British Gas unveil new reward scheme for loyal customers

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The rewards include entertainment bundles provided in collaboration with Sky, "loyalty deals" that give longer term customers discounts, and special tariffs for those who sign up to British Gas' homecare services.

Such perks come in the wake of British Gas' recent commitment to freeze their standard variable tariff (SVT) prices until August, as well as to contact every one of their customers on an SVT by the middle of this year and offer them "targeted deals".

However, critics have already suggested that the addition of rewards and benefits will make it more difficult to compare deals and suppliers in any meaningful way, and that it would be preferable if British Gas simply lowered their prices.

'Industry-leading' collaborations

For example, Citizens Advice said the following in a tweet this morning:

Unsurprisingly, their sentiments weren't echoed by British Gas, with Centrica CEO Mark Hodges affirming, "Our customer base is very diverse, and what they want and need from us varies significantly. The rewards programme we're unveiling today is about offering customers more than just energy".

In addition to just energy, British Gas will be rewarding old customers - and potentially enticing new ones - with the following:

• An "industry-leading" collaboration with Sky, allowing customers to access entertainment, even if they aren't with Sky. There will be further offers in partnership with other UK brands.
• New "loyalty deals" for energy, with larger discounts for those who have been British Gas customers for the longest.
• A new energy tariff bundled with British Gas Homecare services, including an annual service visit.
• A new energy tariff bundled with Hive Active Heating and other connected home technology.
• Other energy tariff bundles, such as with insurance.

It's seems apparent from this list that the company are essentially looking to become less of a simple energy provider, and more of a general service provider.

Either way, their promise of freebies and perks shows how, from April onwards, they'll be using their enhanced buying power and economies of scale to offer savings on certain products and services.

And as with telecoms providers such as Sky and BT, these savings are offered with a view to getting more customers to buy and keep buying their basic, fundamental product, which in their case happens to be gas and electricity.

In fact, this isn't quite the first time they've tried something along these lines, with the HomeEnergy FreeTime tariff they launched in July 2016 providing customers with eight hours of free energy every weekend.

In this case, the promise of eight hours of "free" energy was certainly attractive, yet it involved signing up to a tariff that was generally more expensive than many others offered by other suppliers.

Engagement

It's likely that the special deals and bundles British Gas will automatically contact customers about from April will also involve relatively expensive tariffs, and that they'll serve mostly to prevent existing customers from realising that, perhaps in many cases, they'll be better off switching to a different provider.

That the supplier have 6.6 million customers on SVTs - the highest of any provider - supports this view, although they nonetheless affirm that they have one of the cheapest SVTs of the Big Six.

Given that several of the Big Six - including npower and Scottish Power - won't be extending their freeze of SVTs into the spring and summer, this will most likely remain the case for the best part of the year, so British Gas deserve at least some credit for acting where others have failed to do so.

However, while they've claimed that April's special offers are part of "a major drive to engage" customers, it's unlikely that holding carrots over particular tariffs represents the kind of engagement that the Competition and Markets Authority (CMA) had in mind last year when they published their report on the retail energy market.

Back in March, the CMA urged the industry to do more to get customers to engage with tariffs in general, as well as with the whole concept of switching and with exercising choice over the market as a whole.

Unfortunately, plastering Sky TV onto a particular tariff that customers would perhaps otherwise abandon appears to be in opposition to such a vision of things.

Not only would it encourage customers to think less about energy and more about other services, but it potentially threatens a situation where energy providers are concentrating more on delivering value on entertainment or boiler repairs than on gas and electricity.

Still, British Gas' reward scheme hasn't even been launched yet, so it's still too early to say whether it will provide genuine rewards to loyal customers, or whether it will simply prevent them from realising that their loyalty might be better placed elsewhere.