Third Party Intermediaries: Only the strongest will survive

Third Party Intermediaries: Only the strongest will survive

Introduction

In an environment of rapidly increasing Third Party Intermediary (TPI) take-up, TPIs / Energy brokers managed simply to increase volume by convincing buyers to use their service instead of having a direct relationship with their supplier. Now that buyers' appetites for using TPIs have stagnated, if not declined, TPIs will be competing against each other to increase or hold their market shares.

Scope

*Market shares of the UK's top TPIs, with satisfaction levels from both SME and Major Energy buyers who use TPIs

*Insight into how TPIs view the relative service performance of the UK power and gas suppliers they interact with

*Information on the percentage of buyers from each supplier contract using a TPI, and how this has changed over time

*How TPIs view market developments, and how suppliers can provide them with an increased level of service

Highlights

TPIs need to be conscious of their market position, as there is strong competition and the market is stagnant

Both suppliers and buyers need to be careful about which TPIs they work with, considering the possible structural changes that will affect the TPI environment

TPIs are looking for both a higher level of interaction with suppliers and a higher degree of flexibility to enhance the product they offer to buyers

Reasons to Purchase

*View who the large and dominant Third Parties / Energy brokers are in the United Kingdom who are most likely to survive market consolidation

*Ascertain relative satisfaction levels between buyers who contract direct, and those who use a Third Party Intermediary

*Gain a knowledge of what extra services Third Parties would like suppliers to offer, and how suppliers could improve their current services

DATAMONITOR VIEW 1
CATALYST 1
SUMMARY 1
ANALYSIS 2
TPIs need to be conscious of their market position, as there is strong competition and the market is stagnant 2
Power buyers' willingness to engage with TPIs may have peaked, which will lead to a change in strategy for TPIs 2
The reduction in gas market exposure illustrates that buyers' appetite for using TPIs may have peaked 3
The TPI market is highly disaggregated, with the nine largest companies accounting for just 31% of buyers 4
Utilyx is the dominant gas TPI, however, the gas market is typified by many small players 5
Both suppliers and buyers need to be careful about which TPIs they work with, considering the possible structural changes that will affect the TPI environment 6
E.ON, British Energy and SSE are the power suppliers that provide the best service to TPIs 6
E.ON and EDF Energy provide the strongest level of service for gas contracts to TPIs 7
Datamonitor's customer satisfaction questions cover importance, experience, and experience drivers 8
SME customers that use a TPI are generally less satisfied than buyers which contract direct, while MEU buyers are more satisfied 9
BGB and E.ON are reliant on TPIs to help them achieve better SME gas customer satisfaction 10
Buyers consistently rate TPIs as being more important than their supplier 11
TPIs are likely to continue to exist, as the service that they provide cannot be matched by suppliers 12
TPIs are looking for both a higher level of interaction with suppliers and a higher degree of flexibility to enhance the product that they offer to buyers 13
For TPIs, having access to experienced call center staff is essential for a strong relationship with the supplier 13
TPIs are demanding more flexibility from suppliers regarding the terms and conditions of contracts 14
While the Utilities Intermediaries Association is well known in the TPI community, outsiders' knowledge is limited 15
TPIs firmly believe that customers are choosing their services based on service ahead of price 16
APPENDIX 17
Glossary 17
Ask the analyst 17
Datamonitor consulting 17
Disclaimer 17
List of Figures
Figure 1: Historical TPI exposure by supplier, power 2
Figure 2: Historical TPI exposure by supplier, gas 3
Figure 3: TPI market share by volume and buyers, power 4
Figure 4: TPI market share by volume and buyers, gas 5
Figure 5: Quality of service rating of power suppliers, TPI respondents only 6
Figure 6: Quality of service rating of gas suppliers, TPI respondents only 7
Figure 7: Customer satisfaction interviewing methodology 8
Figure 8: Customer satisfaction competencies 8
Figure 9: Power CSat - TPI versus directly managed customers, by supplier 9
Figure 10: Gas CSat - TPI versus directly managed customers, by supplier 10
Figure 11: Rating of importance of supplier and TPI, by supplier, power 11
Figure 12: Rating of importance of supplier and TPI, by supplier, gas 12
Figure 13: Rating of importance of service/products, by respondent type 13
Figure 14: TPI respondents' view on possible improvements from suppliers 14
Figure 15: Knowledge of UIA, by respondent type 15
Figure 16: TPI views on the TPI market 16