Utility Week

24 | SEPTEMBER 2021 | UTILITY WEEK Customers Event Rage against the machine Energy suppliers are concerned about the rising use of auto switching services. So what steps can they take to combat or compete with their appeal to consumers? This was the focus of discussion at a recent Utility Week roundtable. C onsumer switching in the energy mar- ket is going through a slow patch with numbers taking a record dip in July 2021, according to figures from Electralink. But this overall decline isn't stopping sup- pliers getting hot under the collar about one type of switch in particular – the auto switch. At a recent industry roundtable organ- ised by Utility Week and customer journey orchestration expert Thunderhead, customer service and policy leaders from a range of energy suppliers came together to discuss the threats posed to their businesses by increasing use of auto switching services by consumers – not as a result of the govern- ment interventions covered on p22, but due to the undeniable appeal of such services in a complex and, to many, boring market. They also shared views on the key steps that must be taken to respond to these threats – from regulatory and service strategy perspectives. While auto switching services have been available since around 2016, their use by consumers has, until recently, appeared fairly marginal, according to the limited data available. The first to take an interest seem, stereotypically, to have been the tech savvy and customers already prone to serial switching. But a more widespread consumer willing- ness to put faith in technology and delegate responsibility for energy choices seems to be catching on. A survey conducted by Which? in 2019 showed just 2 per cent of domestic energy switches were supported by auto switching service providers. But in Q4 2020 Ofgem and Citizens Advice took a measure that suggested more than double the number (5 per cent) of switchers were using automa- tion and algorithms to decide which supplier and tariff they should opt for. Suppliers certainly say they are feeling the increase. At our event, two suppliers openly admitted they had seen significant increases in churn in recent months which, on investi- gation, turned out to be driven by customer subscriptions to auto switching services. Meanwhile, another participant shared the considerable headaches the organisation experienced when it emerged that a large number of the customers it had acquired through a SOLR (supplier of last resort) pro- cess were signed up with auto switchers. Our industry representatives were worried by these auto switching issues for a number of reasons which can be broadly grouped into four key areas. 1. Customer loss and admin costs In a hotly competitive market where vol- ume still counts for a great deal, suppliers are clearly very concerned about the rise of Quotes from attendees: "We are seeing an uptick in objections from customers who have been switching by auto switching services. Many of them don't realise that they will be moved multiple times. They don't know what they are buying into." "The focus on price only in auto switching is damaging. If this takes off, it will cause customers to switch off just when we really need them to engage in the decarbonisation agenda." "As retailers, we need to engage with these services, think about what they offer to our customers and recognise that they do potentially pose an answer to a fundamental issue in our market." "Since we've started to understand our customers better and offer them more bespoke products around their life, whether that be financial issues or the way they use their meters, we have seen our churn numbers coming down."

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