In my last blog I talked about the value of reviewing your customer service strategy with a focus on encouraging customer retention. My own industry focus is utilities and these issues are playing out in the UK utilities sector in a very interesting way at present.
At present, the big six utilities control 92% of the UK market, but analysts predict that this will reduce to under 70% within the next five years, meaning that the smaller challenger brands in the utilities market will share about a third of the market. A combination of reduced energy use by customers, the reduced market size, and lower profit margins could mean that the big 6 see profits drop at least 40% over the same period.
Citigroup analysts believe that not all of the big 6 will be able to operate profitably in this changed environment. Their prediction is that some of the big players will just sell their customers to a rival firm and exit the market. It is easy to believe that this is possible, although hard to contemplate which of the big brands might not be around by 2020.
The price comparison site GoCompare.com said in a report last September that when they help customers to switch utility seven out of ten customers are choosing the smaller suppliers – not the big six.
Price is usually the main factor when a customer is considering which utility to use, but customer service is in an important second place according to the GoCompare data. This means that the utility firms not only need to offer great prices, but great service too. And this is not just about achieving growth targets – there is a real suggestion that if these companies do not improve the way they manage customers then some well-known brands may not see the end of this decade.
Utility customers are quite familiar with the use of multichannel service, though one look at Twitter or Facebook shows that they are usually just hopping around channels making complaints. If a utility could really wow it’s customers with an omnichannel strategy that knits together all the various social networks with chat and voice and email to create a seamless way to interact with the brand then they can not only retain existing customers, but attract many more from their rivals.
What do you think of the analyst predictions? Leave a comment here or get in touch via my LinkedIn.
Photo by Kevin Dooley licensed under Creative Commons