Re-prompting campaign encourages increased energy switches

Customers who were re-prompted to change energy tariff following a collective switch (CS) trial by Ofgem were almost twice as likely to do so again, the regulator has found.

Ofgem assessed whether the CS interventions as part of a trial held in March and April 2018 had a lasting or sustained impact on switching in the following 17 months.

In total 55,000 customers were involved in the initial CS trial. Of these 50,000 were split into two groups, one which received letters from their supplier and the other received letters from Ofgem while the remainder (the control group), received no letters at all.

The CS letters included an option for customers to move on to an exclusive ‘collective switch tariff’ and information about price comparison site Energyhelpline (EHL) where they could either choose the exclusive tariff or another supplier.

Switching rates among these customers increased, with 27 per cent of those who received letters from their supplier swapping, compared to 15 per cent of those who received the Ofgem-branded letter. The control group saw a 2.6 per cent increase.

Following the first CS trial, Ofgem conducted a Sustained Engagement investigation which analysed the switching behaviours of around 49,000 customers from the initial trial over a 17-month period.

Overall, the subsequent switching rate of those who changed tariff during the trial (63 per cent) was 30 percentage points greater than that of those who did not (33 per cent).

The subsequent switching rate of those in the control group who switched (31 per cent), and those in the intervention group who did not (33 per cent), were no higher than the 33 per cent in the control group who did not change tariff during the CS trial.

Ofgem says this implies that there was something about the intervention which encouraged people to move in the following 17-month period, but only if they had previously switched during the initial trial.

In total 79 per cent of switchers in the intervention group used EHL in the trial.

Ofgem believes the fact that customers were substantially more likely to switch again than those moving directly to a supplier (69 per cent) was down to the effectiveness of EHL’s communications as all customers were prompted at the end of their tariff.

Of those who used EHL to switch during the CS trial, three quarters signed up to receiving continuous marketing from the comparison service. In addition, those switchers who agreed to marketing received a phone call and received marketing after their tariff end date.

The trial found that those who agreed to EHL marketing were 14 percentage points (73 per cent compared to 59 per cent) more likely to subsequently switch – although more than half of those who did not agree to EHL marketing still subsequently switched.

Furthermore, the majority who switched subsequent to the CS trial did so between 11 and 14 months later which Ofgem says indicates the effectiveness of the prompting campaign.