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CMA Blog 2: Price Comparison Websites the big winners from the CMA’s energy investigation

The CMA’s Final Report on the energy market today gives price comparison websites (PCWs) the ability to de-list suppliers who do not pay them commission, offer exclusive tariffs and access to more customer data. This will give them both the incentive and the means to proactively push customers to switch energy tariffs. No longer will they have to see their hard won site visitors select tariffs for which they receive no commission or be unable to differentiate themselves from their competitors by offering different products and targeted propositions.

The upshot should be higher switching rates and higher revenues for PCWs. Some may even branch into other push channels such as door-step selling and telesales which, prior to consumer backlash, were responsible for driving the highest levels of switching yet seen in the market.
 
Over the longer term, as suppliers find that their customers are switching more frequently, we may well see a fall in the commission paid to PCW by suppliers (as suppliers struggle to cover the cost of acquisition of customers who only stay with them briefly). But if the volume is there, the PCWs should still benefit.
 
The impact on suppliers could be significant – not only could we see revenues shifting from suppliers to PCWs, but so too could the customer relationship. We have already seen entrants such as Flipper offering to automatically switch customers (for an annual fee) every time there is a cheaper offer on the market – the remedies will make such business models even more viable. Such disintermediation has had a devastating impact on the market share of incumbents – look at the car insurance market – so larger suppliers in particular need to make sure they have a clear channel strategy.

 

Back to June 2016

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