A few days ago we published an article
about the reluctance of customers to switch banks, despite the fact that many
people are unhappy with the service they receive from their bank, and even
despite the fact that they can get up to £220 in financial incentives for
switching to a new bank.
However, it seems that customers are
not as reluctant to switch energy suppliers. In fact figures published today show
that last year customers switched energy supplier at the highest rate in six
years, and are increasingly shopping around for the best deal.
According to Ofgem, UK energy
customers switched providers 7.7 million times last year, saving potentially
more than £200 a year.
In the coming weeks, standard gas and electricity
tariffs will go up at Npower, Scottish Power, Co-operative Energy and First
Utility, while EDF will raise electricity prices. Ofgem chief executive Dermot
Nolan said the increase in customer switching should act as a
"warning" to such suppliers.
"If they fail to keep prices
under control or do not provide a good service, they risk being punished as
customers vote with their feet." Mr Nolan said. "While today's
figures show good progress, the market is not as competitive as we would
like."
But according to Ofgem, about two thirds
of energy customers still remain on standard tariffs or pre-payment deals,
which often offer far worse value. They believe that, despite intense competition
and soaring fuel bills, not enough people switch suppliers regularly. In fact half of households have never switched suppliers, proving that you can lead a
horse to water, but you can’t make it drink!
Customer complaints about switching
dropped 36% last year, suggesting companies are also managing the process better,
the Energy Ombudsman said.
Lawrence Slade, Chief Executive of the
trade association Energy UK, said the high rate of switching showed that
"competition was working for more and more households. The industry is
committed to ensuring the market works for everyone and is taking action to
engage with loyal customers.”
But this still begs the question of
why people are now more readily prepared to switch their energy supplier, but are still
so reluctant to switch their bank.
This question, and the whole issue of why
people remain loyal to some companies but not to others, is answered in the book ‘The
Loyalty Gap - the 7 Secrets of Customer Loyalty’ by Darren Bugg, which is published later this year.