The Utility market in the UK is evolving fast. New entrants to the market often top the best-buy lists and occupy a rapidly growing corner of the market. Why? This growth is supported by Ofgem mandates to enable customers to switch suppliers within 3 days by the end of 2014 and by next day at the end of 2018! There’s also ever growing competition pressure as the energy market has been referred to the Competition and Markets Authority.
As a result, there is now a mounting need for energy companies to understand and value UK consumers. Understanding a customer’s every need is complex, but managing consumers in a tailored, yet appropriate way will in turn lead to greater customer loyalty.
If you have a better understanding of customer value you can in turn enhance your return. This will predominantly be led by increased effectiveness and efficiency of your activities. If you have a better understanding of your entire business’ goals, across business units, you can create accurate, optimised, customer centric strategies that improve return, enhance operational efficiencies and importantly improving your overall customer satisfaction. It’s a win win!
Obviously, there are threats and opportunities for all energy suppliers. This competition isn’t just for one segment either – it is for new entrants and the Big Six. The recent evolution within the energy sector has seen the wide adoption of credit risk data. What’s next? The next development will be to consider a more complete view of the customer. Combining risk models in a more sophisticated way – for example, with complex revenue, cost and churn models, will enable energy companies to manage customers in a more appropriate manner. This will enable them to drive down prices, increase customer satisfaction – therefore loyalty and directly impact the bottom line.
Why is this good for the customer? Customers are most likely to move energy provider when they move home. Why? While change is in the air the general trends show that consumers figure ‘why not also change energy supplier’? Or, they could simply be moving into a house where their existing supplier is not the incumbent supplier?
Around 8,100 properties are sold or rented in the UK – every day! Six million people move house every year. Many of these will choose to change suppliers forcing energy companies to make significant investments just to maintain market share, never mind increase it.
The ever ‘price-conscious’ customer will ultimately be attracted to savings they could make with a new supplier. With the energy market now containing 19 companies, the big six are under attack from every angle.
Why not make the most of this opportunity and acquire the most valuable customers? Don’t attempt to retain customers you don’t value but make every connection count. Happy customers are more likely to be loyal and will drive long term profitability.
Create the insight to communicate with the right customers, at the right time, in the right way.