Thursday, 29 October 2009

Never mind the X factor, watch out for the Hassle factor

According to research just out, one third of all consumers think it’s just too much hassle to change energy suppliers. And yet, prices of electricity and gas have soared over the past few years.

I am not so surprised. For a start, utilities are just not that sexy are they? A bit like insurance, a sector I have worked in myself. We always found it difficult to get consumer engaged in what is essentially a commodity. Ask me to spend one hour researching the perfect pair of boots – yep I’m there. Ask me to spend 5 minutes looking for car insurance or to change my gas supplier – yawn…... It doesn’t help that in this multimedia age, many of us are using a PC at the same time as listening to music and have the TV on. Difficult to grab my attention and get me motivated.

You can never underestimate the barrier to purchase that is the “hassle factor”.

Whether the purchase is online or offline, successful companies will make the experience as simple and smooth as possible. Put up even one significant barrier in these type of sectors and you will lose the sale.

In fairness switching utilities is quite easy and sites such as uswitch compare prices and do it all for you. The new energy supplier contacts the old and gets the transfer done. Something insurance companies should seriously consider. And yet still consumers “can’t be bothered”.

Apparently consumers are unconvinced about the savings to be made by switching. So my advice would be to offer fixed price plans and guarantees to undercut rivals over a longer period of time. Good value for money combined with a no hassle approach is a winning combination.

Secondly, the utilities need to look at incentivising and not just nectar points as EDF are proposing. Offer me a free pair of shoes from one of my favourite sites in return for switching? I’m there. A brand affinity program could do wonders for this sector to get a bit of “wow factor” into the proposition. If you can’t be a sexy product, team up with a sexy friend. Get your target audience motivated and leap over the hassle factor barrier.

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