PRAGUE - A practice known so far mainly from the market of mobile operators is becoming more and more widespread in the Czech energy sector. Energy suppliers have started to offer significantly discounted individual offers to departing clients in order to retain them even in a competitive environment. This trend is contributing to the emergence of a new group of customers who, thanks to frequent changes of providers, are achieving consistently low prices.
According to current information, energy companies such as ČEZ, Innogy, E.ON and Centropol are increasingly offering special, normally unaffordable conditions to customers who announce their intention to leave for a competitor. These individual offers often include lower electricity and gas prices or other benefits to encourage clients to stay.
"It's similar to the time when telecoms were fighting for every customer. It is cheaper to keep a client than to get a new one," the energy market analyst commented on the situation. Experience shows that a departing customer is an incentive for suppliers to offer a more attractive contract than a new client would normally get.
A growing group of "smart" customers
At the same time, a specific group of active clients is forming on the market who deliberately use this mechanism to repeatedly obtain better terms. These customers, often referred to as 'energy tourists', regularly announce their switching to another supplier in order to negotiate better deals.
"Clients are increasingly learning how to effectively take advantage of the competition among suppliers. A proactive approach, whereby the customer signals his or her departure after the fixation period, for example, will often secure better contract terms," the experts say.
Energy suppliers are reacting to this phenomenon in different ways. Some companies are strengthening their retention departments and training their staff to be able to respond flexibly to the threat of client defection. Others are trying to lure customers into long-term contracts with guaranteed prices, thus limiting the scope for frequent changes.
Impact on the market and prices
This development has implications for the wider market. More active clients negotiate lower prices, while less experienced customers who remain passive may pay more. This creates a dual pricing dynamic: individually negotiated prices for active clients and standard price lists for others.
So far, regulators are monitoring this practice but not intervening. "The customer has the right to seek the most advantageous offer for himself and companies have the right to adapt the conditions to retain the client," the Energy Regulatory Office commented on the situation.
However, consumers are urged to be cautious. Individual offers should be studied carefully to avoid unfavourable terms in the future, for example in the form of high early termination penalties.
Future developments
This trend can be expected to increase as competition between energy suppliers continues. Customers will thus have increasing scope to actively negotiate prices and terms. In turn, companies will be forced to find new ways to retain clients not only through discounts but also through quality of service, innovation and better customer care.
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