Utility Week

28 | 23RD - 29TH MARCH 2018 | UTILITY WEEK Customers Market view T he huge gap in customer satisfaction between large energy suppliers and smaller, newer entrants has come into sharp relief in this year's uSwitch Energy Customer Satisfaction Report. The report, released last month, included nine smaller energy suppliers as well as the big six. This is the first time such a wide range of suppliers has been featured; last year's report only included Ovo Energy and First Utility, the two largest of the more recent entrants, in addition to the more established suppliers. The big six were all at the bottom of this year's ranking, with satisfaction scores of 65-71 per cent, while three of the newer entrants delivered satisfaction scores of 90 per cent and above: Octopus Energy, Bulb and The Utility Warehouse. Responsive and nimble These customer satisfaction scores are stun- ning and point to the laser-sharp focus these suppliers have on being more simple, responsive and nimble when it comes to beating their big, established competitors. In a low involvement category such as energy, facilitating an effortless, hassle-free and simple customer experience is vital; the two leading suppliers, Octopus Energy and Bulb, deliver this in spades through their brands with their clean, pared-back digital inter- faces and clear, simple use of language. But beyond just making the experience simpler and more effortless, their small scale allows them to create a "David and Goliath" narrative of more personal and agile cus- tomer service against the established players. Ovo Energy, in particular, launched by posi- tioning itself against the big six, taking on the mantle of a challenger brand. Smaller players oen feature their founders on their websites and use images of customer service staff that look a world away from a soulless call centre. Developing distinct identities However, with a growing number of new entrants it is becoming more important for each smaller player to develop a distinctive identity against other small suppliers and be clearer about what sets them apart. In an increasingly competitive marketplace, the very attributes that differentiated brands in the past, such as simple, intuitive digital user experiences or being a challenger to outdated customer service approaches, will increasingly become table stakes for oper- ating in the market. New approaches are needed to exceed customer expectations and maintain a competitive edge in such a price- driven marketplace. Determining the distinc- tive, credible and relevant role your brand can play in your customer's world is the best starting point for this. A brand purpose focused on supporting renewable energy has been a source of dif- ferentiation in the past; offering 100 per cent clean energy is central to players such as Good Energy, Ecotricity and Bulb, which only offer renewable energy tariffs. But this is easy to replicate, and with many players offering a clean energy tariff, it is harder for this to be a differentiating factor moving forward. Increasingly the emphasis, when finding a differentiating brand purpose and pro- tecting businesses from purely price-based competition, will be on smart, innovative approaches to create more value for both customers and the world. While simply offering a 100 per cent renewable tariff won't deliver differentiation any longer, some players are going further than this to adopt approaches that support the growth of renewables and the decarbon- isation of the UK's energy system. Good Energy emphasises supporting local energy projects, framing its renewable energy as "local", and Octopus highlights its role as the biggest investor in large-scale solar farms in the UK. Incentivising smarter use Incentivising smarter use of energy through pricing offers is another opportunity to cre- ate value. For example, Green Energy was the first player to launch a dual fuel tariff and more recently has created the Tide tariff, the UK's first smart, domestic time-of-day tariff. A time-of-day tariff allows customer pric- ing to vary depending on the time of day and therefore can encourage better energy demand management – lowering energy demand during peak periods and encourag- ing usage when energy uptake is typically very low. Perhaps the most exciting opportunity is for disruptive businesses to pioneer large numbers of domestic customers to partici- pate, at scale, in demand-side response ini- tiatives that have been the sole preserve of larger energy firms to date. While this has not happened yet, it will become more and more normal to both generate and store energy in UK homes. For example, Green Energy is already offering domestic custom- ers Solar PV, a 20 per cent discount on a Powervault home battery, when they sign up to its Tide tariff. Exciting and disruptive But rather than waiting for widespread domestic investment in home battery solu- tions such as Powervault or Tesla's Power- wall, the switch from fossil fuel to electric vehicles will bring large electric batteries into homes. Ovo Energy has already started to move into the demand-side response space by buying the smart grid business V-Charge. These are exciting and disruptive moves that will underpin the shi to a more flexible, cleaner and more local UK energy system. Smaller brands seizing the opportunity on future innovations such as this will have a powerful, differentiating brand purpose to set them apart from both the big six and their other competitive challengers. James Payne, consultancy director, Given Differentiate to disrupt Challenger energy firms currently lead customer satisfaction, but in an increasingly crowded market, smart innovation will be needed for them to continue to differentiate themselves, says James Payne. "Increasingly the emphasis, when finding a differentiating brand purpose and protecting businesses from purely price- based competition, will be on smart, innovative approaches to create more value for both customers and the world"

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