Report claims poor service will drive away UK utility customers

24 Jan 2002 – A new report from industry analysts Datamonitor claims that UK utilities may be wasting resources in trying to attract new customers when they are losing just as many existing accounts through poor service. Datamonitor suggest utilities would be better served getting to know their customers rather than trying to poach new ones from rival companies.

The report, released today, says three out of five utility customers walk away with out giving a reason while at the same time, three out of ten customers stated that they would take an additional service from their utility supplier, were it not for poor customer service.

As such, Datamonitor suggests that rather than frantically throwing money into sales and marketing strategies, suppliers would be better advised to re-evaluate their customer service strategies and promote customer satisfaction amongst their existing base. In practical terms, rather than always chasing after uncharted territory, they should look to develop their existing relationships by ironing out the problems and encouraging more commitment on both sides.

Datamonitor say that utility companies are spending #6.7m ($10m) per week on marketing and new business drives.

The research suggests that price savings currently available through switching are not particularly significant and as such, many customers place more value on customer service and convenience. The report claims that if suppliers were better able to understand their customers and respond to their needs and problems, the chances of them switching would be greatly reduced.

There is some good news for utility companies with Datamonitor reporting that three out of ten utility customers would spend more with their supplier were it not for the poor customer service. The report questions whether utilities can raise their customer service levels for those customers who are most likely to spend more and prize open this untapped purse?

The report also warned that almost 15 per cent UK customers want to switch utility supplier but have not as yet done so. One reason may be the process itself. A recent government committee complained that the procedure for switching suppliers was too complicated and electricity and gas industry watchdog Ofgem has issued two warnings in the last six months concerning overzealous sales tactics.

Datamonitor believe their findings show that a significant proportion of utility customers are less than content with their current supplier and suggest that utilities should use their in-house databases to get to know their customers on an individual basis, thus identify both difficulties and opportunities before it is too late.

Alex Patient, utilities analyst at Datamonitor, said, “In an age of choice, UK customers are demanding a higher level of service in return for increased spend and continued business with their supplier. Whilst price savings may form part of switching motivations, excellent service can limit their effect and reap rewards of its own.” Patient added, “If suppliers and customers are to benefit, the supplier must get to know their customers better, and help them in their hours of need. By helping the customer, they can helping themselves and, most importantly, the bottom line.”

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