Close to 15 percent of homes switched energy supplier in 2015, up from 12 percent the year before according to latest figures from GfK’s Quarterly Energy Market Monitor. GfK prepares the Monitor using a nationally representative panel of 12,000 households that reflect the composition of the 26m households in Britain.
The suppliers losing the most customers to switching in 2015 were all in the big six. Net gains were made by the smaller players, in particular Ovo Energy and First Utility. Almost one third (30 percent) of customers who switched in 2015 moved to a smaller supplier.
Customers say the big six perform poorly for value for money
The main reason customers switch is price. The big six suppliers score only 37 percent for value for money overall. Customers rate the smaller suppliers much higher for value for money, at 54 percent.
Six in ten households are “Active Switchers”
The proportion of households that have switched energy supplier at least once stands at 58 percent. This is increasing over time, up from 50% in Q3 2013. In Q4 2015, one third (33 percent) of those who had switched had done so three or more times. 25 percent had switched within the last year.
John Banerji, Director at GfK, comments: “With most companies today aspiring to put the customer at the heart of everything they do, energy suppliers appear to be at the other end of the scale. It is therefore not surprising that switching in this sector is on the rise. Our consumer data tells us that satisfaction with energy companies is declining. Fewer than four in ten people would recommend their current provider. Only one in three customers feel valued, and for some suppliers up to 20 percent cite poor service as a reason for leaving. If energy providers can tackle poor service and satisfaction levels, they have a chance to break the downward spiral of competing only on price, which, as we’ve seen, is impacting the big six the most.
There is a polarisation in the market between those that switch and those that don’t. Switchers tend to be home owners and affluent. Non-switchers tend to be younger, in low income groups and living in rented or social housing.
Suppliers are working harder to retain customers
37% of customers considered changing their energy supplier during Q4 2015 but ultimately ended up remaining with their existing supplier. For more than one half (52 percent), the overwhelming reason for staying was “Obtained a better deal with existing supplier”. 18 percent said they were already on the best deal or savings were minimal if they moved. However, there are still challenges. 13 percent said they were still in contract, had penalty clauses or owed money. For 12 percent, switching is still “too difficult”.
Price comparison websites have helped the rise of smaller suppliers
The majority of switching (60 percent) happens online. Smaller energy suppliers perform best here too, gaining 70 to 80 percent of all of their new customers via this channel. Price comparison websites have been a catalyst for switching. Four in ten switches are performed this way, compared to only 13 percent by direct sales approaches.