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Would marketing letters from energy suppliers make you switch?

Letters through door

Our latest research casts doubt on whether the CMA’s proposals to share customer data will encourage people to switch energy suppliers.

Two weeks ago the Competition & Markets Authority (CMA) published its final verdict on the energy market and its proposals for fixing it. When we asked you whether you thought these proposals were enough to fix the broken energy market, an incredible 25,741 of you voted ‘no’ (93%).

I want to focus on one of these proposals – the creation of an Ofgem-controlled database of customers who’ve been stuck on their supplier’s standard tariff for more than three years.

This would then allow rival energy firms to send letters to people (who haven’t opted-out to being contacted) with new deals and tariffs.

The CMA hopes this will encourage more people to switch supplier. But we’re not convinced.

A central database of energy customers

The CMA’s suggested measures to safeguard people’s data. It has also said there’s trade-off between ‘encouraging more switching and ensuring customers aren’t subject to excess or misleading marketing from firms’.

With 37 energy suppliers out there, there’s the potential you could be contacted by 36 separate companies encouraging you to switch.

Will this increase switching?

The question on everyone’s lips though is; will this work?

We surveyed the very people this proposal is aimed at – energy customers who haven’t switched supplier in three or more years. How would they view letters from rival firms?

  • Four in ten would opt-out of receiving marketing letters in the first place.
  • A third said they’d put letters straight in the bin or would just scan them quickly.
  • Almost half said they’d be unlikely to switch if they received a letter from a rival supplier with cheaper deals. Instead, they were far more likely to switch if their tariff increased or if they’d had a poor experience with their supplier.

The CMA still has until the end of June to finalise its remedies to fix the broken energy market. With two months left, the proposal for a central database needs some careful consideration. Will it increase switching or will it just lead to loads of unwanted letters through our doors?

And just to add, while most of us don’t currently get many marketing letters from rival energy firms, just 4% of people asked said they’d switch due to receiving one. It might not just be letters though.

Our supporter Richard is worried about cold calls:

‘The idea to set up a database of customers who have been on the standard energy rate for more than three years is ridiculous. All it will do is to open up the incidence of scam telephone calls and cold calling by unscrupulous companies.’

Your verdict on letters and databases

Now we want to hear from you. With an incredible 416,000 backing our Fair Energy Prices campaign, we need to continue pressing for a market that protects the most vulnerable and stops people from overpaying.


So what do you think about the idea of a database of customers who haven’t switched for three or more years? Do you think letters from rival energy firms will encourage people to switch? Would you be happy if your data was shared with Ofgem and energy suppliers?

Comments

Nationalise energy supply so that it is fair and everyone gets the cheapest prices possible. Then we would not have to be concerned about which supplier was ripping us off the most or the least. We would then have more time and energy into nationalising every other neo liberal blood sucking scam.

Unfortunately, “nationalise”, “fair” and “cheap” don’t go together.

If a central database becomes available, potential customers will be avalanched with marketing junk by Post, by Telephone and by EMail. Who thought up that bright idea ?!!

Better to encourage switching by getting Local Authoriities to help people in the branch libraries that survive to do the switch, or (as happened in Wales some years ago with benefits advice) send advisors (employed by the Couincil, or Citizens’ Advice, but NEVER, EVER an energy company) round to peoples’ houses to help them compare and switch if appropriate.

But then I always thought natural monopolies like electricity, gas, and transport should stay in the public sector. . . .

Another way of collecting data about us to be sold on. I can’t believe this has been suggested as a bona fide recipe for such an important issue.

If you want to fix the broken energy market then make energy a public service and stop running it for profit. Invest in renewables and lets move on to having clean, cheap energy for everyone.

If you nationalised the industry you wouldn’t need to worry about switching because there would only be one tariff and, theoretically at least , it should be as cheap as the government could reasonably set it

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fred says:
6 April 2016

there must be differant tarrifs, yes but please only 5 per supplier
too many up to 35 on some sites?? stopp all this then we will be able to COMPARE!!!!!

Richard says:
6 April 2016

Set a National tariff for gas and electricity, idependantly monitored to ensure best price and make it illegal to confuse the charge by adding in any marketing inducements to switch companies. I’m tired of switching every other year to get something essential that isn’t any better, different or more efficient.
Encourage research & development of alternative energy generation so our country is less reliant on overseas based companies and imported oil, gas and coal over which our Government has no control. CMA wake up! So simple isn’t it. Forget leaflets and data bases. Just get real.

I had to put don’t know to who is your supplier they are not on the list!! they are ‘Places for People energy’ Well I got a reduction and I’m paying somebody!

Re-nationalise all the energy companies – that would solve it for once and for all

As already said already too many databases out of control, so no to that.
I check every year that I am getting a deal that suits me. Not just price but service and convenience that suits me. I do it all over the internet. When I moved house I changed suppliers immediately to the one I had at the previous house.
If some or even most people don’t switch to the best deal then that’s their loss. They will continue to help the rest of us by boosting the profits of the suppliers who in turn can offer me a better deal. They will also help boost my investments and others pension funds.
It is not all black and white. It is all circles overlapping circles.

If people are identified as “vulnerable” they must be in receipt of some sort of state benefit/pension, so perhaps a note (or even a leaflet) added to the yearly statements, or tax coding notice reminding people about switching would be better than the intrusive phone calls.
My parents both died over 10 years ago and never lived at my address or had the same phone number, but I regularly get calls for them from energy companies, so where do they get those details from. The last one was from a company in Malaysia!
I tend to agree with Colin above – re-nationalise – consumers(who used to own it all anyway) have never benefited from the sale of the gas and electricity suppliers.

I am also very dubious about this as we get a good many people knocking on our doors asking for opinions on various things and we never hear from them again – usually they are students and I always try to give a polite opinion on whatever subject is that day.

I think there is a case for the legality of not sharing my data under the Data Protection Act. Data must only be accessible to relevant parties and/or those who have NEED to see it. My take is that the relevant party is ONLY the company I am contracting with and their staff. Any alteration to this state MUST have my permission which I wouldn’t give. Tbis law is there to protect our data and should be unequivocally enforced by the Data Commissioner in my view.

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I really can’t understand why after all the energy put in to telling every body about the ease of switching, every body hasn’t already done it. Making the energy companies be reasonable about pricing is in the hands of all of us and if we can’t all be bothered – why should they!. They will always charge what we all let them get away with.

The energy generator and supply companies should never have been privatized, it was kept quiet at the time electricity was increased by 10% to pay for it and the CEGB said there was no need for that increase. And one other thing thanks to the eu and it’s meddling in our energy, and also the CEGB used to plan 15 to 20yrs ahead to ensure there was adequate electricity supplies in the future, now there is no proper planning for our needs, Tory and labour governments have buried there heads in the sand regarding this, I worked for the CEGB it was only broken up for political dogma all it needed was a bit of fine tuning and we could have been building power stations when required because they were big enough to do it instead of relying on foreign companies who don’t give a monkeys about this country now we are on the edge of disaster because of NO planning for the future, I was proud to work for the CEGB I felt I was doing something worthwhile for my own country, a lot of the design and construction skills have disappeared to build power stations in the UK. Overall privatisation in the electricity industry has done Britain a lot of harm, what else could you expect from politicians who only think in the short term they should have left the CEGB and the supply companies well alone to do what they did best.Ok

Brian says:
6 April 2016

Firstly ‘Which?’ is itself an example of a fatuous champion of market economics masquerading as a champion of fair markets. Getting everyone to shop around is EXACTLY what Which says we all want, so bunging letters in our boxes SHOULD be great. What I want, however, is a single public not-for-profit company, owned at arms length by and regulated by the state, operating as a monopoly to ensure that energy is offered to all (i.e. consumers as well as businesses) at a standard price, which is the cheapest possible. They don’t advertise or pull misleading ‘smart’ tricks, they just make, supply, deliver and sell energy to everyone as cheaply as possible, without private profit. That will do me just fine, thank you, Which!

This is all very well but how do you explain to OAP.s that know they must be being taken advantage of by high tarrifs from these conning suppliers, but have no access to the ‘net and have no idea how to go about changing suppliers or that there are better tarrifs out there? Something must be done to protect them?

Chris Mimmack says:
6 April 2016

My elderly mother once swapped energy suppliers three times in one week. She received phone calls promising her a better deal so swapped. She is a “vulnerable adult” so was easy prey for telesales callers. Eventually I had her phone disconnected as these people still were able to get her number and call despite her number being changed, ex-directory and TPS registered.

Reconnect her phone, but contact the phone company about nuisance calls. If all ese fails, contact the police about it.

Lets see now, how to market a utility ? We;ve got faster electric, our gas is better and cooks quicker, wash with out water and your clothes will be cleaner!!! Why should selling any util be any different from nearly just about anything else. They will be advertsing for the shareholders, (to increase profits) Well not with my data if I can prevent it any way. As that will be something else they will profit from selling the data onwards, and they sure as hell will what ever is in the “framework”…. Our various Governments have created this mess, so I for one don;t expect much to change, pretty much the same happens in many walks of life, its a postcode and social standing lottery. This could never ever be an open / market forces led industry. So don;t pretend.
It is said say nothing if its not positive ….. well sorry … the idiots at the CMA really are taking the mickey. How long / how much did it cost for them to come up with this ……. or read the instructions from the industry and retype on their own letter headed paper. We all get the same actual product … TV works, boiler heats, taps give water ( mind you here it does differ somewhat) so why the different prices. Why do we pay for smart meters when they only benefit the companies ????? who ever really asked for one ??? Quote “they are more accurate ” …..ie they count more units….& cost you more. (and you’ve paid to have one…. and the rest of us!)
The Market is rigged ……………it doesn’t need assistance and my data is MINE, NO ONE ELSE’S

Hi Chris R, , , If your still knocking around, , I enjoyed your above post