Utility Week

6 | 31ST AUGUST - 6TH SEPTEMBER 2018 | UTILITY WEEK News Inside story T he collapse of Iresa, dubbed the UK's cheapest and most complained-about energy supplier, le around 90,000 consumers in a difficult position and pro- vided a stark reminder of the harsh realities of today's energy industry. Thankfully, Ire- sa's customers have found a new home with Octopus Energy, with whom we're working closely to ensure a positive outcome for the hundreds of consumers who have unre- solved complaints about Iresa. Nevertheless, Iresa's demise contains valuable lessons for the sector – particu- larly the smaller, challenger brands that are experiencing rapid growth, or hope to in the future. Here at the Energy Ombudsman we have been looking back at the Iresa story. We believe it offers some important warnings that all ambitious energy firms should heed. Get the foundations in place for growth Probably the most important commercial takeaway from the Iresa story is that, if rapid growth is your objective, make sure you have the infrastructure, resources, systems and people to cope with that growth. With price comparison websites signposting consumers to cheap energy deals, the potential for rapid gains in customer numbers has never been greater if you're a young, agile provider that – thanks to low overheads – is able to offer low-cost deals. It's critical that any challenger brand is strategic in its approach to customer acqui- sition, takes a long-term view and has the capacity to service new customers. Iresa provides a case study of how not to do it. The company's customer base size grew exponentially in a short period of time. This extraordinary growth was unfortunately accompanied by a corresponding increase in the number of complaints that came to us. Go back to basics on complaints This year alone we accepted for investiga- tion a total of 2,282 complaints about Iresa. In each of these cases Iresa had either failed to resolve the consumer's complaint within eight weeks, or issued them with a deadlock letter (meaning a resolution could not be reached). The table shows the top six com- plaint types relating to Iresa, based on the cases we handled in 2018. Top 6 Iresa 2018 complaint types Failure to issue refund/credit 12.02% Final bill not received 10.92% Incorrect meter reading 8.68% Bills not received 8.60% Estimated billing 6.36% Billing delays 6.05% Crunching the numbers, more than 20 per cent of unresolved Iresa complaints handled this year by Ombudsman Services (OS) in its role as the Energy Ombudsman were about failure to issue refunds/credits or final bills not being received. This suggests that disgruntled consumers were already starting to leave Iresa, having had their hands burnt by poor customer ser- vice, billing problems or other issues. By having in place from the outset both an adequately trained and resourced cus- tomer relations team and a fit-for-purpose billing system, it seems Iresa would have had more success in maintaining good service levels and ultimately retaining customers. An examination of the cases handled by OS shows many were resolved by the com- pany simply fixing the issue, with no good- will payment awards needing to be made to the consumer. This suggests that a lot of the complaints Iresa was facing were relatively straightfor- ward and could have been dealt with quickly and easily, if only the company had the capacity to do so. Having in place a larger, more efficient complaints-handling process would have enabled a large proportion of cases to be nipped in the bud early on. If problems mount up, prepare to act fast An analysis of complaint volumes shows that, from a peak in April and May when we were handling around 450 Iresa cases per month, complaint volumes had actually started to decrease – suggesting that Iresa was starting to address some of its customer service issues. We met company representa- tives on more than one occasion to share our insights and discuss ways to improve the customer experience. The company collapsed just at the point when it was seemingly starting to make improvements and address some of the fun- damental issues that had plagued it. The corner was being turned, but it came too late. The damage had already been done. The clear lesson here is that, if you identify a problem in your customer experience pro- cess, it is advisable to invest time and money in addressing that problem before it gets out of hand. Put the consumers at the heart of everything Consumers will no doubt look at Iresa and see it as a cautionary tale. The company's former customers will think twice before choosing another energy provider purely on the basis of a "cheap deal" they spotted on a price comparison site. Price will always be a major factor in any purchasing decision, but if consumers are more savvy in the future – for example by looking at customer service as well as price – then the Iresa story will at least have one positive outcome. Online reviews, whether we're talking Trustpilot, Feefo, Facebook, Google reviews or Citizens Advice star ratings (to which we contribute), are likely to be more important than ever in a consumer's decision-making process. Looking beyond customer acquisition and towards the service and retention phase, a robust and effective complaints-handling team that shares insights with the rest of the business will be crucial for any small player with big ambitions. Unsustainable growth can be fatal In many ways, Iresa was a victim of its own success. The company simply acquired too many new customers too quickly, resulting in an avalanche of complaints with which it was unable to cope. The story could have been very different, if only the company had Six lessons from Iresa What can the industry learn from the collapse of Iresa, and how can small but rapidly-growing providers avoid a similar fate? The Energy Ombudsman's Matthew Vickers looks for some answers.

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