How Have Customer Retention Programs Changed in the UK Power Industry in the Last 10 Years?


Leading British energy suppliers offer special deals to loyal clients as chronic concerns over the state of the retail market emerge. Players like Npower and EDF Energy are also mulling customer retention programs for clients who stick with their standard tariffs, including charge-free boiler services. The UK power industry has been looking at loyalty programs to offer customers benefit for not switching tariff. British Gas, in 2017, launched its customer rewards scheme from April including energy discounts and Sky TV deals for its loyal customers.

Given that the Centrica owned firm is the largest utility provider for Britain, supplying 9 million households, of which 74 percent or 6.6 million are on its costliest standard tariff, this has long-standing implications for the UK power industry.

  • The Increasing Sophistication of Reward Programs

British Gas has unveiled one of the most comprehensive reward programs in April 2017. Nearly all its energy customers and service customers are eligible for the British Gas Rewards. One needs to sign up to the scheme online and qualify through paperless billing. Consequently, individuals are set to receive a selection of personalised offers. Sky entertainment deals are being offered to British Gas customers part of the reward program. Loyalty deals for energy are also in place.

Customers who have been with British Gas for the longest time period are set to enjoy the biggest discounts on their bills. Customers will also access boiling and heating cover including annual service visits thanks to a new energy tariff connected with the home-care services at British Gas along with another bundled with Hive Active Heating and other types of connected home technologies. 

This will enable customers to save by remaining in control of consumption. Other energy tariff bundles such as home insurance could also be included. The Big Six suppliers as they are known, including EDF and Npower will be considering starting their loyalty schemes, too.

  • Competitive Markets Emerge

British Gas knows that in competitive energy and services markets, consumers have many choices and utility businesses need to work hard to not just win new business, but retain existing clients as well. Supply providers are catering to a very diverse base and what is required and needed from them varies considerably. Rewards programs offer consumers more than just energy requirements.

It is vital to ensure customers make active and informed choices about energy tariffs and remain engaged. Customer retention programs have become very important for utility firms in the UK as liberalisation in the EU markets and worldwide industry make it easy for customers to switch providers. Only ten years back, energy firms in the UK did not have to consider customer loyalty because individuals had limited choices in terms of power suppliers. Liberalisation and retention programs have changed the scene now. Customers can now easily make the switch so much so that the UK power industry is paying more attention to customer loyalty.

  • The Value of Retention

Customer loyalty has become critical for power firms at a time when customer acquisition costs and churn rates are increasing. Further, the margins are also under pressure. Loyal customers need to build a profitable business because they stay with a utility firm they believe in. They are also more likely to purchase additional services, increasing their customer lifetime value.

They also require less effort to serve and interact with. Bain & Co conducted research which revealed that
utility executives need to move past sensitive pricing and improve their services. They need to promote a positive brand image if they expect to keep customers.

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