Utility Week

UTILITY WEEK | SEPTEMBER 2021 | 25 Customers forces which drive up customer churn and, in parallel, reduce service efficiency. Furthermore, there was a common view that auto switching services are creating an administrative cost burden on suppliers, which they are in no position to shoulder given tight margins. For example, one customer service leader complained that poor engagement between auto switching providers and the customers signed up to them means that records are rarely updated when an individual moves house. This means a new resident can end up being wrongly switched. But the cost and responsibility for sorting this out – including picking up erroneous switch penalties from the regulator – falls to the supplier, not the third party. 2. Price-driven competition and cus- tomer welfare A key frustration with auto switching ser- vices among suppliers is their propensity for encouraging consumers to focus on rudi- mentary price comparisons rather than any other service or "value-add" benefits differ- ent retailers have to offer. Not only does this focus perpetuate a "race to the bottom" mode of competition in the market, said our participants, it can also risk considerable consumer detriment. For example, one supplier which offers above average levels of emergency credit to its vulnerable customers as well as a range of other financial support mechanisms, said they were worried customers who had been switched away on the promise of a relatively marginal cost saving on their annual bill, could find themselves in very difficult and distressing circumstances if they could not keep up with their new payment schedule. 3. Level playing field Our event participants were forthright in expressing the view that auto switching services that rely on a retailer subscription model to form their panels are distorting the competitive playing field and encouraging consumers to switch to low cost suppliers who may not be reputable or sustainable. 4. Net zero All our attendees were very concerned that, should auto switching take hold as a main- stream means for supporting consumer switching, progress towards meeting the UK's 2050 net zero carbon emissions target will be undermined. It is widely acknowl- edged that the next phase of the UK's decar- bonisation journey will require significant changes to the way consumers engage with the energy system and that this can be sup- ported through the provision of new prod- ucts and services which incentivise energy efficiency and time-sensitive demand modulation. Consumer understanding of these oppor- tunities is currently low and needs to be built through strong engagement and through innovation. Auto switching, said our par- ticipants, runs counter to both these things, encouraging consumers to disengage from their energy use and stifling innovation by focusing only on price as a differentiator. To mitigate these negative impacts from increasing use of auto switching services our attendees unanimously called for new regu- lations to be introduced to govern how auto switchers engage with consumers and intro- duce greater accountability for them to cre- ate good market outcomes. But however strongly our attendees felt about the need for better regulation of auto switchers, they also admitted that they can- not solely rely on this as a response strategy. They acknowledged that, however much they might like to think about the opportu- nities associated with value-add energy ser- vices, some customers are necessarily driven by price in their decision making. Furthermore, many people feel over- whelmed by the prospect of picking an energy tariff that will work well for them. There is, therefore, a place for auto switch- ing in the energy market, and suppliers must adapt their service and marketing strategies to compete more proactively with what it has to offer. A critical step towards this is for suppliers to gain a clearer and real-time picture of cus- tomer consumption habits, and their touch- points with the company. While the former can be achieved through the smart meter rollout, the latter will require many suppliers to become significantly more mature in the way they track customer activity on all avail- able channels for interaction – from social media and self-service web tools, through to telephone contact centres. For example, one roundtable participant shared the example of a German energy sup- plier that is able to link web activity to call prioritisation in the contact centre or prompts for outbound support – that is, they have a system that recognises when a customer has not been able to achieve their goal through a self-serve channel, and ensures that imme- diate support is provided to that customer so they feel valued and frustration is not allowed to blossom into a desire to disengage. Another area where our participants agreed UK suppliers could generally do bet- ter is in adapting the tone and content of service or marketing communications to take greater account of what is known about cus- tomer preferences and priorities. This will be particularly important, they agreed, as the race for net zero ramps up and the need to articulate a varied set of value propositions to a varied set of human individuals gains urgency. One supplier representative said big wins could be made by suppliers in combat- ting the appeal of auto switching simply by making communication on billing and tariff structure clearer and more accessible. There are still far too many people out there, they said, who don't understand how their energy is priced or how they can influence what they pay, either through changing their behaviour or their tariff type. In short, our participants agreed that while regulatory intervention on auto switch- ing is needed to protect consumer interests, there is also a good deal that companies can do combat and compete with the appeal of such services by delivering better experi- ences to customers in key moments of inter- action. By using data more intelligently, to personalise and demystify products, commu- nications and service, they can significantly dilute the appeal for customers of delegating choice. Jane Gray, content director in association with

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