49%) cite the hoops they may have to jump through as a key issue for switching. 39% of Inert Customers don’t know when they would have to cancel their current contract if they wanted to switch tariff or supplier.

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.