Improving customer satisfaction in an increasingly competitive landscape - December 2018 - Populus
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
1 Improving customer satisfaction in an increasingly competitive landscape December 2018
2 3
Contents
Introduction 4
Chapter 1- The changing energy landscape 5-7
- Back to Basics
Chapter 2 - The rise of disruption 8-10
- How are disrupter brands changing expectations?
Chapter 3 - Performance in the midst of disruption 11-19
- OVO spotlight
- Giffgaff spotlight
- O2 spotlight
Chapter 4 - Empowering customers to change their behaviour 20-21
- Monzo spotlight
Conclusion 22
4 55
Introduction Chapter 1 – The changing Who are the UK public’s current energy providers?
Prime Minister Theresa May has previously vowed to fix the ‘broken’ energy landscape
energy market with a cap on standard variable tariffs (SVTs) and
other default tariffs. However, reports suggest that the Big 6 The energy market is under attack. Changing consumer
routinely switch customers off default tariffs just to charge almost expectations are redefining the way in which customers interact
exactly the same amount.1 with service providers as a whole, joining disruptor brands as
25%
threats to energy providers. Traditionally viewed as ‘necessary evils’,
This, coupled with steady and continuous price rises (SSE are the energy providers are rapidly embracing new technologies to meet
latest Big 6 company to announce a summer 2018 price rise2), these changing consumer expectations.
is taking its toll on the energy market. It represents a serious 13%
reputation problem for the Big 6, and the energy sector beyond it. The threat facing energy firms is already here. Our research shows
Populus research shows that while many consumers regard energy that a quarter (25%) of the UK public are already consumers with
providers as ‘frustrating’ and ‘a necessary evil’, a growing number 10%
disrupter energy providers.4 This is a rapidly evolving contingent
are increasingly restless - choosing to switch suppliers in search of of price-aware, switch-savvy, tech-embracing energy consumers
a ‘better company’ or ‘a better deal’. already aligning themselves with energy providers that deliver on 10%
these requirements.
In fact, record numbers of people switched energy provider in early 9%
2018, with 1 in 5 of these customers actively avoiding a Big 6 energy
companies.3 The dramatic rise in the number of disruptive energy 8%
companies means consumers have more choice than ever before. 4%
These are companies shaking up the very definition of energy 4%
provision. From new arrivals such as WePower, a crowdfunding
platform for renewable energy projects, and Energi Token, which
rewards energy-efficient behaviours, right through to long-term 17%
disrupter contenders such as Ovo and Octopus Energy, the
competition has never been tougher. What’s more, the rise of
disruptive technologies across all sectors is spilling into the energy
sector
OTHER
(1) https://www.theguardian.com/business/2018/feb/23/big-six-energy-companies-routinely-overcharging-customers-exclusive (4) Populus interviewed a sample of 2,030 UK adults aged 18+ between 27 and 28 April 2018. Populus is a founder member of the British Polling Council and abides by its rules.
(2) http://www.bbc.co.uk/news/business-44300394 Further information at www.populus.co.uk
(3) https://www.theguardian.com/money/2018/mar/12/record-numbers-switch-electricity-supplier-amid-wintry-uk-weather
6 7
Back to Basics
“”
The result of ever-increasing competition is a recent surge in It is in this unchartered, challenging energy landscape that Top Two most important features for all customers:
price-driven switching. Recent estimates suggest over 11 million retention becomes equally, if not more, important than acquisition.
people used price comparison websites to compare and find the Much more needs to be done by companies to ensure customer
Getting the basics right remains a crucial foundation of success.
best deal on their energy suppliers.5 This is a huge pool of potential satisfaction with the brand throughout the customer lifecycle and
Service providers across all sectors know this. As the competition If anything goes wrong, I want to find the
energy consumers actively searching for a cheaper energy provider thus inspire loyalty.
online. Our research shows that price hikes play a substantial role in
intensifies in the energy market, delivering the service and reliability right person to speak to easily
“”
that consumers expect, becomes vital. Customers expect a brand
customer churn. The popularity of price comparison websites and Over the following chapters, Populus takes a closer look at what
to deliver against its product promises, whether that be delivering
money advice sites like Money Saving Expert is contributing to the providers could do to boost and maintain ongoing customer
a reliable supply of electricity, ensuring a constant broadband
intensifying competition in the energy market. satisfaction in this competitive, price-driven environment in order to
connection, or guaranteeing a GPS-tracked taxi.
It’s frustrating to deal with call centres. The
94%
improve customer retention rates and boost loyalty.
“” Until now, the energy sector (in particular larger Big 6 names)
have relied on the fact that gas and electricity are a necessity,
And when something does go awry, customers expect the
resolution process to be both seamless and effortless. In reality of customers want problems
to be resolved quickly
people you speak to on the phone… are
clearly reading from a script
“”
this means resolving problems quicker than ever. Our research
When you stay with a provider, you lose out allowing for customer-brand interactions to be limited to the basic
supports this view, finding that an overwhelming majority (94%)
functions; supply of energy and customer services. However, with
when they rise their prices of UK energy consumers want problems to be resolved quickly.
“”
the evolution of an increasingly competitive market and rapidly
Prompt, efficient service is paramount.
changing consumer expectations, energy providers need to provide Investing in customer experience is really
and be seen to provide, much more than simply energy supply.
In an era of 24 hours news cycles, on-demand services and important - enhancing it in terms of
guaranteed delivery slots at the touch of a button, consumers
They’re not offering you a cheaper rate until are used to being met where they are. Our research shows that
convenience, and the options the customer
you’re actively leaving not only do consumers want quick solutions, but they want them has to interact with the provider
in a way that best suits them. A significant majority (88%) want to
contact providers in a way that suits them.
88%
While delivery of this excellent service would once have been
In a world where technology is abundant, and customers are enough to differentiate an energy provider from the competition,
increasingly accustomed to contacting brands via instant- customer expectations have now evolved to a point where product
messaging, public-facing platforms like Facebook or Twitter, it is of customers want to contact promises are assumed to be met. Therefore, energy providers need
providers in way that suits
vital that energy providers integrate customer-centric technology in them to do something else, something above and beyond the traditional,
order to be present, seen and available. to really attract and retain customers in the future. Populus takes a
closer look at what this is and what it looks like in practice, over the
next few chapters.
(5) https://www.telegraph.co.uk/business/risk-insights/price-comparison-sites/
8 9
Chapter 2: The rise of Popularity of disrupter brands %
How are disrupter brands Uses technology to
make my life easier
disruption 79% 80%
changing expectations? Helps find the best
Uses technology to
make their service more
deal for me engaging
It is hard to think of an industry that hasn’t been affected by Disrupter brands use technology to their advantage – introducing
technological disruption. Customer expectations of brands has it not to be seen as ‘innovative’ but to truly benefit the customer’s
61% 16% 100%
evolved exponentially across all sectors. An entire digital generation life. This could be by making more relevant and personalised
has grown up with a wealth of information at their fingertips, recommendations (Netflix uses a complex formula to recommend
allowing for everything from continuous interactions with brands, curated content), making their service more engaging (Air BnB have 75%
34% 11%
to instantaneous price comparisons. As a consequence, consumers made it easy for people to find and engage with ‘hosts’ across the Uses technology to
Makes relevant
are increasingly used to, and indeed, expectant of, a ‘swipe-ready’ world), or making their service effortless (thanks to Uber it is now 50% make using their
recommendations
customer-brand interaction. possible to get a cab in a matter of minutes, with just one click). service effortless
32% 34% for me
Age: 25%
Energy providers are no longer immune to this. Our research
shows that the rise of disrupter brands such as Netflix, Air BnB 28% 20% 18-34
and Uber and the perceived convenience they offer is a concept
55+
that is spilling into the energy sector. The finance, and increasingly
insurance, sectors have already undergone considerable changes. 26% 33%
For example, Populus has found that 70% of the UK public are Makes relevant Can be contacted
aware of the ability to purchase insurance via an app, two thirds recommendations 24/7
21% 5%
(66%) have heard of telematics and over half (51%) know about for me
robo-advisors.6
23% 5%
This expectation is particularly strong among younger consumers
– those who are accustomed to regularly using ‘disrupter’ brands
like Netflix, Air BnB and Uber. As this generation ages, and an even Provides a Can be contacted in a
12% 5%
more digitally-engaged generation follows in their footsteps, the personalised service way that suits me (e.g.
typical consumer of 2025 (or even 2020) will have very different telephone, email, social
ingrained expectations of service brands than the typical energy Resolves problems quickly media, text)
customer of today. 0 50 100 150 200
Changing expectations have already impacted some of the more ‘traditional’ sectors such as the financial sector. This sector
has seen a meteoric rise in the number of online banking customers (in 2017, 63% of the UK were using online banking
services7), widespread availability of banking apps, and even the development of facial recognition and fingerprint technology Base: Uber (191), Netflix (385), Airbnb (199)
in an attempt to improve security and drive customer engagement with financial brands. (6) Future of Insurance whitepaper https://www.populus.co.uk/2018/01/future-insurance-re-defining-sector/
(7) https://www.statista.com/statistics/286273/internet-banking-penetration-in-great-britain/
10 11
How important is it that brands…?
Chapter 3 – Performance in What do customers think?
the midst of disruption
Disrupter Brands OVO Energy The ‘Big 6’
Adopting technology to offer a personalised and engaging service is
increasingly important for consumers, so how are energy providers
68% 70% 44%
Use technology to make their service effortless 78% Very/quite important performing against this expectation?
Makes their
service of customers think disrupter brands of customers think OVO uses technology of customers think the ‘Big 6’ (British Gas,
“”
Our research shows that the Big 6 providers are considerably less SSE, Scottish Power, E.ON, EDF, NPower)
(Uber, Netflix, Airbnb) use technology to to make their service effortless
likely than disrupter brands to be seen as using technology to make effortless use technology to make their service
make their service effortless
effortless
the service effortless, more engaging, or to make the customer’s life
Use technology to make the customers life easier 75% Very/quite important “Disruptive technology make things fun. easier. Similarly they lag behind disrupter brands when it comes to
Uber is fun. Deliveroo is fun. Utilities are offering a personalised service with relevant recommendations.
Make 68% 70% 43%
not currently fun.” customers’ lives of customers think disrupter brands of customers think OVO uses technology of customers think the ‘Big 6’ (British Gas,
SSE, Scottish Power, E.ON, EDF, NPower)
However, disruption does already seem to be taking hold within the (Uber, Netflix, Airbnb) use technology to to make customers’ lives easier
easier use technology to make customers’ lives
Use technology to make their service more engaging 63% Very/quite important energy market. In fact, OVO Energy outperform disrupter brands
make customers’ lives easier
easier
on been seen to use technology to make their service effortless,
the customer’s life easier, as well as offering great rewards and
incentives. It also is closing in on disrupter brands in making their Make their 64% 56% 39%
Provide a personalised service 59% Very/quite important service more engaging and personalised. A similar pattern also service more of customers think disrupter brands of customers think OVO uses technology of customers think the ‘Big 6’ (British Gas,
(Uber, Netflix, Airbnb) use technology to to make their service more engaging SSE, Scottish Power, E.ON, EDF, NPower)
emerges when looking at the emerging, smaller energy providers. engaging use technology to make their service
make their service more engaging
more engaging
Make relevant recommendations 43% Very/quite important
Provide a 53% 51% 33%
personalised of customers think disrupter brands of customers think OVO provides a of customers think the ‘Big 6’ (British Gas,
(Uber, Netflix, Airbnb) provide a personalised service SSE, Scottish Power, E.ON, EDF, NPower)
By focusing on tech which benefits the end-customer, disrupter Beyond delivering the basics, offering a personalised and engaging service
personalised service provide a personalised service
brands are characterised by the personalised and engaging service service now crucial for keeping customers engaged long-term with
on offer. However, as the number of ‘disrupter’ brands increases a brand. For energy providers, this translates as taking everyday
(in the past year alone we have seen the rise of Revolut, Monzo,
among many others) these characteristics are fast-becoming the
energy provision and making it considerably more ‘fun’ for
customers.
Make relevant
recommendations
55% 42% 32%
of customers think disrupter brands of customers think OVO makes relevant of customers think the ‘Big 6’ (British Gas,
expected norm. (Uber, Netflix, Airbnb) make relevant recommendations for them SSE, Scottish Power, E.ON, EDF, NPower)
recommendations for them make relevant recommendations for them12 13
Spotlight on OVO Energy OVO Energy as a ‘disruptor’ in the energy market
OVO Energy understand that offering a traditional gas and
electricity supply service is no longer enough to keep customers
engaged with their brand. To combat this, OVO Energy started with
“”
“Utilities have such an impact on our
the mission to create an energy company which puts the customer
environment. Little links to bring more
at the heart of something bigger than basic energy supply, a
movement which integrates technology within the customer’s life awareness of the environmental impact.”
(and OVO Energy’s business) with the ultimate goal of a future built
on renewable energy.
Innovative tech and smart products
To help drive their mission, OVO Energy also focuses on creating
forward-looking, innovative tech and smart product to help
customers manage their energy better. One of their latest
innovations, Home Energy Storage, is currently being offered
on-trial to OVO customers. By delivering the latest ‘energy-saving’
devices and making them exclusive to OVO customers, OVO are
again fuelling this idea that customers are part of something bigger
than just basic energy supply.
As part of this mission they have curated several different initiatives Innovative tech and smart products
to help engage customers with the brand, for example: To help drive their mission, OVO Energy also focuses on creating Surviving disruption
forward-looking, innovative tech and smart product to help There are several things energy providers could implement to
100% green energy tariffs customers manage their energy better. One of their latest better attract and retain customers in this increasingly disrupted
OVO Energy were the first energy company to offer partial-green innovations, Home Energy Storage, is currently being offered sector. Implementing changes now may seem unnecessary,
energy tariffs as standard, later including an affordable upgrade to on-trial to OVO customers. By delivering the latest ‘energy-saving’ particularly if you currently remain ‘bigger than the competition’
their 100% green energy tariff. Environment concerns emerge as a devices and making them exclusive to OVO customers, OVO are however integrating new initiatives earlier will help energy providers
key concern of respondents, according to our qualitative research. again fuelling this idea that customers are part of something bigger stay ahead as the number of competitors, type of competitors, and
By offering green energy tariffs, the brand allows consumers to feel than just basic energy supply. the size of competitors, continues to grow.
part of something bigger than just energy supply.
We will outline some suggestions through the following sections,
providing examples on how other brands (from other sectors) have
successfully integrated these offerings to huge success.14 15
15
Spotlight on GiffGaff
Changing the Dynamic of Trust
GiffGaff, a brand which provides mobile network coverage, is a
company that delivers a transparent service to help build trust with
#1 most preferred feature: “I only saved £120 but switching only took me 5 minutes.” its customers.
Automatically switching you to a better tariff if one is
GiffGaff positions itself as ‘the mobile network run by you’.8 It is
available
Energy providers therefore face a challenge. Clearly keeping prices built on the idea of a ‘goodybag’ designed around the customer
The energy sector, as with most utilities, tends to offer cheap tariffs competitive is a vital factor in attracting customers in the first place mobile needs. This culminates in an online account which provides
to capture new customers, before increasing prices at a later stage. however, once an energy provider is selected the brand must build an easy-to-understand breakdown of the customer’s monthly
While this is beneficial for acquisition, the approach is at odds in trust over the customer life-cycle to ensure they stick around at the mobile usage then towards the end of each month, the customer
an increasingly competitive market where retention is becoming end of their contract. will receive a notification, suggesting that they either stick with their
equally, if not more, important as acquisition. current goodybag, upgrade to a more expensive goodybag, or
However, trust in the energy sector is notoriously low and is downgrade to a cheaper one.
“It’s so frustrating! When you stay with a provider they up increasingly damaged with news of price hikes, unregulated tariffs,
your prices every year. At the same time, if you move to a and large profits. When a sector is plagued like this, it is challenging
company that’s cheaper, they get you after a year!” for individual brands to build trust but it is a challenge worth
accepting if it encourages customers to stick long-term.
Switching providers has never been easier, so it is crucial a
customer trusts their energy brand to offer good value. However, The notion of ‘trust’ is built upon transparency - a characteristic
regular price rises damage customer perceptions of value not traditionally associated with service providers but one which
prompting them to start searching around and switch when a better consumers now demand. Transparency helps enlighten the
deal is found. customer, helping them feel they are being looked out for, and
reassure them that they are getting a good deal.16 17
Change the dynamic of trust Delivering a Better Provider-Customer Dynamic
“”
By providing a transparent breakdown of the customer’s usage,
GiffGaff are able to ‘prove’ that their recommendations are based
#2 most preferred feature:
Rewards for being a customer
around the customer’s needs (rather than the brands greed). This
approach, based on transparency, therefore instils confidence “Utility companies have a way to go until
within the customer that they are paying only for the service they
Rewards have emerged as a key element of service provision across they make it feel like loyalty is being
actually need, thus getting good value for money.
many sectors, and for good reason; they both attract customers,
appreciate and people are being rewarded
“”
then keep them loyal. They have been particularly successful when
offered by brands within society’s more disengaging sectors, where for being a customer in the long haul.”
62%
the product on offer is a need rather than a want. For example,
Compare the Market (insurance) and Tesco (grocery shopping)
“If they can give me what I need at a lower
“”
are both brands now synonymous with the successful reward
cost they should be offering it to me.” campaigns that they offer. Both these brands have taken everyday of customers believe it is
very or quite important that
products (which people would rather not have to spend their
providers offer great rewards or
money on) and made them much more engaging for the customer.
incentives
“It would be great if after 12 months they
GiffGaff in turn make cost savings as customer support is mostly
Energy providers could learn from this. Electricity and gas are said, “thank you for being a loyal customer
provided via forums. This repackaging allows for more leanness.
needed by customers but most would rather spend their money
– here is a month’s subscription to Netflix
elsewhere. Therefore, a successful reward campaign, which goes
beyond delivering the service customers need to offer exciting or a voucher for Amazon – something
products the customer actually wants, would help act as a key
small. At the end of the day, there is a lot
differentiator within the current sector, which will in turn attract
new customers and retain existing customers. of competition and you can move easily.”
(8) https://www.giffgaff.com/18 19
Spotlight on O2 Offers great rewards or incentives %
O2 (the mobile phone service provider) uses exactly the same
mobile network as GiffGaff. However, O2 is positioned as a more
‘premium’ brand with more expensive contracts than GiffGaff. To
justify this, O2 offer a more luxurious brand experience, providing
the basic service customers need (a working mobile network), plus
great deals and offers that O2 customers want. This reward scheme
55%
is known as O2 Priority.
With this reward scheme O2 have successfully differentiated
their brand from more expensive competitors, offering a unique
attraction for customers to join and stick with the brand. The
reward scheme also helps justify O2’s higher price-point, by helping
boost brand perceptions of premium and quality.
38%
39%
(9) https://priority.o2.co.uk/20 21
21
Chapter 4 – Empowering Spotlight on Monzo
Customers to Change Their Monzo, the self-declared ‘bank of the future’, describes itself as
Behaviour ‘a new kind of bank’ that lives on the customer’s smartphone.
“”
Monzo has grown rapidly in popularity, particularly among younger
Energy providers are well-placed to empower customers to save
consumers.10 This popularity largely stems from Monzo’s app which
money and the environment, which according to our qualitative
contains several features to help customers better manage their
#3/4 most preferred feature: research, is the two key concerns among consumers today.
Showing you the daily breakdown of your energy usage Widespread uptake of smart meters appears to support this “Technology needs to personalised for money. These include the opportunity to set monthly targets (on
things like groceries), an easy-to-understand summary of spending
by appliance / Energy saving tips tailored around your notion. Providing further technology (our respondents suggested
the individual. I would like to receive (broken out into key themes, e.g. going out, bills), and notifications
current energy usage an app which breakdowns daily energy usage by appliance) to
track expenditure or environmental impact would help further something like ‘Welcome, the McDonald to let customers know if they are spending too fast. By harnessing
this technology, Monzo appeals to younger consumers because it
empower customers and in turn drive brand appreciation. family. This is what you could this week to has helped empower them to change their spending behaviours
Consumers buy in to lifestyles. They choose products that make Technology doesn’t have to have one key aim. For example,
them feel healthier, stronger, better. As lifestyles get busier, empowering customers to help the environment could also help
save one more tree.” positively.
consumers truly value technology that empowers them to make them track their household recycling, car sharing, and public
genuine change in their lives. Energy brands can help consumers transport usage – any and all features associated with reducing In April 2018, the UK government introduced the Soft Drinks
to become the consumers they want to be, which in turn, translates their environmental impact. Industry Levy in a bid to empower the UK public to make positive
into loyalty. changes (eg reduce the amount of sugar they consume via soft
“”
drinks). Many venues, pubs and bars across the country switched to
sugar-free varieties of soft drinks, with a sign up explaining that the
standard sugar drinks incur an increased charge. In the same way,
energy brands can empower customers to change their behaviour
“They could break it down for me a bit. by making it easier to do so.
For example, if they could show how my
usage impacts the environment. I.e., based
on your usage over the last 3 months, if
you took 2 showers less a day you’d save
money.”
(10) https://monzo.com/about/22 23
Conclusion - Improving
Customer Satisfaction in the
Energy Sector
Energy is no longer an industry with just a few players. So how can energy providers survive? 2. Inspire with rewards
Competition (especially around pricing) means there’s been Rewarding energy customers will be a crucial component of
an explosion of choice for consumers. Switching is easier than Our research shows that there are three key areas for energy improving customer satisfaction in the energy sector. Our analysis
ever before, and can be achieved at the touch of a button via an providers to work on: shows that rewards for being a customer is appealing. Rewards
abundance of price comparison websites. don’t necessarily have to have anything at all to do with the
1. Build trust product or service. Energy providers should look outwardly to
What’s more, customers expect more engaging, tailored services Energy consumers have been conditioned to either seek out the other sectors, such as mobile phone providers, that have offered
as a result of their experiences of disruptive technologies. This best priced deals, or to remain inert until price hikes force action. rewards alongside their services.
is filtering through into more traditional sectors such as energy, Energy providers could build trust by automatically switching
where brands such as OVO Energy are taking the lead in adapting consumers to a better tariff once one becomes available.
brand experience to be more engaging and customer-centric. Populus carried out a MaxDiff analysis on a range of ideas and 3. Empower behaviours
concepts, to test which are more and less appealing to customers, Customers want to own the decisions they make, and to feel like
Banking has already been transformed in this way. It’s not long until finding that being automatically switched to a better tariff they are part of something bigger. There is a huge opportunity for
the disruptor becomes mainstream for energy too. when one is available to be the most appealing. energy providers that can empower consumer behaviour change.
Consumers who feel like their energy providers have their best Our analysis shows that energy-saving tips around current
interests in mind, are more likely to feel loyal and trusting of the energy usage and daily breakdown of current energy usage by
brand. appliance are popular among energy consumers.24 Northburgh House 10 Northburgh Street, London EC1V 0AT info@populus.co.uk www.populus.co.uk
You can also read
