Businesses swap between energy suppliers in order to take advantage of changes in price and services from different companies throughout the year. Some do not swap because they are satisfied with the service. Some are already aware of the perks of switching suppliers. However, 32% of businesses who are unhappy with their current contract never switch their supplier simply because they do not know where to begin; we are going to make sure that is not you.
What can Switching Save your Business?
For businesses who do switch suppliers, these are some common reasons why:
|Reason for Switch||Percentage of being the Reason for Switching|
|To Lower Bills||24%|
|To Lower Unit Rates||15%|
|To Lower Standing Charges||10%|
|End of Their Contract||9%|
|To Move to a Fixed Price Contract||8%|
Seeking out better deals regularly reduces your business’ outgoings, meaning you can use your profits more efficiently. Even if you are happy with your current contract switching suppliers can save your business money so it is worth considering regularly.
The energy market is competitive. Switching suppliers is a process encouraged by the energy industry and their deals are intended to be marketed towards enticing customers from other companies to switch to them. Imagine energy suppliers as Savannah animals, and your business is the watering hole they are all after. You are quite the valuable prize, so its important to take advantage of these bids for your custom, compare and contrast the deals, and pick the best offer.
How Can you Compare Offers?
Knowing what you’re looking for when comparing suppliers can be difficult. Below is a breakdown of ways businesses research the market:
|Type of Research||Percentage Chosen|
|Do Their Own Research||61%|
|Outsource and use an Energy Broker||36%|
|Familiar already with the Process||53%|
If you are going about this yourself its important you’re aware of what switching looks like to those who orchestrate it, and within the market itself.
Switching: The Market
In 2020 6 million customers switched electricity supplier. This was a decrease on 2019’s record year of 6.4 million switches, but still an impressive feat. This is particularly interesting as Emma Pinchbeck, Chief Executive at Energy UK, explained “[d]uring a year when everyone’s attention has been…on other issues, it’s encouraging to see”.
The term ‘Change of Supply Event’ is coined by the industry to describe when a customer switches from one supplier to another. Below is a breakdown of total number of switches, separated into domestic and non-domestic.
So, this is what switching looks like to the market; a graph of change, increase and decrease over the year of people beginning and ending contracts. How does switching effect the suppliers themselves?
Switching: The Suppliers
Some contexts on the energy industry feels necessary. When we use the term ‘larger suppliers’ this refers to the industry ‘Big Six’.
The terms small and medium suppliers tend to be considered ‘challengers’ of the Big 6.
Electricity Switching in June 2020
- 103,000 switches from one Big Six supplier to another
- 149,000 switches from a Big Six supplier to a challenger brand
- 60,000 switches from a challenger brand to a Big Six Supplier
- 115,000 switches from one challenger to another.
In December 2020, of all domestic switches:
|Direction of Switch||Percentage of Switches|
|Larger to small/medium suppliers||28%|
|Small/medium to larger suppliers||13%|
|Between larger suppliers||50%|
|Between small/medium suppliers||8%|
Switching, to the suppliers, also involves watching a lot of ups and downs in customer retention. However, the switching between particular suppliers is interesting to be aware of. The Big Six have done very little to reduce their prices or compensate for their customers’ financially difficult year.
So, customers are turning to smaller suppliers. There are far more smaller suppliers so the market is more competitive. As a result of thissmaller suppliers have to offer more competitive prices. Everyone has been desperate to save money where at all possible, especially recently; switching provides an alternative option to save money for many people. You can find a more detailed breakdown below.
Now that the market itself is clearer, why should you consider switching now?
Why Switch Now?
As aforementioned, 2020 saw a jump in household switching. Electralink has speculated that the easing of lockdown resulted in a return to work from furlough for many people. Hence, engagement with energy suppliers has once again become a priority.
Alternatively, it may be a result of processing the backlog of switching requests and installations of Smart Meters. These were delayed as a result of the pandemic lockdown. Slowly these switches are being dealt with.
With much of the UK working from home, there has been a momentous increase in domestic energy bills. However, overall usage of gas and electricity has dropped.
If you think, 40 workers switching their computers on for longer at home is not equivalent to the electricity required to heat and light a larger office space for the working day.
This has led to record low wholesale energy prices. Suppliers have then passed on these savings to customers. Some of the cheapest tariffs in years have been offered in the last 6 months.
Though, many households are likely to receive belated price increases over the next few months. This is because of the aforementioned restrictions of lockdown preventing meter readings/smart meter installation. This means that many people’s current energy bill may not necessarily reflect their increased gas and electricity usage accurately.
Therefore, it is important now more than ever that you are shopping around and researching prices in order to make sure you’re getting the best deal possible.