The (not unexpected) news of another rise in the Energy Price Cap from the 1st April, and the advice to look to fix now if you are on a price-capped tariff, got me thinking about the behaviours at play when looking to change your supplier. Switching energy suppliers is often seen as a simple way to save money and gain better service. Yet, despite the potential benefits, many of us hesitate to make the switch. Why is that? As is often the case with decisions we have to make, the answer lies in human psychology. Subconscious behavioural biases and psychological barriers influence our thought processes and can stop us from taking the leap and switching suppliers, even when it's in our best interest.

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Status quo bias: the comfort of familiarity 

One of the main reasons we hesitate to switch energy suppliers is status quo bias - the tendency to prefer things to remain as they are. We often assume that sticking with our current provider is easier than navigating the hassle of switching. Just the thought of comparing deals, filling out forms, and possibly making phone calls feels like a burden, even when the actual time investment is minimal. The bias towards sticking with the familiar, even when change could be beneficial, leads to inactivity, resulting in us delaying making decisions.  Switching suppliers can often be a straightforward process, but we perceive it as too much effort.

Loss aversion: the fear of losing more than gaining

We are more sensitive to potential losses than equivalent gains—a phenomenon known as loss aversion. When considering a switch, we might be apprehensive of unexpected fees, disruptions in service, or even just the above-mentioned hassle of dealing with the process. Even if the potential benefits outweigh the risks, the fear of a negative outcome can be a powerful deterrent to making a switch.

Choice overload: too many options, too much confusion

With numerous energy providers offering different rates, contract lengths, and tariffs, we can experience choice overload. When faced with too many options, decision-making can feel overwhelming, leading us to avoid making a choice altogether. Instead of carefully evaluating the best deal, we stick with our current provider simply because it requires no effort.

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Loyalty perception: believing longevity brings rewards

Some of us believe that staying loyal to our current energy provider could lead to better deals or special perks. Sadly, often the opposite is true - long-term customers can pay higher rates than new customers who benefit from introductory offers. Still, the perception that loyalty is rewarded can keep us from looking elsewhere.

Overcoming the barriers: how to make switching easier

Understanding these psychological barriers is the key to overcoming them. Here are some ways you can make it easier:

• Simplify the process: Use an online comparison tool to quickly identify deals.
• Set a reminder: Schedule a time each year to review your energy tariff and check for savings.
• Focus on the gains: Instead of fearing losses, focus on potential savings and benefits.
• Chunk it down: Tackling the switch in small steps can make the process feel less overwhelming.

By spotting and tackling these behavioural biases, you can take charge of your energy bills and make better financial decisions. Pushing past hesitation and fear of change can lead to big savings and a more empowered experience.

It’s behavioural challenges like these that we deal with every day at Behaviour Change. We help our clients to identify the exact behaviours that are at play in their given situation or scenario, and then develop tools to help them overcome them.

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