The year ahead will be an interesting one for energy market watchers and analysts. We will finally see the impact of price caps on consumers and providers. We could see further small providers fail following Economy Energy and Our Power’s collapse and, while we’re no longer expecting a merger between SSE and npower, existing providers may seek to consolidate.
Despite this background, energy remains a market renowned for extremely low levels of consumer engagement. Can you build a brand in an unengaged market, almost paralysed by inertia and where price is key?
Our research shows there is a market out there for potential switchers – we call them “nudge needers”. While the choice of who to use is largely driven by price, the importance of brand shouldn’t be underrated.
Take Bulb for example. Bulb are the Monzo of the energy market – bright bold colours with a simple, tech-focussed approach and but doing essentially the same as every other brand in their category. It’s a winning formula. Around 200,000 customers have joined in the last year, often through use of referral codes and with particular growth among millennials.
Like Ovo, another of the independent brands challenging the Big Six, it highlights its green credentials. And rightly so. Opinium’s brand strength index analysis shows that one of the things that makes these brands attractive is their distinctiveness even if they aren’t so well known.
It’s interesting to see that Bulb are taking exactly this approach to its recent TV ad campaign. Bulb’s simple, if not quirky ads centre on its rapid growth, green credentials and customer satisfaction – all things that help it stand out in a market that’s traditional stagnant. Our analysis shows it ranking the highest in being a distinguished provider as it stands out and sets trends for the reasons given above. As the campaign gains tracking, it’s relatively low levels of awareness should increase and therefore it’s overall brand strength and consideration.
The market overall is driven by prominence and year-on-year British Gas remains the overwhelming leader. British Gas streaks ahead the rest of the pack for how quickly it comes to mind for consumers when thinking about energy companies. Clearly, it’s unlikely to lose that place anytime soon, but it isn’t resting on its laurels as a torrid year in terms of customer retention testifies. British Gas has increased its lead this year among the Big Six for its emotional connection with consumers with an above average score for the first time.
Maintaining this connection, especially of existing customers, will be vital for the year ahead, especially if increased bills will more people the nudge they need. Can we expect more in terms of advertising its additional home care products and services such as boiler repair and plumber. It would seem like a suitable strategy – locking in customers, but also building a deeper relationship with them. If challengers like Bulb and Ovo have a weakness, it’s that their recent investment in growth and being cheaper than others means they still need to build long term connection with customers, especially if prices rise and other companies get greener. As novelty becomes normal, brand identity needs to go deep.
Adam Wilson is an associate director at Opinium