The huge gap in customer satisfaction between large energy suppliers and smaller, newer entrants has come into sharp relief in this year’s Uswitch Energy Customer Satisfaction Report. The report, launched last week, included nine smaller energy suppliers as well as the big six.
This is the first time that such a wide range of suppliers have been featured; last year’s report only included Ovo Energy and First Utility, the two largest of the more recent entrants, in addition to the more established suppliers.
The big six were all at the bottom of this year’s ranking, with satisfaction scores of around 65-70 per cent, while three of the newer entrants delivered unprecedented satisfaction scores of almost 90 per cent or above: Octopus Energy, Bulb and The Utility Warehouse.
These customer satisfaction scores are quite stunning and point to the laser sharp focus these suppliers have on being more simple, responsive and nimble when it comes to beating their big, established competitors.
In a low involvement category like energy, facilitating an effortless, hassle-free and simple customer experience is vital; the two leading suppliers, Octopus Energy and Bulb deliver this in spades through their brands with their clean, pared-back digital interfaces and clear, simple use of language.
But beyond just making the experience simpler and more effortless, their small scale allows them to create a “David and Goliath” narrative of more personal and agile customer service against the established players – Ovo Energy, in particular, launched by positioning itself against the big six, taking on the mantle of a challenger brand. Smaller players often feature their founders on their websites and use images of customer service staff that look a world away from a soulless call centre.
However, with a growing number of new entrants it is becoming more important for each smaller player to develop a distinctive identity against other small suppliers and get clearer about what sets them apart.
In an increasingly competitive marketplace, the very attributes that differentiated brands in the past, such as simple, intuitive digital user experiences or being a challenger to outdated customer service approaches, will increasingly become table stakes for operating in the market.
New approaches are needed to exceed customer expectations and maintain a competitive edge in such a price driven marketplace. Determining the distinctive, credible and relevant role your brand can play in your customer’s world is the best starting point for this.
A brand purpose focused on supporting renewable energy has been a source of differentiation in the past; offering 100 per cent clean energy is central to players such as Good Energy, Ecotricity and Bulb who only offer renewable energy tariffs. But this is easy to replicate, with many players offering a clean energy tariff, it is harder for this to be a differentiating factor moving forward.
Increasingly the emphasis, when finding a differentiating brand purpose and protecting businesses from purely price-based competition, will be on smart, innovative approaches to create more value for both customers and the world.
While simply offering a 100 per cent renewable tariff won’t deliver differentiation any longer, some players are going further than this to adopt approaches that support the growth of renewables and the decarbonisation of the UK’s energy system.
Good Energy emphasises supporting local energy projects, framing their renewable energy as ‘local’ and Octopus highlights their role as the biggest investor in large scale solar farms in the UK.
Incentivising smarter use of energy through pricing offers is another opportunity to create value. For example, Green Energy was the first player to launch a dual fuel tariff and more recently has created their ‘Tide tariff’, the UK’s first smart, domestic time-of-day tariff. A time-of-day tariff allows customer pricing to vary depending on the time of day and therefore can encourage better energy demand management — lowering energy demand during peak periods and encouraging usage when energy uptake is typically very low.
Perhaps the most exciting opportunity is for disruptive businesses to pioneer large numbers of domestic customers to participate, at scale, in demand side response initiatives that have been the sole preserve of larger energy firms to date.
While this has not happened yet, it will become more and more normal to both generate and store energy in UK homes. For example, Green Energy are already offering domestic customers Solar PV, a 20 per cent discount on a Powervault home battery when they sign up to their Tide tariff. But rather than waiting for widespread domestic investment in home battery solutions like Powervault or Tesla’s Powerwall, the switch from fossil fuel to electric vehicles will bring large electric batteries into homes across the country. Ovo Energy has already started to move into the demand side response space by buying the smart grid business V-Charge.
These are exciting and disruptive moves that will underpin the shift to a more flexible, cleaner and more local UK energy system. Smaller brands seizing the opportunity on future innovations such as this will have a powerful, differentiating brand purpose to set them apart from both the big six and their other competitive challengers.