Utilities have already attempted to entice customers to switch supplier via the Internet, often without much success. The greater ease of iTV should bring a more favorable conversion rate than the Internet as penetration increases. Since the UK will lead the way in European iTV use, it is highly likely that more suppliers will follow ScottishPower’s lead.
ScottishPower will enable customers to switch electricity and gas supplier via interactive TV.
UK utility Scottish Power (which trades as ScottishPower) has said it will air an interactive TV advertisement, to appear on Sky Digital, that will enable consumers to switch their gas and electricity suppliers via their iTV sets before returning to normal viewing.
Utilities’ early hopes and expectations for Internet customer acquisition have proved overoptimistic. Switching via the Internet has been limited, and traditional methods such as door-to-door sales still prove more effective.
One of the problems faced by utilities has been in driving traffic to their sites: say tempting customers to search proactively for electricity and gas supplier websites, or enter website addresses, particularly given the low level of interest consumers have in their electricity and gas supply.
However, the increasing penetration of iTV is now offering suppliers a viable option. It can help to overcome customer inertia to some extent by saving customers the effort of having to get out of their armchairs or remember addresses, and allows customers to act on the advertisement immediately.
At present more homes have PC Internet access than iTV, but by 2004 Datamonitor expects iTV penetration will exceed that of PC Internet across Europe. The number of UK homes with iTV will almost double from the current nine million homes (5.7 million of which have Sky Digital) to just over 16 million by 2005.
ScottishPower would be wise to be pragmatic about the number of customers it acquires initially, particularly given that purchasing over iTV is still in its infancy. However, over time iTV should become a more effective channel than the Internet for customer acquisition, as households prefer to choose their electricity and gas suppliers from the comfort of their armchairs.
This will drive others to follow ScottishPower’s example, focusing their attention and investments less on the Internet and more towards iTV.