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Who Is Switching Energy Providers and Why?

September 7, 2023

The energy experience is becoming more complex. Since deregulation, there are more energy options than ever. Ernst & Young (EY) calls this the rise of the “energy omnisumer”, where people source their energy from multiple places, solutions, and commercial relationships. The question is, who’s switching energy providers and why? We investigate two key energy markets, the U.S., and the UK, to see why some consumers are more prone to switching than others and whether customer experience plays a part. We also look at energy suppliers and ways that companies can make their energy experience more “switch-proof” or, depending on your goals, more “switch enticing”. 

The Rising Options in Unregulated Energy Markets  

In the U.S., there are currently 18 unregulated states that allow customers to choose their energy providers, Texas being one of the least regulated and most open energy markets. In fact, 79% of Americans said they were familiar with the idea that they can switch energy providers and 58% already have. This has resulted in a flood of new competitors into the U.S. energy market, accelerating the switching trend.  

Though two-thirds of Americans say they are happy with their current energy supplier, according to EY, that doesn’t mean they are necessarily switch-proof. Many are open to getting a better deal and the report found that only 23% of consumers want a single energy relationship. Most want options aligned to their values, lifestyle, and price point.  

In the UK, homeowners can readily select which energy providers they want, choosing either a single gas and electricity supplier or multiple vendors who buy energy on the wholesale market then resell it to customers. There are currently about 22 energy suppliers in the UK and switching is popular. Around 500,000 people switch each month, which can often be done in minutes, through a call or simple online form.  

Who Is Switching Energy Providers and Why  

Let’s look at the U.S. market first. According to J.D. Power’s 2022 Electric Residential Customer Satisfaction Study, more customers are now facing higher monthly bills, which has caused a 17-point decrease in overall satisfaction. Millennials are the consumer segment most likely to switch, making up 63% of those who have already switched to a new home electricity supplier.  

One reason for this is that Millennials are often more price sensitive. As one of the groups hardest hit by the Great Recession, they have experienced stagnant incomes, rising unemployment, lower savings, and record levels of household debt during their prime earning years. Holding only 3% of total U.S. wealth, this makes the Millennial generation more prone to switching energy suppliers in search of lower rates. 

In the UK, saving money is also the main reason for switching, as Europeans have been confronted with the largest rise in energy prices since the Second World War. Though the willingness to switch is lower than the U.S. (35%),  UK’s numbers are much higher than the European average (26%), mainly due to the recent insolvencies of many smaller energy suppliers and the ease with which people can switch.  

According to a 2022 Simon Kucher customer survey, even with the prospect of only modest savings, one in three British consumers say they are still highly likely to switch energy providers within the next twelve months. Ofgem’s consumer studies show that older customers (65+) were the least likely to switch, as they reported the highest satisfaction levels with their current provider (71%). That means that, again, it’s younger customers who are more likely to switch energy providers.   

Customer Experience is More Important than You Think 

While price is often the reason most people switch, according to Ofgem’s customer surveys, dissatisfaction with customer service is also a main driver of switching behavior. Among British customers, it was the #2 reason people switched, second only to getting a better price.  

Common customer difficulties ranged from the inability to contact suppliers (43%) to waiting too long for issues to be resolved (37%), even perceptions that suppliers didn’t listen (33%). In the U.S., consumers were more likely to rate the quality of a company’s website or mobile app higher than the courtesy or helpfulness of staff or customer service representatives.  

The data clearly shows you can’t keep customers loyal or entice them to switch through price alone. What consumers want besides an affordable price is a company they can contact effortlessly and conveniently, and one that resolves issues promptly.  

The “digital preference” myth also needs to be addressed. While digital customer interaction does allow for cost savings, greater convenience, and the simplification of the customer journey, not everyone wants to communicate with a company through digital channels. In the UK, phone calls to suppliers are still the preferred method of contact (56%), followed by email (21%) and apps (15%). While in the U.S., 69% of Americans still prefer talking to a live agent, while email also came in second (54%) and online chat third (46%).  

How Suppliers Can Make Their Energy Experience “Switch-Proof” or “Switch Enticing” 

If you want to switch-proof your company or make your company switch enticing, the surest way is to give consumers what they want. One in four customers say that it is often difficult to even contact their energy suppliers. That’s one way to ensure greater customer satisfaction. Make sure your support is easy to access. 

itel’s reliable customer experience solutions can help you meet the needs of your customers, while saving time and cost. You also gain the flexibility to scale your operations as needed, to better manage sudden surges without the need to invest in costly infrastructure or technology upgrades or worry about talent acquisition.  

With our expertise in customer experience management, CX technologies, data analysis and reporting, as well as our years of experience in the energy sector, we can uncover new ways to add greater efficiency to your CX operations. Learn how we helped a leading utility provider in the Caribbean to reduce their call times by 14% with our training bootcamp, while introducing a callback feature during busy times that greatly improved customer satisfaction.  

Since these are also challenging times for many energy consumers, to make your company switch-proof, there is also a need to communicate in a sensitive and empathetic way, and according to the EY study, over two-thirds of customers expect their energy provider to provide advice on ways to reduce their energy costs.  

itel’s highly trained agents are known for their expert knowledge, willingness to help and their empathetic approach, especially our collections teams, who are always trained to communicate firmly but respectfully. As a result of these attributes, we’ve reached 150-200% above recovery targets. We can also help you communicate new offerings and products that may help consumers save money or explore energy alternatives like renewables.  

Remember, the two things that energy consumers want most are to save money and to have more convenience, and the best way to switch-proof your business is to ensure that your CX helps them with both. 

Want to learn how we can help? Reach out to us for a consultation.

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