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Challenger Utilities Growing Faster Thanks to Customer Service

Blog
16th November 2015

The ‘Big 6’ companies, who serve around 9 in every 10 homes in Britain, dominate the UK energy market. But several smaller ‘challenger’ utility companies are now challenging this market domination.

The figures are quite startling. At present around 11% of households use a challenger utility rather than a Big 6 provider. This works out to be just over three million homes. One year ago the same figure was just under two million meaning that in the last year around one million customers have switched to one of the challengers.

Although the vast majority of customers remain with the Big 6 the rate of customers switching is accelerating so there is something significant taking place in the energy business.

Price and tariff is obviously a factor. Customers can use comparison websites to find a better deal and easily switch provider, but customer service is often cited as another important reason why customers are moving.

Richard Lloyd, executive director of Which? said: “The Big Six have repeatedly failed to deliver a decent standard of service so it’s no wonder customers are starting to leave them in droves.”

There are now 31 energy providers in the UK compared to 6 back in 2010 meaning that customers can explore prices available in the market and the experience of other customers with the challenger utilities.

However, price is just a hygiene factor. Customers will not move to a company that is more expensive unless there is some other significant difference about the service on offer.

If the challengers can match the big players on price then they have a significant opportunity to use an improved customer experience to target all those customers that have not switched from the Big 6. The opportunity is out there and with 25 challengers competing for the same business the market is getting crowded, but it is also possible to develop an intelligent approach to prospective customers too. The tools are out there for a committed challenger to scale their business significantly.

What do you think of customer experience as a key differentiator in the energy market? Can the challengers really use it as a tool for building their business? Leave a comment here or send me a message via my LinkedIn profile.

 

Photo courtesy Brenda Clarke on Flickr.


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David Turner
Article by: David Turner

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