Price vs. service in the UK energy market

Here at Nous we’re on a mission to make things simpler and fairer for people. We’ve spent a lot of time researching different household service providers across a number of different categories and, well—frankly, it’s complicated. Like, really, really complicated. There’s just so much information out there. 

This isn’t a new problem, nor one limited to this area of our lives. If you google ‘how much information is created every day’, you then have to google ‘how many zeros in a quintillion?’ or ‘what is a byte?’ in order to try to make sense of the answer. I just did and discovered that the World Economic Forum has predicted that by 2025, the information created in a single day would be equivalent to over 212 million DVDs.  

I don’t know about you, but I have quite a lot of information ‘pressure’ on my everyday life (some push, some pull), and I don’t get anywhere close to 1 DVD of media consumption in a day.  Between staying on top of the news, reading information about my favourite sports and teams (Liverpool, Barnet, New England Patriots, Boston Red Sox, golf, F1, cricket, just to be clear!), understanding what could be wrong with my golf swing (a lot, apparently, and more whenever I go on the internet!), reading missives from my kids’ schools (like, seriously, I feel like I get more homework than my children, and I don’t understand why it all arrives on Friday night in up to 15 different documents?), keeping up with news from friends (genuinely, I don’t care about your lockdown puppy but I feel I should know if you had a child, changed job, moved house or had some other significant life event—I do love you all despite never replying), and reading things I am supposed to do or have done from my wife (I shall make no comment as she might be reading this), I think it is safe to say I am info-overloaded…

Which doesn’t leave much headspace for the things I spend quite a bit of money on. Like most people, household utilities make up a significant chunk of my spending. And yet, compared to things I care about (holidays, cars, golf clubs – you know, fun stuff) in the past I’ve barely done any research into my options.

Until Nous.

As I said, there’s a lot out there. I just spent the best part of a day, uninterrupted, reading customer Trustpilot reviews of UK energy companies. Here’s (some of) what I learnt.

There are a lot of reviews. Most of the big players have tens of thousands of reviews. Some of them have tens of thousands of reviews in the last 12 months. There’s a lot of information. But is it useful?

There’s a huge variation in the number of reviews relative to the size of the companies. In the last 12 months, Octopus has received more reviews (nearly 29,000) than British Gas (24,000). British Gas is around three times the size of Octopus in terms of customers and revenue – although, of course, new customer recruitment won’t be quite like that.

I’ve picked those two companies because Octopus has the highest average Trustpilot score (4.8), and British Gas is at the lower end of the ‘big guys’ with a score of 3.1. 

What’s more interesting, though, is how those reviews are derived and how the scores vary.  Trustpilot breaks up the sources of reviews – most are either ‘organic’ (a customer took the initiative), or ‘manually requested’ (where the customer is given a link by the company in question). Obviously, the level of positivity varies quite a lot between these two. For British Gas, organic reviews were 5% ‘excellent’ and 88% ‘bad’, with ‘manually requested’ reviews 41% ‘excellent’ and 27% ‘bad’. Even for Octopus, organic reviews were 71% ‘excellent’/21% ‘bad’, with manual reviews 92% excellent and less than 1% ‘bad’. 

So, clearly, when a company manually stimulates a review, it’s likely to be better – if you were being cynical, you could say that companies make a big effort and ask for reviews after interactions they know they’re good at. (We’ve all seen this - at work, you all know the person who asks for their 360 feedback only when they’ve just done something really good!). However, not only do different companies get better or worse scores for each type of review, but there is a massive difference in the ratio of stimulated vs. organic reviews.  Many of the smaller energy companies have a lower Trustpilot score, seemingly just because they don’t stimulate as many positive reviews. That could be a lack of effort on that particular process – maybe some of them are actually focusing on giving great service rather than just getting great scores to move their averages up?! (That’s not to knock the organic scores achieved by Octopus, which seem good.

What’s even more interesting is what the reviews are about. I saw a lot of reviews about the switching or onboarding process. This makes sense to me for a number of reasons. Energy companies, due to the regulatory environment in the UK, are effectively marketing/recruitment, customer service and pricing/billing entities. Given that the product (your lights successfully turning on) doesn’t change, it makes sense that this onboarding process gets reviewed. There seem to be a lot of positive/short reviews for onboarding, which makes you think that energy companies are requesting reviews after this stage.

The negative ones seem to be mostly about what I would describe as customer service complaints. Miss-billing, and failure to sort it out. Generally speaking, in my experience of high-touch consumer environments, customers will forgive service errors. What they don’t forgive is a failure to recognise errors when reported, and failure to either apologise and/or fix the issue with appropriate haste. You do see a significant number of positive reviews for a customer agent who is empowered/able to quickly fix an error caused by billing processes or similar issues.

It’s also interesting how few reviews are about price or value for money. If a customer has an hour of their life wasted by a company that doesn’t have good processes, that’s clearly a cost.  We can argue about how people should value their discretionary hours – it is different for different people in different contexts – but people seemingly go bananas about having their time wasted on the phone. It’s fascinating that being on a tariff that is charging them hundreds of pounds more than they need to be charged for an identical product seems to be remarkably uncommon as a cause for complaint. 

Why might this be? Do customers care way more about service than price in this category? I think service is important. Time is money. Conflict with call centre staff is not fun. It’s not fun for the call centre staff either – I’ve done a few shifts in call centres in my time, and having people shout at you when the systems don’t enable you to help isn’t a particularly rewarding experience. But it seems as if many of the reviews over-focus on service, partly because of the way in which reviews are gathered (stimulated) by the industry participants.

But price is important too. Anyone who has shopped for energy has probably encountered options in a list, sorted by price, and has almost certainly used price as a key factor in deciding which vendor to go with. It doesn’t seem right to me that pricing varies so much for what is often - but not always - a commodity, relatively undifferentiated product. Even less that the price might be walked higher each year, buried in the small print of your tariff contract. And I wonder what the skew and gist of reviews might look and sound like if more people knew they could get exactly the same outcome (lights successful switching on, etc.) for a lower price. My current hypothesis is that most people make the sane choice: they choose not to pay close attention to this stuff, because there is too much information to process. And that seems deeply, deeply unfair. 

Having said that, where there is a real distinction in service, or a real distinction in product (green energy being an obvious example), pricing should vary, and the choice should be clear and simple for people to make. Trustpilot clearly does a lot of good things, and actively points out the sources of its reviews and helps customers to spot them. But in a world with so much information, who has time to get into the level of detail required to make really good decisions in these categories?  

We’re constantly learning more about what customers want, and how all of these different industries work, or don’t.  We’d love to hear more from people who are passionate about these kinds of problems.  Get in touch!

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