Too typically, “quantity of switching” is seen because the measure of success in vitality. That is loopy! Elsewhere, “loyalty” is the measure of success, and rightly so.
The issue in vitality is just not “too little switching” however too many individuals being screwed. They’re being screwed by being loyal to suppliers whose enterprise mannequin is “overcharge present prospects”.
66% of the UK are nonetheless on Huge Six Normal Variable Tariffs (SVTs), overpaying by £100s and struggling poor service (simply check out their critiques). So encouraging individuals to maneuver to corporations like us is an enormous a part of our efforts to enhance the lives and funds of vitality prospects within the UK.
However this isn’t about providing you with a brief time period answer. It’s not about low-cost mounted offers that solely profit the switchers, whereas those that don’t need the yearly discount hunt are hit with extortionate SVTs.
Switching carries massive value, which suppliers in the end go on to customers. For instance, worth comparability websites can cost suppliers over £70 in fee, and their enterprise mannequin is finest served by switching that buyer once more a 12 months later. This “£70 tax” impacts everybody.
Certainly it’d be higher if we might create a market that delivers good worth for the long run, not only a mounted time period.
Ofgem studies that prospects switched 7.7 million occasions final 12 months. That’s the most important buyer migration in 6 years. Whereas that is nice for these overpaying or struggling poor service, the query then turns into: ought to I change yearly?
The prevailing recommendation from regulators, authorities, and shopper watchdogs is “sure”. However the truth that so many are nonetheless overpaying, and have been for years, suggests this name to modify doesn’t work. It simply provides value, trouble, and complexity for patrons.
And extra importantly, shouldn’t loyalty be factor?
There’s a motive corporations like John Lewis and British Airways succeed regardless of not being the most affordable: they offer prospects nice experiences. Clients return time and time once more as a result of they get sensible service. This may be so simple as saving a buyer time, giving them flexibility to vary or cancel, or the peace of thoughts ought to issues go mistaken.
There’ll at all times be worth variations between vitality suppliers. Though all of us promote the identical stuff, we do issues otherwise. At Octopus, for instance, we function a really lean, digital enterprise mannequin that permits us to go on effectivity financial savings to prospects. Not all suppliers select to have this benefit, usually as a result of they’re too unwieldy to make the change.
Making a market that rewards loyalty, that makes common switching a factor of the previous, is about eradicating the exploitative pricing that exists right now, giving prospects long run worth, and letting suppliers compete on what really makes them completely different.
Solely then will the UK’s vitality market work for everybody, and never simply the common switchers.
