The two major sources of attrition for utility companies are aggregators and comparison sites, and home movers. While aggregators really understand the value of their data and push brands hard for deals on comparison sites, the issue of home movers is a very different proposition, because historically there has been no clear view of who is likely to move or when. Too often suppliers are the last to know if a good customer is planning to move home and take their business elsewhere. By the time they become aware of their customer’s intentions, it is often too late to retain them.
The big six energy utilities are only able to retain on average 15-20 per cent of all movers, with this generally happening when the customer contacts the supplier to inform them that they are leaving the property and not because the supplier has contacted the customer. This leaves a huge 80-85 per cent of customers being lost through churn. This costs the industry an estimated £126 million a year and clearly affects energy companies’ bottom lines. Plus significant time and financial investment is required to recruit new customers just to maintain the status quo on market share – often at the expense of focusing on nurturing existing customers to keep them longer, grow their value and gain referrals to friends and family.
The challenge is identifying exactly when a customer is looking to move home. Any insight is important to help energy suppliers create an effective customer retention and acquisition strategy. External data can help. Many businesses that offer moving services collect data on consumers, fully consented for third party marketing, as they flow through the moving process.
For example, internet property portals capture consumers whose houses are advertised for sale on their website and postal companies with mail re-direction services capture customers just before they move and for periods specified afterwards. In fact, a number of companies have now established specific home move databases. Utilities can match these data to their own customer database to identify which customers are in the process of moving home and whereabouts in the process they are.
By using such data throughout the customer lifecycle, suppliers can identify and respond to different customers’ needs, creating a tailored strategy for each customer type. In fact, they should look to embed major life event triggers into marketing strategies.
Moving home specifically represents a great and actionable communication trigger – the perfect chance to suggest relevant support in a considered and timely manner, offering customers alleviation from some of the worries and decisions they inevitably have to make. For example, once aware of a customer’s moving plans, the supplier can make it easy for the customer to stay with them in their new property, perhaps by offering incentives for loyalty; by advising on the most cost effective tariff; or by recommending energy efficiency solutions such as insulation for the new property.
Smart marketers must add a home move element to their existing marketing strategies: from retention and acquisition through to cross-sell and up sell, the timing of which needs to be executed carefully to ensure maximum success and return on marketing investment. By creating a comprehensive strategy for all new and existing customers, providers can benefit from reduced churn, improved retention rates and increased customer satisfaction and loyalty.
Pete Denby is strategic account director at Callcredit Information Group
This article first appeared in Utility Week’s print edition of 16th November 2012.
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