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Home arrow Market Research Findings arrow Economic Climate and Consumer Confidence arrow Pricing Deals And Introductory Offers Are Leading To Low Customer Loyalty Levels
Pricing Deals And Introductory Offers Are Leading To Low Customer Loyalty Levels PDF Print E-mail
Written by ORC International   
06 May 2010
According to the recent switching survey conducted by ORC International, the plethora of pricing deals and introductory offers available in the energy sector has created an environment of ultra-low customer loyalty.

The survey of 1,000 adults with responsibility for paying their household bills showed that 27% have switched electricity supplier within the past year; additionally, 26% have switched gas supplier. Add in consumers who plan to switch within the next six months and we start to see a pattern where up to half of customers could be lost over a period of two years.

Other sectors covered by the study – broadband, telecoms, home media and banking – had lower rates of churn. Home broadband comes close, though, with 20% of users switching within the past year and 22% planning to switch or review their supplier in the next six months.

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Within the energy sector, a desire to save money undoubtedly plays a role in switching behaviour, especially when household finances are already stretched. The past two years have seen sharp increases in domestic gas and electricity prices, prompting consumers to check they are getting the best deal.

There has also been intense competition as a result of deregulation, with energy suppliers actively encouraging customers to switch with the promise of lower bills. There is, however, an apparent lack of trust in these promises.

Over 30% of all energy buyers do not feel confident they are getting the best deal; over half who switched energy supplier in the past year checked price comparison web sites or other consumer sites before signing up.

By contrast, service levels play a much stronger role in the choice of broadband supplier and loyalty to suppliers.

Of all the sectors we examined, broadband operators generated the highest level of customer complaints, with 35% having complained to a supplier.

Fewer than half received a successful outcome and consequently looked around for an alternative supplier.

Wary of ending up with another service which doesn’t meet their needs, consumers planning to switch turn first to friends and colleagues to find out about their personal experiences.

Statistical techniques such as Key Driver Analysis can help to identify what causes customers to become defectors.

They can be used to understand the relative importance of price, quality, service and a range of other factors on customer loyalty or intention to churn, allowing businesses to reduce revenue loss.

12 April 2010
 
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