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17 DECEMBER 2017

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Wednesday, 03 August 2016 10:41
Customers lacking the energy to leave
So change the business model
Loyalty made an appearance on the Radio 4 early morning Today programme this morning. Surprisingly it was during a piece on energy providers. Sadly, it wasn't an energy provider that brought up the subject, or Ofgem's spokesperson, but a frustrated presenter who asked whether encouraging customers to constantly move providers was anti-loyalty and not working for anyone.

That the UK energy system is not working is an understatement. The very poorest with pre-pay meters pay the most, and those who don't know how to swap, or who haven't the energy to carry out the task, are penalised by being moved to expensive standard variable tariffs.

Changing energy providers is not easy, and is very time consuming, even for tech-savvy knowledgeable people. The challenge for the old, those without computers or the educationally less able is just too great.


So what can be done?

Loyalty Magazine suggests the energy industry takes a leaf out of the telco mobile services provider handbook. They had a massive churn problem a decade ago, and they have addressed it relatively successfully. Most providers now engage with customers to persuade them to stay, rather than putting all their resources into finding new customers.

It is a long while since Bain & Co proved that retention is far more cost effective than trying to gain new customers. The loyalty industry knows this. Perhaps someone ought to mention it to Ofgem and the energy providers.

 
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