Time and effort stops consumers switching for a better electricity deal
- Consumers apathetic about switching electricity providers, 44% believe too much effort and 37% say information available too complex
- Almost half of those who searched for information about switching gave up saying it was ‘too hard’
- More than a third of people have never changed electricity providers
Monday, 20 August 2012 — While the increasing size of electricity bills is weighing heavily on the minds of most Australians, perceived barriers such as time, effort and a lack of clear information is preventing them from switching service providers to seek a better deal.
The survey, the first to be released as part of Ernst & Young’s Customer Experience Series, found the cost of electricity was one of the most significant ongoing expenses for consumers after rent or mortgage payments, with 92% of customers reporting that electricity bills accounted for a moderate to high amount of their total household running costs.
Ernst & Young Customer Leader, Advisory, John Rolland said Australians were feeling more and more powerless when it came to their electricity bills.
Mr Rolland said despite only 20% of customers currently in the market for a new provider, retailers’ ‘day of reckoning’ was fast approaching.
“The impacts of the national carbon pricing scheme, rollout of smart meters in some states, combined with rising electricity costs and increased pressure on discretionary spending are bringing us to a tipping point.
“This means it’s only a matter of time before we see a ‘consumer awakening’ of sorts, and a shift in the power balance in favour of the customer,” Mr Rolland said.
Some key insights of the Customer Experience Series - Utilities, include:
- More than a third of people (37%) have never switched providers
- Four out of five people always try to think of ways to reduce electricity use at home
- Of those customers who had changed electricity companies in the past, the main reasons for doing so were: being offered a better deal by a door-to-door salesperson (37%); moving house (23%); and/or getting a large bill from their current provider (16%)
- Similarly, of those who had considered switching providers, receiving a large power bill topped the list at 32%, followed by door-to-door sales (21%) and seeing an advertisement or promotion (20%)
- While door-to-door salespeople were the number one reason behind switching, 72% of respondents said that they didn’t trust salespeople who came to their door
- Three-quarters of customers have heard of smart meter technology, but only 14% understand how it works. In fact, one in five customers admitted they were unsure whether or not they already had a smart meter installed at their property.
Mr Rolland said the Customer Experience Series was created to look more closely at consumer decision-making with a particular focus on the pain-points as well as the opportunities to improve customers’ experiences.
“At the core of this consumer apathy is the fact the electricity sector has traditionally suffered from a lack of customer engagement,” Mr Rolland said.
“Purchasing electricity doesn’t require high involvement from customers as many of us don’t give it much thought beyond receiving and paying our monthly or quarterly bills.
“Combine this with the complexity of the market, the ‘hangover’ from the days of government-provided electricity and that some areas still have no choice in provider, and it’s not hard to understand why almost a third of people who have considered switching providers in the past never do anything about it.”
Almost half (47%) of those who were motivated to switch gave up after their initial search for information. This was due to three main reasons: believing there was too much time and effort needed to switch, feeling it wouldn’t be worthwhile, or on the flip side, thinking they should just stick with their existing provider as they likely offered a better deal.
“While it’s been on the agenda for some time, it’s clear there’s a need for greater transparency and an opportunity for retailers who can provide easier-to-access information for people looking to make the switch.
“Consumers are acutely aware of the potential benefits to changing electricity providers such as lower costs and greater control over their bills. They want a guaranteed better deal without the perceived time and hassle that goes along with shopping around and switching.
“And despite electricity retailers continuing to market themselves as extremely competitive, no one to date has fully taken advantage of consumers’ willingness to switch,” Mr Rolland said.
Mr Rolland said electricity retailers appeared to be following in the footsteps of the telecommunications industry which historically had a too-strong reliance on door-to-door salespeople to gain new customers despite very low trust on the side of consumers.
“It sounds simple enough but things have moved on. Consumers now want to choose exactly how they engage with their service providers,” Mr Rolland said.
“What’s needed in this industry is a much deeper understanding of customer segments and their differing needs, and of all the channels consumers use when making decisions. Once this is better understood, the next step will be a more seamless and integrated customer experience.
“The electricity retailer that manages to boost trust in its brand as well as genuinely reduce the effort it takes to switch will be the big winner – because customers will be too. By helping to empower customers and give them back the control they’re looking for, they have a golden opportunity to differentiate themselves and ultimately seize market share from their competitors.”The Customer Experience Series - Utilities findings are based on both quantitative and qualitative data collected from more than 620 electricity customers, across New South Wales, Victoria and Queensland. The Series also draws upon the findings of a 20-year Australian longitudinal study, AustraliaSCAN1 which identifies key social trends and measures culture change.
Other findings of the Customer Experience Series Utilities research:
- Of the 29% of customers who gave up on the idea of changing their electricity company 17% did so because it was ‘inconvenient’, 15% because they ‘didn’t think switching would be worthwhile’ and 13% because they ‘got distracted and forgot about it’.
- Only 17% of people who sought out information ended up switching provider.
- People who had switched providers were divided when it came to rating how the new provider matched their expectations, with 53% rating them well, 32% neutral and 15% not well.
- Phone is still the preferred channel of contact with electricity companies, with 67% of consumers using this method.
- The most common reason for customers contacting an electricity provider was for ‘general enquiries’ (46%), followed closely by switching related enquiries (37%).
New South Wales
- Sydney residents were more likely to have given up on trying to switch providers due to ‘too much effort’ being required, with 23% citing this as their reason for not changing compared to just 14% across other areas.
- Customers living in Melbourne were significantly more likely to have switched their electricity provider in the past – 55% compared to the overall average of 38%.
- Almost half (48%) of Victorians surveyed reported they had a smart meter installed at their property, more than double the overall figure of 20%.
- People living in regional Queensland were the least likely to have ever changed their electricity provider, with only 22% reporting they had switched compared to 38% across all the states.
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Ranked in order, the least wasteful industries based on how much time their workers say is wasted on a typical day were:
- Professional, scientific and technical services (17%) and health care and social assistance (17%)
- Financial and insurance services (19%)
- Trade- retail and wholesale (19%), public sector (19%), manufacturing (19%), and
- Construction and mining (20%).
Based on workers rating their organisation’s efficiency, the ranking changes to:
- Financial and insurance services (68%)
- Professional, scientific and technical services (66%)
- Health care and social assistance (64%)
- Construction and mining (63%)
- Trade (retail & wholesale) (60%)
- Public sector (56%), and
- Manufacturing (55%).
Ranked in order, the most productive states based on the least amount of time wasted on an average day were:
- Western Australia (16% of day wasted)
- South Australia (17%), ACT (17%) and Tasmania (17%)
- New South Wales (18%)
- Victoria (19%) and Queensland (19%), and
- NT (29%).
Based on workers’ views about the efficiency of their organisation, the order changes to:
- Western Australia (66%) and South Australia (66%)
- Queensland (62%)
- New South Wales (61%), and Victoria (61%)
- NT (59%) and ACT (59%)
- Tasmania (47%).
- 68% of respondents are proud to work for their employer
- 69% believe their work is valued
- 78% have a clear vision of what is expected of them in their role.
- 36% do not agree that their organisation’s processes and systems support role execution
- 41% do not agree that their organisation has the right level of focus and attention on effectiveness and efficiency
- 38% do not agree that their organisation operates effectively.
- 32% say they are planning to leave their organisation in the next 12 months
- Only 62% believe their skills are being strongly utilised by their employer
- 35% are already pursuing external opportunities. Approximately half of all respondents do not agree that there is a clear direction for their career at their current organisation.
- 51% say further innovation would increase productivity
- 44% do not agree their organisation gives innovation the right focus and attention
- 41% agree that innovation is not adequately recognised and rewarded
- 48% of people agree that there is a culture of continuous improvement in their organisation, 33% were neutral and 19% disagreed.
- 62% of respondents agree technology is important to their role
- 40% say technology has increased productivity levels
- The professional, scientific and technical sectors fare best on the technology front, with 55% of employees acknowledging technology has increased productivity levels over the past 12 months.
- 65% say additional, new or improved technology would make their organisation more productive over the longer term
- 39% don’t have access to the right technology and 42% don’t have the right training to apply technology effectively
- The construction and resources; and retail and wholesale trade sectors rank the highest in terms of technology wastage with at least 10% per week.