Helping challenger energy brands grow rapidly in a competitive market

Challenger brands are shaking up the UK energy sector; offering strong competition to existing brands while creating more choice for consumers


According to a 2016 report from Ofgem, challenger energy brands are steadily gaining market share in the UK, with 23 additional companies becoming active.

Combined market share for these disruptive suppliers grew to 14% in March 2016, up from just 1% in the early 2000s and making a significant dent in the share currently dominated by the big six energy providers.

Challenger brands in the UK are shaking up the energy sector; offering strong competition to existing brands while creating more choice for consumers.

Part of their competitive advantage involves providing an advanced customer experience, which includes flexibility, clarity and and personalisation.

GoCardless is helping over 25,000 companies in a range of sectors across the UK and Europe not only to improve the customer experience they offer, but also to minimise administration associated with Direct Debit processing, while mitigating risk via automation and advanced processing capabilities.

Notably, GoCardless now works with 25% of the UK’s registered domestic energy suppliers. In this article we explore some of the specific ways in which GoCardless is supporting the UK’s challenger energy brands to go above and beyond in their quest for providing a market leading service.

Enhanced customer experience

The ability to handle payments online is a critical part of an efficient customer experience. GoCardless offers a fully digital Direct Debit payment service, with a number of especially useful features for energy suppliers.

For example, one major cause of payment failures is customers incorrectly inputting their sort code and account number. The modulus checking process catches these errors in real time, helping to reduce failures.

With GoCardless, modulus checking can also be done for customers signing up over the phone; important because many energy suppliers still sign a significant portion of new customers this way.

For maximum convenience, GoCardless offers a self-service option that enables customers to set up and manage their Direct Debit payments online via desktop or mobile. Many customers prefer just to set their energy payments and then forget about them.

For Brighton-based challenger brand TOTO Energy, the choice of Direct Debit provider was based on three measures; technology, price and time to market.

“We’ve invested our start-up time in making sign-up and service super simple. Bigger energy companies can be tricky to deal with, so that’s where we think our time is best spent,” said Tom Nicholas, Head of Transformation at TOTO Energy.

“GoCardless came out on top in every measure. What’s more, implementing GoCardless through Junifer was a piece of cake.”

Another common cause of failed Direct Debit payments in the energy sector is customers having insufficient funds in their bank accounts to cover payment of energy bills in a given month.

But having flexibility to easily set the Direct Debit payment date to coincide with the customer’s salary payments can easily help address this issue. What’s more, a shorter notification period of three working days allows flexible payments and ensures smart meter billing will be as accurate and timely as possible.

On top of this, having the right data is key for understanding the customer more deeply and tailoring the experience to better serve their needs.

Using GoCardless via Ensek or Junifer provides easy access to extensive data to help you create custom communications and develop integrated lifecycle campaigns based on payment data and customer behaviour.

Reduced administration and risk

Being burdened by cumbersome admin tasks can compromise your ability to deliver exceptional customer service. With GoCardless, payment files are automatically submitted to Bacs, with reports available in real-time via your dashboard or API.

Plus, interpreting those time-consuming Bacs error codes now becomes a thing of the past, as GoCardless provides plain English explanations for all of them, significantly reducing your admin time.

"GoCardless allows us to automate our entire customer Direct Debit collection, meaning we only deal with the exceptions.

What's more, the integration between Junifer and GoCardless ensures customer records are updated automatically, so we know why a payment has failed and can communicate this back to our customers," said Simon Oscroft, director of So Energy.

Automated submissions and reconciliations also help to make your admin time as short as possible, freeing up resources to focus on more important matters, like helping your customers.

When payments fail, many energy companies send out a standard response to customers, which could include a request to retry, then a phone call from your customer service department, followed by resorting to a debt collector.

With the GoCardless API, you can open up a whole new range of responses and become more creative and informative with handling failed payments.

This could include sending customers a text message with the option to pay weekly instead, or inviting them to choose a new collection date that better fits their lifestyle and when they are most likely to have funds available.

This leads to a better perception of your company, as part and parcel of an approach to customer service that goes above and beyond the traditional energy firms.

GoCardless integrates across your entire business workflow, including specialist billing platforms such as Junifer, Ensek, and Utiligroup, along with finance and accounting platforms such as Sage, QuickBooks and Xero.

For challenger brands like Bulb Energy, the main benefits of using GoCardless have been its simplicity and ease of use, along with its ability to integrate into the existing Bulb systems and fit into the existing workflow, providing a fully-automated solution overall.

“Our advanced in-house IT system automates a lot of the issue-resolution normally done by large teams of employees at other energy companies. GoCardless integrated easily into our existing system,” said Hayden Wood, Bulb co-founder.

“We wanted to give our members whatever payment options they most trusted and were the most convenient. GoCardless was the most simple, reliable and advanced Direct Debit system we found.”

What’s next for challenger brands?

Despite the success of many new entrants, it’s not easy to break into the UK energy market. Keeping your services lean and costs low, while continuing to provide top-notch customer service is what will make you stand out from the established providers.

Managing customers using systems such as ENSEK or Junifer, which integrate the power of GoCardless for billing, ensures the whole process is kept streamlined and automated. Reducing the time and effort spent on billing gives you a better chance of gaining and keeping that vital competitive edge.

For new entrants, it’s key to engage the untapped market of British households who have never switched provider. Thanks to the power of automated systems, your business can focus efforts on improving its offering, while conducting outreach and engagement initiatives that target the UK’s switchers-in-waiting.

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