Richard Bates
Director, Consumer Empowerment Programme
Today we published Get it, together – the case for collective switching in the age of connected consumers. This report argues that a collective approach to switching can improve consumers’ experience of the energy, financial services and telecoms markets.
The people who created these markets shared a common expectation that by giving consumers choice they would drive competition. By seeking out and switching to better deals in sufficient numbers and with sufficient frequency, consumers would realise the benefits of competition – namely better value, better service and innovation.
The problem is, consumers don’t tend to conform with this expectation and for good reason too. These markets are complex and identifying a better energy tariff, mobile phone contract, or interest rate for our savings can be like trying to find our way through a maze. And most of us know someone who’s been left bruised by a poor switching experience. As a result, the common characteristic of these markets is deep-seated inertia. And if consumers don’t engage in these markets, competition stalls and the benefits it should deliver are absent.
What if we could offer an alternative to consumers who have rejected the conventional ‘go it alone’ route to market? One that transformed inertia from a force that works against consumers to a force that an intermediary can put to work on their behalf; and one that offered consumers the prospect of a better deal for much less effort.
Collective switching has the potential to make this possible. It would transfer the onus for getting a better deal from consumers to an intermediary that does the hard work in these markets for them. It would offer the focal point around which consumers could cluster as a group, bringing together the group’s demand and fashioning it into a block of market share that providers are then compelled to compete for. The intermediary would then manage the mass switch of participating consumers to the provider who had offered the best deal to the group.
iChoosr and the Dutch consumer body, Consumentenbond, have successfully used this approach in energy markets on the European mainland; and we are starting to see attempts to make it work here, including the Which? Big Switch initiative and thePeoplesPower.co.uk. More are in the pipeline. Unsurprisingly, the consumer response to these initiatives indicates significant demand for being able to engage in these markets in a hassle-free way. We believe collective switching will grow from these early initiatives into a major force that gives consumers the power to get a better deal from the markets listed here. We look forward to engaging with any organisation that has an interest in the ideas set out in the report and in working with them to realise the potential of collective switching.