Good Energy sees fall in domestic customers as it targets SMEs

Green energy supplier Good Energy has seen a “continued but anticipated” fall in domestic customers as it continues to target businesses.

Although overall customer numbers increased by 1.4 per cent to 261,700, the Chippenham-based retailer said the domestic supply market price continued to be a “sticking point”.

Founder Juliet Davenport told Utility Week that the company had been increasingly targeting business customers but insisted it was not seeking to move away from the domestic market.

In its half-year results to 30 June, published today (10 September), Good Energy said its business supply customer numbers saw “significant growth”, largely due to an increase in SME clients and an increased investment in its business sales team.

Businesses make up 47 per cent of the supplier’s customer base, while domestic clients make up 53 per cent. This compares to 46 per cent and 54 per cent in the same period last year.

Domestic supply customers however make up the majority of the volume, with 73.9 per cent – down from 78 per cent year-on-year. Business supply volumes represent 26.1 per cent, up from 22 per cent in 2018.

The company said it increased investment in its business supply team personnel, technical resources and overall customer service and sales capabilities.

Specifically it says it is realising the benefits of the investment in its customer relationship management (CRM) system, implemented in the second half of 2018.

This has enabled the business team to make a more targeted approach to growing its customer base, which has been demonstrated by the growth in new business customers in the first half of 2019; the strong confirmed pipeline for the second half of 2019 and high retention rates for existing customers.

Furthermore, there was a surge in domestic feed-in-tariff (FIT) customers before the scheme closure in Q1 this year.

The company has also invested in electric vehicle (EV) charger locator ZapMap and has commenced its rollout of second-generation (SMETS2) smart meters.

The supplier saw total revenue increase by 2.8 per cent to £63.5 million, with profit before tax rising 8 per cent to £2.5 million.

Compared to H1 2018, net debt fell by 31 per cent, while there was also a small increase in the dividend.

Speaking to Utility Week, Davenport said the move towards attracting more business customers has been part of a two-year strategy but added that the company has not “pulled back from the domestic market”.

She said: “We took a look at the market and we saw a lot of the new entrants coming in and doing negative margin sales basically with a view to build a customer base, bring the cost down and move into profitability or sell the business.

“That  wasn’t really a business model we wanted to engage with. We have not pulled back from the domestic market, we have loads of domestic customers, we support them with great service but we wanted to focus on actually diversifying into the business market. We saw a lot of business customers making the commitment to a 100 per cent renewable, wanting to work with a genuinely renewable company that was making a difference.

“We would like to see our growth in domestic market for the future but we recognise that price elasticity has shifted in that market, and also we need to have a wider service offering to make sure that customers understand that not only are they getting a great quality product from our electricity but they can get added value from other services including demand side response, batteries and EVs.”

Davenport added in a statement accompanying the results that Ofgem’s recent decision to exempt Good Energy from the price cap provides “validation of our model”.

“It is recognition that we support renewable generation across the UK and that our customers are choosing to be a part of that support”, she added.

You can read Utility Week’s interview with Juliet Davenport here