Why Do Energy Comparison Sites Call You Back?

There’s a bit of a run around comparing energy plans these days. A TV or radio ad tells you to go to a website. Once you’re there, you give them your phone number. Then they call you back to sign you up! Isn’t there a simpler way? (There is – more on that later.) The whole approach is geared to make the comparison site (also known as a ‘comparator’) commissions on sales.

Online to offline – the sales model

According to a 2014 Accenture report, 64 percent of surveyed consumers use the Internet to learn about products before they buy. An Australian Consumer and Competition Commission report (2014) on comparator sites says that for “comparator website operators, call centers act as the primary consumer engagement and sales channel.”

Some sites exist to provide information only and make money through advertising. Others are “lead generation” sites, where energy retailers pay a fee for any lead captured through their service. The most common sites you see advertised on TV or radio are known as “end-to-end” sites. End-to-end sites earn money when they successfully sell an energy offer on behalf of the retailer. Retailers pay this commission up front, on a trial basis, or via a combination of both.

Information sites tend to “scrape” the web for information, taking it directly from electronic sources. This is unbiased, and updates in real-time. End-to-end websites get their information by commercial arrangement. This means they ONLY list the products and services of retailers that have agreed to pay them commissions.

In the ACCC report, it states:

“Many comparator website operators reported that their call centre staff is paid the same commission per sale, independent of which product they recommend, and call centre staff are not informed of the commissions that the comparator website operator receives from the various service providers. While this approach may remove the risk of call centre staff being incentivised to promote products that would generate higher commission for them, the potential for high-pressure sales tactics to be used to secure a sale still remains.”

If they send an email, it’s easier to change your mind and go with someone else. Calling someone makes it harder to say no, especially if they can sign you up on the spot.

Comparing the “market” = comparing who is signed up

Websites don’t explicitly state they don’t have every single plan or offer available to them. In fact, the name alone treads thin ice where consumer law is concerned. In 2014, Compare The Market was fined $10,200 for claiming “We now compare more health funds than any other website in Australia” and “Compare more health funds than anywhere else” when it was found other sites in fact compared more funds. iSelect was ordered by the court in 2007 to not mislead consumers when claiming to “compare a significant portion” of policies, and/or claiming they compared every policy available while picking the one with the lowest price for the consumer, based on their input.

How can you avoid the calls?

The only real way to avoid the calls is to do your own homework and sign up for energy retailers yourself. However new end-to-end sites such as Econnex tell you exactly who you are comparing with, show you savings in dollar terms (not percentages), and let you complete any sign-up online. For more information, visit Econnex here.