In the past, UK utility providers have struggled with customer retention as they were losing hard earned customers and their relationships because they didn't track them when they moved house. With millions moving home every year, this was a huge concern.
Whilst UK utility providers spent millions on advertising and marketing in a bid to persuade customers to switch to them, they were overlooking an opportunity to catch home movers. These providers had no firm marketing strategies to attract home movers, and nor did they have a strategy in place to track existing customers who move house.
Large scale attrition
By tracking consumers by house rather than as an individual, there is a continual loss of customers through this wide gap in the sales process. Utilities must act quickly to avoid losing the customers they have built up. No matter how good the CRM system, a valuable customer relationship is negated if you lose track of them because you no longer know where they live.
Nearly 7 million customers move home every year in the deregulated energy markets of Germany, Sweden and the UK, and a further 5 million move home every year in the regulated markets of France, Italy, Spain and the Netherlands. And these European utility providers are spending millions on advertising campaigns to acquire fickle consumers who will switch for a better deal, whilst ignoring some of their best customers as they leave via the back door by moving to another area. Many home movers will switch to the provider which has traditionally served their new residence, either for convenience or by simply not realizing they are able to change providers.
Apart from the obvious disadvantage of losing the revenue each customer generates, utilities also lose the customer knowledge they have built up and must start the sales and marketing process from scratch. This means that many utilities are paying acquisition marketing rates again for customers with whom they already have relationships — a situation that is far from ideal. Research shows that in many cases those customers could have been retained with a well-timed telephone call or mailshot prior to their departure, or soon after their arrival.
Home moving customers are going through one of the most stressful periods in their lives and need to be treated as such. Utilities that show they understand this experience, and help to make the process easier, will build customer loyalty whilst better positioning themselves to retain or even acquire customers. Utilities must try to become a natural part of the 'moving experience' by partnering with one or more of the moving intermediaries — the letting or estate agent, furniture movers and surveyors, for example.
Owing to new innovations in the relocation-technology market, moving has never been easier. If you are in the process of moving, you can use a home setup service that will update your address across all accounts and setup your energy, council tax, water, broadband and more. Now European utility providers like E. ON Energy UK, British Gas, and RWE are linking with such services, and tying customers in with special offers. By providing customers with time and cost savings at this crucial period their service can be retained and the likelihood of selling additional products improved.
As time passed, UK utilities adapted
Utility providers have now changed for the better. In the UK, utility companies have become much more strategic in how they approach customer retention strategies. They are leveraging technology, hosting hackathon events, and building transparency into their billing processes, among other things. Here's a snapshot of some of the changes seen in the UK utility industry:
- 75 percent of utility companies in the UK are using focus groups to learn about their customers
- 34 percent are using hackathon style events to discover new business ideas and solutions
- UK utility companies have been on a buying spree acquiring new renewable technology sources
- A focus on transparency in the billing process has shown a high return on increased customer satisfaction
Changing old business models is never easy, but utility companies are proving they are not so old school anymore.
This article was updated on 6/17/2020.