Insights

Poor customer service is making new energy suppliers obsolete

Energy suppliers are facing unprecedented change.  An increasing number of ‘disrupter’ organisations, demanding new regulations and emerging technologies provide a perfect storm for energy suppliers.   Existing business models are under real threat from artificial intelligence,  automation, decentralised energy, IoT and blockchain technology.  Put simply,  the face of energy as we know it will change significantly in the coming years.  With so much going on what should suppliers focus on in 2019?

In the evening, high voltage towers silhouette and a beautiful sunset

We believe that the number one priority of Energy Suppliers in 2019 should be customer services because excellent customer service separates ordinary suppliers from great suppliers; poor customer service is making new suppliers obsolete; and customer service expectations are increasing across the board.

Great energy suppliers have great customer service

OVO Energy is one of the fastest growing suppliers of the last decade , they now have over 1m customers and are the 7th largest supplier in the UK. OVO  has been leading the pack in customer service scores for years. Recently they scoped the top prize from Uswitch for Overall Customer Satisfaction survey [1].  It is the fourth time in five years that OVO walked away with Uswitch’s top prize.  OVO are also seen high on most other customer service scoreboards, for instance, they topped Which?’s customer satisfaction survey in 2015 and 2016, but OVO Energy is not just a well-selected outlier.  Octopus Energy came in second in the same Uswitch Awards with 87 %, and won the ‘Most Likely to be Recommended’ award in the same competition,  and they scooped the top price in Which?’ 2019 customer survey.   Bulb was Uswitch’s 2017 runner up and finished 4th this time.  All three companies excel at customer services and they’re some of the leading challenger brands posting significant growth numbers with very competitive tariffs.   

Conversely, poor customer services scores are a clear indicator of a struggling firm

 

We recognise that low entry barriers make companies more likely to enter the market without meeting our expectations for customer service and make it more likely that they will fail.

Ofgem State of the Market Report 2018

Which?’s 2019 customer survey [2] also demonstrates that poor customer services are directly related to struggling firms.  At the bottom of Which?’s 2019 table, in 30th place is  Solarplicity. Ofgem recently banned them from taking on new clients.  In position 29 out of 30 is Spark Energy. Unfortunately, they have ceased trading.  A closer look at the table’s footnotes shows that Economy Energy was initially in 29th and Extra Energy in 26th position, but by the time the survey was complete, they too had ceased trading.

Considering the impact of poor customer service, Citizens Advice are now calling for tighter licensing rules for new energy companies to improve customer services:  Gillian Guy, Chief Executive of Citizens Advice, said:

“We have seen too many companies who were completely unprepared to offer acceptable levels of service. The regulator needs to take urgent action by tightening rules around supplier licenses, monitoring existing firms more closely and enforcing standards where these aren’t met. [3]

Monitoring suppliers with a poor  customer service record could be an effective way to raise minimum standards across the industry, but customer service standards are not fixed.

Unfortunately, consumer expectations for customer service are not static and are rising across all industries.

Customers have grown used to a seamless experience provided by Amazon, Google, Uber and most other online providers. The younger, more digitally engaged generation expects to do business on their phone and at the speed of a few clicks. Anything falling short of this standard is not good enough.  Unfortunately, most energy suppliers fall significantly short of this ‘seamless’ standard and have a long way to go before they offer the experience  of their tech counterparts. However, in order to retain customers it is more important than ever to improve the customer experience.   Salesforce’s “State of the Connected Customer [4]” report surveyed over 6,700 consumers and business buyers globally to understand customer preferences. It provides a clear picture of customer expectations:  80% of customers say the experience a company provides is as important as its products/services.  More interesting is that  57% percent of customers stated they actually stopped buying from a company because a competitor provided a better experience, clearly demonstrating the consequences of poor customer service. A trend seen in the energy industry where customers simply moved from their incumbent supplier to challenger brands.

What is good for the customer is good for suppliers

It goes without saying, but serves as a good reminder, what is good for the customer is also good for the supplier. Excellent customer service increases customer loyalty; generates positive word of mouth; and builds a supplier’s brand. Conversely, existing suppliers that are unable to offer great customer service will lose out to those suppliers that can.  Ultimately the winners in the energy retail market will be those firms that have a laser focus on customer service and deliver a seamless customer experience, and as we’ve seen those that don’t will fall by the wayside. It’s easy to be customer focused when you first start out, but much harder when the company grows.  So how do companies develop, or maintain that laser focus on customer services?

Here are some guidelines, these guidelines apply to most suppliers, but we’ve focused specifically on smaller suppliers, as are most at risk of failing:

1. Have a laser focus on customer services – involve everyone

Laser focus means getting everyone involved, including senior staff.  The customer cannot be an afterthought it needs to be at the top of mind for every employee in the company. How to do this?

  • Celebrate excellent customer service  – Make it a theme to celebrate excellent customer services through weekly  ‘shout outs’ based on great customer feedbacks and hand out awards to best customer service agents. 
  • Senior Staff buddy up in the call centre  – It is essential that senior staff are entirely on-board with customer services. Having a buddy programme where even the most senior of people spend half a day in the call centre every six months ensures customer service is alive and well,  and that senior management understands the problems faced by customer services. It also is amazing to see how quickly customer service issues are addressed if senior people experience these issues themselves.

2. Listen to feedback and monitor your performance

  • Measure it – Using the adage; ‘you can’t manage what you can’t measure’, having KPIs to track customer services keeps it at the top of mind. Don’t know what to track, don’t worry just ensure you have a Customer Service related KPI for the next quarter. You can improve your KPIs from here; even a very basic KPI for customer services keeps it in focus and ‘alive’ within the business.
  • Track Social Media – what are my customers saying? Negative comments are expected, and quite frankly if you don’t have any negative comments, it means you’re not pushing hard enough.  However, keeping an eye out for patterns and repeating themes allows you to start making improvements. Things like; the on-hold music is terrible, customer services never have my details when I phone, the login screen is confusing; are all easily fixed.
  • Ask your agents for feedback – Provide your call centre agents with digital feedback forms and ask them, what is going well and what can be improved?  Having a simple, but systematic way to collate and analyse feedback from those closest to the customer allows you to be truly customer focused and deliver a better service.

3. Think big and start with the right tools

It is easy for a company to provide exceptional customer service when it has  25,000 customers, but can it still deliver the same customer service when it has 250,000 customers? What about 1 million? Sadly, the answer most of the time is no. 

In order to keep costs down new suppliers often use basic solutions to manage their customers. These solutions often work ‘okay’ when customer numbers are small, but when the company grows these solutions stop being effective. At this point, it is tough to embark on an expensive implementation programme for, say a new CRM, retrain staff, and implement new processes and ways of working.  The company ‘makes do’ until it is forced to upgrade, often at the expense of its customers.

Most cloud-based  software solutions are fully elastic these days; this means it grows with the company. It can be used when the company has 25 customers and can  simply scale up from there. Yes,  it will be more expensive at the start of the journey,  but it repays massively as the company grows; especially taking into account the number of suppliers that have been penalized by Ofgem, or that have ceased trading.  

These are just the basics; this article is part of a wider series of looking at customer services for energy and utility suppliers. In our next article, we will look at using technology to improve customer services.

[1] https://www.uswitch.com/gas-electricity/campaigns/uswitch-energy-awards/

[2] https://www.which.co.uk/reviews/energy-companies/article/best-and-worst-energy-companies/which-energy-survey-results

[3] https://www.citizensadvice.org.uk/about-us/how-citizens-advice-works/media/press-releases/increasing-numbers-of-small-and-newer-energy-suppliers-delivering-poor-customer-service/

[4] https://www.salesforce.com/blog/2018/06/digital-customers-research.html