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Can Digital Change Stop People Switching Energy Providers?

28/04/2014 15:36 BST | Updated 28/06/2014 10:59 BST

Britain's energy providers have certainly received a battering in recent months. The number of complaints about energy providers has surged by 224 per cent for the first three months of 2014, according to the sector's ombudsman. Complaints from distressed customers rose from 3,277 for the first three months of 2013 to 10,628 for the same period this year. Cost is of course a significant driver of such feelings but what else are energy providers doing wrong?

Part of the problem lies with the difficulty energy providers have in connecting with customers, as they miss the more personal in-store and face-to-face experience. Digital channels have opened up a vital reason and way for energy providers to interact with customers more frequently. If these brands instigate the right approach, digital could offer the solution to building engagement and brand loyalty in a fragmented marketplace.

Customers today have a very different set of needs to those of the past. They frequently use digital platforms to interact with brands. Energy providers have met this need, but now need to go a step further. Simply operating a mobile app to check payments on its own will result in little more than a frustrated customer. Each interaction with a brand, across any offline or online channel, needs to be watertight and relevant to create a seamless customer experience.

The BIO Agency commissioned a piece of research to highlight this disconnect between customer needs and energy companies' current services. It reveals that 68 per cent are fed up with inefficient traditional customer service channels from their energy provider, particularly phone calls, and instead would prefer to communicate with them through mobile apps or online. Over half of people would consider switching provider if offered digital tools to help service their accounts and save time and money; such as easy to read bills and speedy response to enquiries via email and mobile channels, compared with just 18 per cent who would switch if offered fixed rate tariffs.

The research underlines that energy providers are missing a trick in retaining and attracting customers, with over half of customers saying they would like to be offered a loyalty scheme, compared to just one in eight (12 per cent) who wish they were offered easier switching. Mobile was the preferred digital communication tool, with exactly a quarter of customers wanting to interact via a mobile app, and a third (33 per cent) choosing a mobile app as their preferred method to submit their energy reading. People are clearly looking for a fast and efficient service that fits with their busy lifestyles. Only last week the Government announced new legislation in which companies must promise to enable customers to switch within 24 hours. Our report only reiterates the need for providers to put digital at the heart of their organisations.

Edelman's annual Trust Barometer 2014 found that customers remain distrustful of energy providers, with a dip of 32 per cent in consumer trust compared to last year. British Gas may have announced a loss of 400,000 customers in 2013 but it has shown signs of appeasing its remaining customers with the introduction of a new online billing system. These developments raise the question of why digital is being viewed as the answer to the issue of trust.

A consistent experience must be at the forefront of engagement and the digital strategy now needs to be considered holistically. Questions must be raised about how consumers spend their time and how they choose to interact, as clearly they don't rely on the telephone to speak to a member of staff anymore. Infrastructure must be in place to join the dots between customers channel-hopping from the start.

Some brands have found ways to use digital to increase engagement. E.on has created an "energy saving toolkit" which allows customers to compare bills with one another. Homeowners can compare these with anonymous homes of a similar size and type, as well as energy efficient E.on homes in their local area. Through creating a digital offering that is allowing users to check-in on their energy pricing there is a greater opportunity to engage on a more frequent basis than simply when a bill is received. There is recognition for the need to identify ways to encourage further interaction by bringing brand values closer to consumers' day-to-day.

The change in the way consumers think about energy in the context of their everyday lives is set to really evolve as connected devices in the home penetrate the market on a large scale. British Gas already operate smart meters through Hive, but as these devices become more complex customers are set to become a lot more aware of their day-to-day energy use. This will present energy providers with the opportunity to boost their personalised offering. Digital will form a key part of this change, with a real-time understanding of consumers' usage patterns central to activity.

With the more immediate threat of customer switching to grapple with, energy providers have a substantial job to do in thinking like a brand and helping customers live their lives more easily. Implementing digital change gets to the core of how people wish to interact with their energy companies. With customer loyalty an important factor for consumers, accessibility through digital channels should keep the flame alive for customers and providers alike.