STARTUP UNDER THE SPOTLIGHT: SWITCHCRAFT
When Switchcraft’s CEO Andrew found it tough to keep his family on the best energy deal, he saw an opportunity to solve the problem with a game-changing innovation in the price comparison market.
Andrew explains the problems for consumers trying to access the best deals. “First of all, finding the time to do your research is hard. We are all busy people these days and comparing energy tariffs is pretty boring.” If you do have the time and patience to battle through the process (and it is worth it, average annual savings from switching are £300), your problems aren’t over. “Energy companies tempt new customers in with a cheap deal” explains Andrew, “which is how you can make that initial saving. When you come to the end of your new contract, however, you will be rolled on to the infamous standard variable tariff which is often around 40% more expensive. So you need to switch regularly to avoid being overcharged.”
Switchcraft’s answer is technology that automatically switches you whenever there’s a better deal – so you never need to worry about switching again. You save money year after year, while they do the hard work.
Andrew is passionate about the user experience and the ongoing relationship with customers, “The UX is streamlined and simple, we want that first registration with us to be as easy as possible. After that, we have the details we need to process each future switch for our customers, saving them hundreds of pounds a year”. Before any switch takes place, customers are notified by email. They’re offered the chance to cancel the switch or choose a different deal. “We want to take the hassle of switching away from our customers. But it’s important that they remain in control of what we are doing for them at all times.”
The value to the consumer of Switchcraft’s service is pretty clear. But it also makes complete sense as a business. Andrew says “The price comparison industry is not very good at loyalty or cross selling. Right now, we’re proving that our ongoing service appeals to customers and keeps them engaged with us over time. Next, we’ll be looking to offer our customers the same automatic switching service for other products such as insurance.”
Switchcraft’s service is free. Like price comparison sites, they’re paid a commission when they introduce a customer to a new supplier. Competitors have tried charging a fee to the customer instead, but the early experience of Switchcraft suggests that their model works better – not least because most customers are experienced users of price comparison sites, which are also free to the user.
Andrew, CEO, started work on Switchcraft in autumn 2016. He was keen to move on from his previous career as a trader to a project with a social element. He’s also very interested in putting his university background in Neural Networks to work.
CTO Rob Porter joined forces with Andrew in early 2017, having worked with him at Dresdner Kleinwort almost 10 years earlier. Rob has over 20 years’ experience in financial technology at firms including Merrill Lynch, Man Group and RBS. Although he has held several senior management roles, his passion is coding. Working at Switchcraft has allowed him a chance to be more hands-on and work with the latest frameworks.
Alex Bone leads marketing for Switchcraft. Drawing on 10 years’ experience in agencies, his main role is to oversee strategy. Alex has worked on award-winning campaigns and is dedicated to perfecting customer engagement, message and brand. “It’s such an exciting message to be getting out there – being able to make a very significant difference to people’s household budgets and give them back some valuable time - all for free”.
Alice Long, previously at Schroders Private Banking, works on business development including social media and partnerships. “People are looking to social media more and more for recommendations and to get comfortable with a brand. We are really enjoying interacting with our audience and partners: answering questions about our service, listening to their experiences and providing thought-leadership on the consumer energy market.”
Alex and Andrew were at school together, and Alice is married to Andrew’s brother. “It’s a close knit team” says Andrew, “which helps us to work through robust issues, give honest feedback and put ideas out there. We are also really excited about making some new hires in the next few months.” Everyone on the team is also a Switchcraft customer. “We all have busy lives, young families and bills to pay” Andrew explains, “we’re not just on the side of our customers, we are our customers”.
Anyone paying a domestic energy bill is a potential customer – but drill down a bit and there are fascinating differences in the way people approach their relationship with their energy supplier.
Switchcraft’s core customer is the busy professional. These are people who are financially savvy, and know that they should be shopping around, but often lack the time to take care of it. They’re the easiest people to reach because they get the concept immediately.
Tackling the “poverty premium” is a very important part of Switchcraft’s mission as well. Right now, the people most likely to switch are more affluent. The people who could benefit most from switching and saving are less engaged with the market. Importantly, Switchcraft’s service covers households with prepayment meters, which are common in households which have struggled with bills in the past.
“Pay-per-click (PPC) is widely used in the price comparison industry and we have already seen amazing results in this space. It works well for us because it allows us to reach motivated customers who are actively searching for keywords like ‘switch energy supplier’” says Alex.
“We’ll continue to invest in and refine our digital marketing strategy, but in 2018 our main focus will be on partnering with other organisations that share our values. For example, smart home manufacturers could be a great opportunity for us and we already have several very exciting discussions in progress.”
The team are feeling very positive, “We’ve just raised our first round and were oversubscribed in just over three weeks. We had initially looked at crowdfunding too, and although we were deterred by the high fees it’s certainly something that we’ll look at again before our next raise in 2018. It really helped that we were up and running before approaching investors. We were also very focused on proving the unit economics as far as possible early on, but in the end our investors were most interested in the team and the idea.”