Combating the challenges of domestic energy customer acquisition and retention

Since the British residential energy markets were opened up to competition by deregulation in the late nineties, the acquisition and retention of new customers has been a constant challenge for the sector.

A relatively recent addition to this challenge is the sheer volume of suppliers. In Q3 of 2012, Ofgem reported that 99% of the domestic energy market was controlled by six suppliers, “The Big 6”. By Q1 2019, this figure had reduced to 73%, with a further eight suppliers gaining a greater than 1% share of the market, and a plethora of smaller suppliers following in their tracks.

On top of a more competitive trading marketplace, there's been a marked increase over recent years of highly competitive price comparison websites - of which Ofgem lists eleven current sites bearing the Confidence Code logo. It's easy to understand why then, acquisition and retention of customers has become a major issue - perhaps the primary issue - for the energy suppliers.

So how do energy companies combat these challenges and ensure that they acquire the right customers that are likely to remain loyal in such a price competitive industry? A solution is at hand...

Why shoppers switch

First however, we have to understand why people choose to switch energy supplier.

Our data reveals some fascinating findings. One such piece of insight being that, excluding social housing, homemovers are 4.2 times more likely to change their energy provider in any given year than the average UK household. That's an audience of approximately 2 million properties a year that are 4.2 times more likely to change their energy provider.

Whilst we already have the most in-depth and accurate homemover data universe in the UK, we also now have the ability to look at this data by customer type and to assess the loyalty or propensity to switch of the customer, in the form of three models specifically created for the energy sector.

These three models can be used to complement our existing homemover data:

• The Pay Monthly energy model is a selection designed to identify properties that are more likely to purchase energy on a regular basis, rather than through an ad-hoc Pay As You Go contract;
• The Pay As You Go model is a selection designed to identify properties that are more likely to purchase energy on an ad-hoc basis, rather than through a regular contract;
• The Energy Loyalty model is a selection designed to identify households that are more likely to stay loyal to their energy provider over time. As well as allowing utility companies to identify which households are likely to be loyal (so either don’t approach them for an acquisition campaign, or select them for a retention campaign), this model may also be used to select properties that are likely to switch.

We have the answer to your domestic energy customer acquisition challenges

Not only can we help you to target homemovers who are 4.2 times more likely to switch energy provider, we can also provide you with the insight to help you identify the type of energy customers that are the best fit for your business, whilst also allowing you to target those who are the most loyal or open to switch. We have the answer to your domestic energy customer acquisition challenges.

You might also like to read our latest report, Energy Engagement [free download] for more information about how our approach can help you to win new customers in the energy sector.

Would you like to find out more?

TwentyCi | enquiries@twentyci.co.uk | 01908 829300