Utility Week

22 | 22ND - 28TH JUNE 2018 | UTILITY WEEK Customers Analysis A ccording to the latest data from Energy UK, more than 660,000 cus- tomers switched electricity supplier in February this year, an increase of 60 per cent compared with February 2017. The trade body said this represents around 24,000 customers switching each day and it was the "highest ever" number of switches in a single month. In this year so far more than one million customers have already switched supplier. All this would suggest higher levels of engagement, but there are those who argue switching is not a helpful indicator of either engagement or fair play when taken in isolation. One of them is Ryan Thomson, a partner at Baringa. He says: "The regulator must acknowledge that a reduc- tion in switching, if done for the right reasons, is actually a posi- tive sign of a successful, sustain- able and competitive market, not a sign of failure." The issues surrounding switch- ing continue to be multi-faceted and worthy of both scrutiny and investigation. In April 2017, in response to what at the time was an emerg- ing switching trend, Utility Week launched a biannual survey in partnership with market research firm Harris Interactive. The survey gathers responses from more than 1,000 UK adults across all regions and age ranges, and the findings from the third survey in the series are summarised online at www.utility- week.co.uk/category/premium The results and expert commentary on what they show form an exclusive informed overview of the current state of affairs, and how the market might be best placed to react. The results at a glance Although switching volumes are healthy, underlying information about who is switch- ing shows long-standing industry challenges around engaging customers in the market remain. Because while serial switching has increased, the proportion of customers who have never switched is stagnant. In light of this, the fact that first-time switching rates have also declined over the past year could be seen as cause for concern. And despite the surge of smaller suppli- ers entering the market, it is worth noting that the long-held assump- tion that there's some manner of customer exodus away from the big six is not grounded in real- ity. It would seem consumers like to stick to what they know: those surveyed who switched away from a larger supplier tended to move to another large supplier as opposed to a mid-size or smaller supplier. In the same vein, those moving away from a mid-sized supplier, by and large, did so towards a supplier of a similar size. However, it's not all happy endings for the dominant players. While 69 per cent of respondents are moving between larger sup- pliers, 31 per cent are not, which would suggest the big six's market share is steadily eroding in favour of mid and small-sized suppli- ers. But it is not an exodus so much as an exudation. The greatest motivator for switching remains cost and perceived value for money, although interestingly the research also sug- gested an increasing number of consumers are choosing to switch to get a smart meter (albeit at moderate levels). Eleven per cent cited this as their motivation for switching, which is approximately the same as those who wanted to access better customer ser- vice and to access greener energy (13 per cent and 14 per cent respectively). This might suggest smart meters will have a growing influence on future competition. If this were to be the case, it would play into the hands of larger suppliers, who are better placed to have access to more mature roll- outs and have more established relationships with City finance and equipment suppliers. Switching: where next? There are more switches than ever before, but drilling down into the data presents a more nuanced picture of market success, according to research by Utility Week and Harris Interactive. "A reduction in switching, if done for the right reasons, is actually a positive sign of a success- ful, sustain- able and competitive market RYAN THOMSON, PARTNER, BARINGA HOW EASY IS IT TO SWITCH? HOW CONFIDENT ARE YOU ABOUT SWITCHING? Key Very easy and straightforward Fairly easy and straightforward Fairly complicated and difficult Very complicated and difficult Extremely confident Very confident Fairly confident Not very confident Not at all confident Harris analysis: As seen across previous waves, those who have switched have overwhelmingly found the process easy and straightforward. Harris analysis: The majority of switchers are confident they would know what to do when (next) switching supplier, with more consumers saying they are confident overall when compared with the previous waves. However, confidence is much lower among those who have never switched. Which of the following best describes how you found the process of switching energy supplier the last time you switched? (Base: 712) If you were to switch supplier, how confident are you that you know how to do it? (Base: 1,032) 0% 10% 20% 30% 40% 7% 2% 44% 47% 60% 40% 20% 0% April 2018 April 2018 2% 2% 29% 32% 30%

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