Innovation has impacted a range of sectors, and energy is no exception; currently the sector is facing one of its biggest challenges yet as customers wake up from widespread inertia, spurred on by the evolution of price-comparison/auto-switching services and changing consumer expectations.
The key challenge for traditional suppliers lies in competing for more agile customers while maintaining their inert legacy base. For newer suppliers the challenge is to win the battle for price-conscious, savvy switchers by developing a compelling point of differentiation.
What are consumer attitudes towards switching?
Traditional suppliers have historically been able to maintain their sizeable market share. However, this has become increasingly difficult in recent years as consumers become more familiar and comfortable with switching. In April 2016, Populus research showed that just 13 per cent of consumers were likely to switch supplier. In 2019 this has more than doubled to 27 per cent.
Price comparison revolution
The energy sector has been transformed by a prevalence of money-saving advice (from the likes of Martin Lewis), Ofgem accredited price comparison websites and, most recently, auto-switching services. In addition to helping consumers switch with increasing ease and confidence, this wealth of price-led information and comparison services places a very narrow focus on monetary savings, which consumers are picking up on; our research shows 19 per cent of all energy consumers have researched offers within the past three months.
Switching drives switching
The switching process is often a learning curve for consumers. The process of moving from one provider to another, researching the market, exploring the options, and then taking the plunge to switch endows customers with a wealth of knowledge. Gaining this knowledge makes consumers more comfortable switching, meaning switching isn’t a one-off action: 61 per cent of those who have switched in the past two years say they’d do it again.
Competing in a changing market
Much of the information available to consumers is price-led, but there is still opportunity for suppliers to compete through differentiation – identifying and capitalising on a USP that resonates with customers. Green energy, consumer-friendly tech, and exemplary customer service are just some examples which work for successful suppliers.
The world is changing. To stay ahead, suppliers need to fully understand their customer by exploring the attitudes and motivations that truly underpin their behaviour.
For further information, visit https://www.populus.co.uk/insights/2019/08/the-changing-tides-and-currents-of-the-energy-market/
Methodology: Populus interviewed 2,004 adults (aged 18+) in Great Britain online between 1 and 3 March 2019. Populus is a member of the British Polling Council and abides by its rules. For more information, see www.populus.co.uk