Can Energy Retailers Create a Branding Effect and Gain Their Customers’ Loyalty?
According to McKinsey & Company, 75% of domestic energy consumers are interested in changing their current provider, with 20% having already done so in 2023. The leading factors for switching remain consistent: pricing and poor customer service.
The free retail energy market has always been marked by the “price war,” where low-price energy retailers often emerge victorious. While this strategy can be effective during stable periods, volatile times are challenging for these low-price offerings. For instance, during the 2021 energy crisis, 31 UK suppliers who promised attractive but unreliable low-price tariffs went bankrupt. The government had to step in with a state-sponsored rescue package costing £37bn, which was ultimately covered by taxpayers
Alert! Volatility is still around the corner! The energy transition is causing significant disruption, leading to a highly competitive market characterized by low customer engagement and high churn rates. This results in lower profit margins than anticipated, typically ranging from 0.5% to 7% in the best cases.
Moreover, upcoming challenges could exacerbate the situation. The EU directive 2019/944 mandates that by 2026, the technical process of switching suppliers should take no longer than 24 hours and be possible on any working day. Additionally, renewable energy technologies with zero marginal costs could potentially drive electricity prices to zero in the near future.
However, this disruption also brings new green opportunities. According to EY, 81% of energy consumers want their providers to enhance their new energy product and service journey. McKinsey & Company agrees, remarking that energy retailers have opportunities to offer value to current customers and attract those willing to switch providers. Their statistics indicate that more than 25% of customers who have purchased energy-related products from third parties are willing to switch to their energy retailer.
Don’t panic energy retailers, now Enaptiq is here! Our customer analytics plug-in SaaS platform turns fragmented customer data into valuable insights, enabling retailers to understand their customers’ needs and preferences in real-time. By leveraging Enaptiq’s comprehensive 360° customer profiles, energy retailers can move beyond the price wars and create lasting loyalty through superior service and innovative solutions.
At Enaptiq, we empower energy retailers to build a brand that not only survives but thrives in the new energy era and proactively address customer concerns, personalize their offerings, and enhance the overall customer experience.
