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Make It Cheaper publishes data on SME switching habits

Small businesses are less likely to switch energy providers than other services because they don’t want the hassle of the process and haven’t got the time needed to negotiate a good deal. Make It Cheaper recently conducted research among 300 small business owners (SMEs) to look at the reasons why so many of them are disengaged from the energy buying process and whether more of them would switch if a third party intermediary (TPI) undertook the process for them.

According to Ofgem figures, a third of SMEs have never switched energy supplier and Make It Cheaper’s research finds the common reasons for this fall in to three categories: distrust of the energy industry; an unwillingness to accept the hassle of switching; and a reluctance to spend hours on the phone in order to negotiate a good deal with a new supplier.

The overwhelming response from the survey was that businesses – whether engaged in switching or not – would benefit if a TPI could do the job for them. Even among regular switchers, 41% of respondents say they would have acted sooner had they felt confident in trusting someone to do it for them. One survey respondent said: “I love the fact that they handle everything, and it’s cheaper, because it’s a nightmare to switch”

A further 91% believe that if a TPI undertakes the switching process on behalf of a customer they should be able to access the information needed to negotiate a switch, and 97% believe the supplier should inform the TPI if there is a problem with the switch within a reasonable timeframe. Digital Letters of Authority (LoAs) enable small business customers to delegate the switching process to a TPI but energy companies don’t have to pay attention to these and, even when they do, they often take a long time to respond.

To make the process easier and ensure business customers get the best energy deals available, Make It Cheaper is proposing that Ofgem forces energy companies to respond to LoAs in a timely and accurate manner. Make It Cheaper will soon launch a campaign to that effect, calling on the regulator to take action and help businesses take control of their energy bills.

You can read more about this in our research paper Switching on Small Business. The research sought responses from 300 small business owners in order to gather qualitative and quantitative data through an online survey and two impartially-moderated focus group sessions. Respondents were from a broad range of sectors with between 2-48 employees (average 14) and an age range of 31-66 (average 43).