Ofgem/BMG Engagement: Part III Suppliers

In August 2014 Ofgem appointed BMG to conduct research on ‘Micro and Small Business Engagement in Energy Markets’.

Its conclusions have now been published

Although the sample was relatively small at 1,502 and was not randomised but focussed on those who “were most likely to be affected by reforms resulting from Ofgem’s Retail Market Review”, the insight provided is still valuable in understanding the psyche, trust and understanding of businesses engaging in the energy market.

In this third review of the survey’s findings we focus on the energy suppliers.

Engaging with suppliers

45% of businesses have contacted their energy supplier in the last year.
65% of businesses contacted their energy supplier to seek information
20% of businesses contacted their energy supplier to make a complaint
60% of businesses who have shopped around for a new supplier or tariff contacted their supplier
59% of businesses that have switched in the last year were more likely than average to have contacted their supplier
47% of businesses with a fixed term contract were more likely than average to have contacted their supplier
46% of businesses cite their current supplier as a source of information when choosing energy contracts.
33% of businesses cite their current supplier as their main source of energy information.
44% of businesses without employees use their supplier as their information source

Business Juice comment: this is concerning and the root of the market apathy amongst smaller businesses. By limiting their market interaction engagement and the ability to strike advantageous deals are inevitably decreased.

26% of businesses that used brokers contacted their supplier regarding complaints compared to 19% of businesses who did not use a broker
26% of businesses consult alternative suppliers for information
22% of businesses use alternative suppliers as their main source of information for making their energy contracting choice
23% of businesses consult their previous supplier, but none relied on them as their main information source with respect to choosing their current contract or tariff.
31% of businesses who contacted their supplier in the last 12 months did so regarding the billing process
24% of businesses who contacted their supplier in the last 12 months did so regarding the accuracy of their bill
23% of businesses who contacted their supplier in the last 12 months did so regarding their existing tariff
7% of businesses who contacted their supplier in the last 12 months did so for information on changing supplier
31% of businesses who contacted their supplier in the last 12 months did so regarding the billing process

Service quality from suppliers

55% of businesses that contacted suppliers were satisfied with the time it took the supplier to respond to their query or complaint
57% of businesses were satisfied with the solution they offered
47% of businesses were satisfied with the follow up communication.
23% of businesses that contacted suppliers were dissatisfied with the time it took them to respond to their query and complaint
22% of businesses were dissatisfied with the solution they offered
25% of businesses were dissatisfied with the follow up communication.

Back billing

14% of businesses reported having experienced back billing.
18% of businesses in the transport, food and accommodation industries received a back bill
72% of businesses who were back billed were done so for a period within 12 months preceding the date of the bill
18% of businesses received a back-bill for a period more than 12 months ago.
10% of businesses reported back billing on their gas contracts
15% of businesses reported back billing on their electricity contracts
17% of businesses that shopped around in the last year report back billing
20% of businesses who switched supplier in the last year reported back billing

Supplier sales experience

77% of businesses that have renewed their contract with their supplier were satisfied with the experience of renegotiating, extending or rolling-over their contract

Business Juice comment: this statistic, though similarly strong, fares badly against the level of satisfaction with brokers on this measure who score 81%.

Supplier satisfaction

69% of businesses were satisfied with the degree to which their energy supplier meets their needs
10% of businesses were dissatisfied with the degree to which their energy supplier meets their needs
50% of businesses were satisfied with their energy supplier with regard to value for money
18% of businesses were dissatisfied with their energy supplier with regard to value for money
49% of businesses were satisfied with the information that their energy supplier provides on available tariffs and options
21% of businesses were satisfied with the information that their energy supplier provides on available tariffs and options
66% of businesses were satisfied with the service provided by their energy supplier.
11% of businesses were dissatisfied with the service provided by their energy supplier.
18% of businesses would recommend their energy supplier to others.
57% of businesses would act as detractors to their energy suppliers.

Business Juice comment: It isn’t easy being an energy supplier, if that was in doubt, the fact that 66% of businesses were satisfied with their energy supplier but only 18% would advocate them represents an imbalance exacerbated by the 57% of businesses who would actively detract from the supplier’s worth.

Trust in suppliers

Ofgem/BMG comment: There is evidence of an underlying distrust of energy suppliers’ ability to be fair in their dealings with business customers.

40% of businesses said they distrust or completely distrust energy suppliers
28% of businesses said they trust or completely trust energy suppliers
31% of businesses remained neutral in their views.
25% of businesses with 10-49 employees trust energy suppliers
30% of businesses without employees trust then
39% of businesses without employees distrust suppliers
41% of businesses with 10-49 employees distrust them
51% of businesses that have switched in the last 12 months distrust energy suppliers to be fair
46% of businesses who has some contact with suppliers in the preceding 12 months distrust them
35% of businesses who had not contacted suppliers in the preceding 12 months distrusted them.

Ofgem/BMG comment: This suggests some negative impact from recent contact.

Business Juice comment: Energy suppliers have a tough time amongst their customers, with 55% satisfaction with service response and 66% satisfaction overall suppliers still face 40% of businesses customers distrusting them and their sales performance though well rated at 77% compares unfavourably with brokers who achieve 81%. Indeed Ofgem conclude that the greater interaction between customer and supplier, however prompted, leads to greater distrust. If ever a market needed an intermediary to conciliate between the two parties it is business energy.