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Lessons from small firms for the big six

11 May 2010

Utility companies should not throw in the towel when it comes to customer service. At least not yet. Once again the big six UK energy companies have been found wanting when it comes to customer service. In the latest Which? customer survey of 8,000 members, the number of utility customers who said they were satisfied with the service they received ranged from Npower's paltry 27 per cent to a not exactly stellar 50 per cent from customers of Scottish and Southern Energy. And yet we all know that customer satisfaction is significant if companies are to retain their customers, and that is the key to success in most organisations. That got me thinking. Improving customer retention in utilities has to be one of the hardest tasks in the world. First, do customers even want a relationship with their utility supplier? There's little reason to contact one - most customers now pay by direct debit. When customers do call, they're likely to be upset or stressed because of a mistake on the part of the utility (an incorrect bill or a high meter estimate, for example), because they are having problems paying bills or because they are moving house. As consumers we are looking for quick and seamless responses to our queries at a time that suits us. So it can't be easy for companies to wow customers, or to convince them not to follow the advice of the media to look for the cheapest energy prices. Instead, utility companies must rely on apathy rather than enthusiasm. Not a particularly strong foundation upon which a company can hope to build a strategy for improving customer retention. Second, the industry, especially the big six, is doing little to change consumers' perceptions that there's not much difference between them, except for the price. Why shouldn't they simply follow the media's advice and look for the best tariff? It is easy to do by visiting one of the now ubiquitous price comparison websites. (I typed the phrase "utility provider" into Google, and all but one of the results on the first two pages were for switching or price-comparison websites.) When they have found the cheapest price, the energy regulator has made it easy for them to change supplier. There's no pain and little risk these days. Once a customer has realised how easy it is to change their utility supplier, they are even less likely to be loyal to the new provider. After all, there appears to be nothing to differentiate them except price, and two weeks after a customer has picked the cheapest supplier it will lose its position at the bottom of the tariff table. But utility companies can't just throw in the towel, not if they want to defend their market shares, let alone grow. Our recent research into consumer attitudes to customer service showed that utility providers in the UK were most likely to lose customers as a direct result of bad service. We have to accept that consumers don't need much excuse to start searching for another supplier, but service provision plays a part in keeping customers. If smaller suppliers can keep customers satisfied, why can't the big six? They must start focusing on their customers' needs, fixing broken processes, implementing the right technology and empowering their agents to focus on satisfying customers. Accepting that the company will lose 30,000-odd customers in a month but gain an equal number - and focusing primarily on acquiring replacement customers rather than on keeping current customers - is not a long-term strategy for success. Especially when there are organisations such as Which? that highlight companies that are doing it right as well as those that are doing it cheap. Guy Tweedale, senior vice-president, European operations, Jacada
Source: Disconnector

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