Price savings or quality of service – or both?

An overall ranking of service would help consumers judge which suppliers are worth shortlisting.

Almost every day we are told of the tariff savings available if we switch energy supplier. The Competition and Markets Authority (CMA) recommended that Ofgem urge customers to engage more, and to switch to better priced deals. Ofgem has hailed the success of its collective switch trial, after which 22.4 per cent of customers switched to lower priced suppliers and saved an average of around £300 per year.

But wait! Last year many of the lowest price suppliers later put customers on to higher priced default tariffs. Some suddenly or repeatedly increased their tariffs. A dozen or so suppliers went bust. Some suppliers have been almost uncontactable. Ofgem has banned a few suppliers from taking more customers until their customer service record improves.

So, how can customers moving to a lower priced supplier today be sure they are moving to a better supplier over the longer term?

To its credit, Ofgem “required Energyhelpline to consider customer service when selecting the winning collective switch tariff to offer customers”. How best to do this?

Increasingly, price comparison websites and other third party intermediaries are developing their own indices of customer service. But how comprehensive are they, and how to choose between them?

An Overall Customer Service score

I have elsewhere suggested an Overall Customer Service score. This combines the rankings from three separate, independent, recent and important sources.

Citizens Advice compares suppliers every three months across five different categories of customer service based on objective data about complaints, billing, switching, etc. The latest ratings are for July-Sept 2018.

Which? compares suppliers annually on similar but more categories, including value for money, and rates based on systematic interviews with customers. The latest survey was in September 2018.

Trustpilot reflects the subjective views of customers themselves. Its Trust score is updated daily as and when customers feel inclined – or are invited – to report their experience of prices, customer service, contactability, or whatever else interests or concerns them.

My proposed Overall Customer Service score is the simple average of these three sets of ratings (normalised to a value out of five). As of today, a total of 26 suppliers have ratings from all three sources and can thereby be scored. The table of supplier rankings, above, shows the result.

The suppliers fall naturally into four divisions: excellent, good, mediocre, and poor. Broadly speaking, the medium-sized suppliers are in the top two divisions, and the six large suppliers are in the bottom two divisions, while a dozen or so small suppliers are scattered across the divisions.

This is not to say that suppliers in the lower divisions always provide poor service to all customers. There must be many existing customers who don’t have strong concerns about tariff increases or changes in direct debit levels, and who have not recently switched, for whom existing customer contact – or lack of it – is just fine. But these suppliers do not seem to have won over other customers for whom such aspects of service are important.

There are another 40 or so small suppliers not included in the table. They may be good, bad or indifferent – we just don’t know enough about them yet to include them in the rankings. But most already have Trustpilot scores, and hopefully can be included when Citizens Advice and Which? repeat and extend their surveys.

As noted, some comparison websites have supplier rating systems too. That of Uswitch is shown in the last column. The scores for 2018 and 2019 are based on YouGov surveys in November 2017 and November 2018, respectively. The main change is a slight downrating of the large suppliers. My Overall Customer Service score reflects a wider range of inputs and has a finer classification. But the two rating systems give broadly consistent results.

Evaluating the offers available today

Now consider the offers of savings available today. On 4 March Uswitch noted that all the large suppliers and nine smaller suppliers had announced price increases of around 10 per cent. It was nonetheless able to publish a “best buy” table of ten offers of savings of between £258 and £324 on the tariff cap level of £1,254 a year.

How should customers choose between these suppliers? Or do they have to look beyond them, and accept lower savings in order to ensure good customer service?

Consider how these ten suppliers fare in the Overall Customer Score league. Six of them don’t appear: they are simply not yet well enough known to have established a reputation. Another one does appear but in division three, the “mediocre” category.

That leaves two suppliers with “good” reputations (Avro Energy saving £284 and Green Network Energy saving £258) and So Energy in the “excellent” category saving £267. My own calculations using Uswitch suggest that four of the other suppliers in the excellent category offer tariffs with savings ranging from £248 down to £207, and another such supplier offers a saving of £151.

So, most of the top ten offers today, including the very highest ones, are from suppliers that are not yet well enough known to have established a reputation for quality of service. But three of the highest savings are from suppliers with good or excellent reputations. And no less than five suppliers with excellent reputations are offering savings of £207 up to £267.

Conclusions

First, there are lots of suppliers with lesser reputations or no reputation at all, but if customers want a better supplier for the longer term and not just a lower price today, there are at least a dozen suppliers out there ranked good or excellent.

Second, there are still good savings (not over £300 but certainly over £200) to be made from switching to some half dozen suppliers with excellent reputations.

Third, to avoid disappointment and criticism later, those urging customers to switch to get lower prices would be well advised also to emphasise, and perhaps screen for, reputation of the suppliers.

Fourth, if a supplier’s aim is not only to attract but also to keep customers in an increasingly competitive and informed market, then some suppliers, especially the large ones, need to pay more attention to how customers perceive them.

Savings available in the retail energy market and the Overall Customer Service score, 12 February 2019, available at:
https://www.eprg.group.cam.ac.uk/wp-content/uploads/2019/02/S.-Littlechild_12-Feb-2019.pdf