For a long time now I have been talking about the importance of customer service in the UK utility sector – in particular how the big players stand to lose market share to new market entrants who know how to make their customers feel special. Now it looks like these predictions are becoming a reality.
Recently, Reuters reported that small energy providers have 13.4% of the household energy supply market. If 13.4% does not sound very significant then consider that the small players only had 2.6% of the market two years ago – this is a major change in how energy is supplied in the UK.
Reuters claims that the shift to smaller suppliers is driven by two key factors. Primarily the quality of customer service is better at the smaller companies and secondly, customers feel the larger companies just charge too much.
Ed Kamm, Chief Customer Officer at First Utility – one of the smaller companies gaining large numbers of new customers – that their focus is on engaging customers. He said: “Eventually customers who are on standard tariffs realise that they’re kind of getting ripped off and they look to the market and we’re out there with a great price, with a different message.”
The switching process is simple so it is likely to accelerate, especially as the word of mouth effect multiplies. Two important variables need to be considered though. Can the smaller companies cope with such rapid growth? In particular can they continue to offer great customer service if they are taking hundreds of thousands of new customers on board rapidly?
Also, will the big players adopt a new strategy? Many customers don’t want to switch energy supplier so if the big companies can up their game, they can easily keep many customers on board.
What is clear though is that for both the bigger and smaller energy companies, providing great customer service has become a key market differentiator.
What do you think will happen next in UK energy? Leave a comment here or get in touch via my LinkedIn.
Photo by Nick Page licensed under Creative Commons.