Is Powershop forcing a competitive response already?

Is this the first response to Powershop? Via a secret source, Contact energy is offering 12% prompt payment discounts, up from 10%. In this game that’s a huge discount. Click on the picture to see the original (it looks the same). I don’t get the “no credit card” rule though – at least not from the customer’s perpective. The credit card companies take less than 2% commission, and payment is made to Contact on the same day, so why not give a 10% discount to those on auto-payment via credit card? It’s hard to set up a direct debit (especially for those like me with the inability to handle paper transactions), so I can see the reason for an incentive. But it is scary just how much Contact is giving away here – it is saying a lot about their current margins. It’s good to see a reaction, if that is what it is. Keep the sign-ups to Powershop coming, and let’s make the retail electricity market a bit more dynamic.

Powershop aims to open up the retail electricity market, and make it easy to select the cheapest deal. The prices are right, and you can sign up to Powershop via Flowerpower now – and get $20 of free power. FlowerPower is a PowerKiwi Limited product, and I’m a co- founder of that company.

About Lance Wiggs

@lancewiggs
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3 Responses to Is Powershop forcing a competitive response already?

  1. Rua says:

    Mercury have been offering 11% since December. I get this paying with Internet banking.

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  2. Ja says:

    A colleague got a sizable yearly credit from contact just by pointing out the descrepency between their prices and another company (not Powershop). So yes they are struggling.

    While I love the Powershop concept my personal experience of it has actually been poor so far, with subpar customer service by nice people that are unfortuately new to the industry (maybe a byproduct of setting up in Masterton but also possibly lack of training).

    Their online help is also poor and crucially static (in startup mode it should be expanding daily as queries come in right?). Many options to choose don’t have any explanation as to what they mean. e.g. Whats the benefit implied in the below tick box? No idea.

    “Low User Option
    If you use less than 8,000kWh a year you will benefit from changing to our low user option. To qualify for the low user plan, your home must a) be used or intended for occupation mainly as a place of residence, and b) be your primary place of residence.”

    I have an email that has not been replied too, price discrepencies have gone unanswered and currently the website is advertising products at a cheaper rate that I can actually buy in my account.

    The true test will be how they perform during a period of high wholesale electricty prices which are currently quite low. A lot of customers will just switch if Powershop becomes more expensive than other providers for more than a short period of time. Prices have already increased in the last week from 20.15c (still displayed on the website) to 20.91c for uncontrolled power in Wellington.

    ie For me they are failing most of your rules Lance, for startup ecommerce businesses.

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    • Ari Sargent says:

      @Ja:

      I am sorry that you have not received a good level of customer service. You are right, we do have a new team (there haven’t been too many electricity call centres in Masterton before), and all things considered they are doing a good job. We are fielding many customer queries that we did not anticipate and the contact centre staff are reliant on operational staff providing information and answers – we expect service levels will improve when the number of ‘new’ questions reduces.

      We agree with you totally on the online help, and some of the copy we have around the site. We have plans for a major overhaul of the structure of the site, but these things take time. We are also a lean operator (that’s how we deliver savings to customers) so we can’t just throw money at fixing these issues. We have to prioritise our development effort, as a consequence some changes take longer than we would like.

      For security reasons we have physically separated our public website from the core Powershop application. The pricing page on the public website is only ‘refreshed’ from the live system on a daily basis. So the reason your prices appear different to those on the public site is merely one of timing. If you check back tomorrow these should match again. We plan to introduce some changes to this refresh to ensure that this discrepancy is minimised in future.

      We fully acknowledge that we are not perfect, but I honestly believe we are doing a pretty good job. And our heart is definitely in the right place – we are striving to be a people’s power company, and not a faceless corporation.

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