The itch to switch: Research finds two thirds of consumers would change their energy provider due to poor customer experience | NTT DATA

Thu, 09 February 2023

The itch to switch: Research finds two thirds of consumers would change their energy provider due to poor customer experience

New research from NTT DATA UK&I shows that reduced price competition from energy providers has seen heightened competition in customer experience.

Today, leading digital innovator for the energy industry, NTT DATA UK&I, revealed new research which found that consumers are less likely to switch energy providers than ever before. However, despite a general reluctance to switch, two thirds of respondents agreed that they would change their energy provider due to poor customer experience, highlighting a new battleground for energy providers looking to differentiate themselves during the cost-of-living crisis.

With energy prices at record highs this winter and offsetting measures for household bills gathering record interest from consumers, such as National Grid’s demand flexibility service, there’s clear public demand for cheaper electricity and gas. However, with wholesale energy prices remaining stubbornly high, providers have little room to compete on price. In the absence of price competition, the differentiator between energy providers is now becoming the customer experience domain.

According to new research from NTT DATA UK&I, energy providers are facing a major drop in willingness from consumers to switch. With high tariffs constantly in the headlines and prices between energy providers similar across the board, only 23% of consumers are planning to change energy providers in the next year. This is a huge contrast to recent years as, prior to 2021, almost half of consumers (48%) used to regularly change energy providers to seek the best fixed deal.

The research findings also show:

  • Over two thirds (67%) of consumers are currently on their energy supplier’s standard variable tariff
  • 23% are on a fixed deal that is expiring in the next year and 9% are on a fixed deal that is fixed for more than a year
  • 63% of consumers plan to stay on the standard variable because it’s cheaper and they’re not locked in

However, despite lower appetites for switching providers, the research identified customer experience as the one key area that can make a difference for providers and encourage switching. Two thirds (66%) of consumers say that a poor customer experience would make them change energy providers, with 1 in 6 people (16%) saying that they have already changed providers due to a poor customer experience.

Eduardo Fernandez, Head of Gas, Water and Power at NTT DATA UK&I, commented: “The second half of 2022 saw energy demand drop due to high prices, with consumers also pushing back provider switches to avoid lock-in to expensive fixed rates. In this market, every possible advantage can prove critical to a provider's bottom line and the biggest advantage for providers wanting to get on top of tough market conditions is to transform their customer experience.

“With two-thirds of consumers reporting that customer experience could be key to them changing providers, industry players need to remember that digital services, which drive quality customer experiences, are vital for winning over consumers and gaining a competitive advantage in the current market.”

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