Are the energy companies just buying new customers?

The Telegraph carried a fascinating report this weekend that explored the possibility that it is now cheaper for energy companies to ‘buy’ new customers, by offering great deals for switching, than to offer great service and keep the customers that they already have.

This is a business school classic and the conventional wisdom is that it is far more expensive to use advertising and sales to attract new customers than it is to just keep your existing ones happy. If the suggestion feature in The Telegraph is true then one of the natural consequences would be a very poor level of customer service – why invest in good support if you can just ‘buy’ in more customers?

But we saw this a decade ago with the banks, where poor service was excused for many years because it was easy to move to a new company. Today this is no longer possible in retail banking as several challenger banks have arrived and are challenging the established order. Metro Bank is one example where their differentiation from the competition has focused entirely on a different approach to customer service.

Customers across any industry have a right to fair treatment. Even if The Telegraph has identified a problem with the energy suppliers and their approach to customer service, I don’t believe that this issue can remain for long.

Customer service has been identified as a key issue for the utilities. Customers are switching company, seeking out better service, and as more and more smaller firms challenge the big players this focus on working hard for customers will only increase.

Even if it’s possible to win customers today by offering a few discounts then eventually letting the customer down, that has never been a long-term strategy in any business and it will not work for the utilities now.

What do you think about the comparison between service in banking a decade ago and energy suppliers now? Leave a comment here or get in touch via my LinkedIn.

Metro Bank launch - a lot of lollies


Photo by EG Focus licensed under Creative Commons

This entry was posted in Current Affairs, Customer Service, Strategy, Utilities and tagged , , , , , , , , . Bookmark the permalink.

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