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Here at Delta-EE, we have been talking about auto-switching as an important, emerging trend for a very long time. As long ago as May 2017, my colleague Jenny Carson posed the question, “Is the energy industry underestimating its potential to mix things up?”, noting in passing the added appeal of completely free variants of the concept, based on Delta-EE’s own customer research.
The lingering doubt, as with any innovation, was whether it would all just prove to be a passing fad. By the time we revisited the topic in late 2018, we had, however, identified no fewer than 20 auto-switchers across the globe, which suggested, if nothing else, that a lot of entrepreneurs thought it was just as promising an idea as we did. But the uncertainty remained, with few of the major price comparison sites climbing on board, and some of the first auto-switch companies, such as Voltz (UK) and Wechselfuchs (DE), disappearing almost as quickly as they had first appeared.
Auto-switching* is more than a concept – it’s emerging from Austria to America, Great Britain to Germany. From Look After My Bills’ appearance on the UK’s Dragons’ Den, to articles a-plenty appearing across the news, it’s slowly but surely entering the mind of the public. But while energy consumers are gradually becoming more aware of auto-switching, although by concept rather than name, it’s still being met with suspicion by some. How can customers be assured they will, in fact, be given the best deal? Is it really as easy as it sounds? Where’s the catch?
In the first episode of Talking New Energy, the new podcast from Delta-ee, we discussed the important issues driving auto-switching forward, and the roadblocks standing in its way. Find out more headlines below.
It’s already been 18 months since we wrote about the emergence of what we believed could be an important new trend: the growth of auto-switching services. Since then, we have watched as a series of new players has begun playing this new game. Customers continue to sign up – perhaps as many as 200,000 across Europe – and we’ve spotted no fewer than twenty auto-switchers across the world, several of whom are increasingly well funded. We have revisited this intriguing trend in some recent research, increasingly convinced that incumbents need to start taking the threat seriously.
For those of you unfamiliar with the concept, auto-switchers are next-generation price comparison sites, reimagining the one-off, manual tariff switching services that companies like GoCompare, Moneysupermarket and Selectra offer residential energy users. Typically, you register your home and criteria online and the auto-switcher will run an algorithm, or even use AI, to find the best deal on the market to suit your preferences (price savings, service, green) then switch you whenever it flags up that savings can be had. Timings & authorisation vary, but the idea is that you only ever personally need to take action once at the start (unless to update preferences) then forever live in complete security that the hassle of switching is removed from your To Do list forever. Some services operate membership fees (Flipper) and others rely on commission (comparison sites, Labrador) or optional hardware (June), but all share the goal of permanently soothing the perennial consumer headache that is finding the best supplier.
Our recent webinar, How to make money in ‘New Energy’ #1, focused on marketplace operations - one of 6 key categories of business models that we have identified through our ‘New Energy’ Business Model Service research. This business model naturally comes in a variety of flavours, ranging from simplistic price comparison sites – where customers are recommended a certain supplier to switch to – to sophisticated trading platforms which create new environments that allow consumers to be matched directly with their preferred energy generators.
Another example of marketplace operations becoming increasingly interesting is the notion of auto-switching – where companies provide a service designed to cut customers’ gas and electricity bills as much as possible by automatically and frequently switching them on to the best possible tariff.
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