People in the UK are finally starting to switch utilities companies.
Trade body Energy UK said 660,000 people switched supplier in February, a new monthly record and 60% up on February 2017.
That’s scary news for companies like Centrica, which owns British Gas.
The company reported a 17.4% fall in full-year operating profits, and recently announced it was going to cut 4,000 jobs.
But it seems like this was all part of the plan. The government, like it did for banking, stepped in to an industry it could see was stagnant and tried to freshen it up.
Err… or did it?
Michael Fallon, defence secretary and former energy minister, spoke to the BBC Radio 4 Today programme, on April 24 last year.
We wanted to see more competition. We wanted to see more people able to switch between energy users [sic], that, over the last three or four years has not happened. This is a market that is not working perfectly and therefore we are intervening to make markets work better.
Lots of bluster, but the Conservatives’ plan to cap energy prices fizzled out. Theresa May passed the responsibility to energy regulator Ofgem, who kinda just kicked it around for a while until everybody had forgotten about it.
But would a government-mandated price cap have made people switch?
Human nature would suggest that knowing the prices are all pretty much the same would make one LESS likely to switch, not more. The motivation needs to come from somewhere else.
Here’s a graph from around the time Michael Fallon gave his version of ‘I have a dream’…
Even in 2016, people had begun switching. But the data suggests it’s the engaged few who are moving their energy accounts to smaller, newer companies (a bit like the Londoners with a Monzo card in their wallet around that time).
They’re switching for price, yes – but they’re also switching for better customer service. A more convenient app. Sustainable energy.
Government meddling worked in banking because it removed red tape, not added it. It’s now easier than it used to be to start a bank. There are now a stack of really good startup banks. It makes sense.
Just because people don’t switch utilities companies, doesn’t mean they’re happy. Or not happy. Or anything really. They just haven’t seen something they like enough to make the effort.
So who’s inspiring customers to switch?
One utilities provider appealing to heart, mind and wallet is London startup Bulb.
Bulb is doing plenty right when it comes to inspiring action in disgruntled customers of the big six. As well as promoting its green energy sources, Bulb offers credit to customers who refer a friend. The company also pays any exit fees a customer might incur when switching to Bulb.
As co-founder Hayden Wood revealed on the People Tell Richard Stuff podcast, the company sees its community of advocates as its secret weapon.
Providing a great customer experience – and making sure customers are empowered to shout about it – is Bulb’s marketing method of choice.
And it seems to be working – in just three years Bulb has signed up over 300,000 households across the UK, and is stealing customers from the unloved encumbents.
Some switch to save money, for others it’s a moral choice or a question of convenience. There’s no one-size-fits-all recipe. What is measurable, however, is the benefits that come when customers are empowered to speak on behalf of the brand.
Gas and electricity might be the name of the game – but the real commodity is people power.