5 Challenges TPI’s Face Managing Commissions
Energy procurement is all about relationships and – perhaps more importantly – the management of those relationships.
As a middle-man acting on behalf of both suppliers (who provide the energy that consumers need) and the consumers themselves (who have the buying power), energy brokers are important – as are the relationships they hold. Maintaining these relationships with both supplier and consumer places a burden of responsibility on the broker, but provides them with the opportunity to present attractive prices to the consumer whilst maintaining a margin.
Without brokers, where are we as consumers? Sure, we can go direct to source – but at a cost – time is almost as important as value; so receiving a truly full-market view from all suppliers provides at the very least a set of options and ticks a few boxes for purchasing managers in analysing energy costs.
But very few consumers are aware that brokers – themselves – have brokers. Or more precisely, aggregators.
The TPI market is diverse and hugely fragmented. For many suppliers, it is difficult and impractical to maintain relationships with all brokers operating today – meaning those with less kWh throughput are likely to be left with gaps in their supplier portfolio, disadvantaging them when compared to their peers. After all, if you can’t get a price from the big 6, can you really call yourself an energy broker?
Here’s where the aggregators step in. Established brokers with relationships to major suppliers, who can be used as a proxy on which sub-brokers can fill their gaps and offer a full panel of suppliers to the consumer (minus a share of commission). For many, Indirect Suppliers (our nomenclature for aggregators) are a long-term solution – and despite sacrificing a take of earnings – represent a realistic and profitable way to provide a broad view of the market to their customers. For others, Indirect Suppliers act as a stop-gap whilst building enough volume and reputation to work directly with the source.
Either way, we recognise the value of Indirect Suppliers, and so do our customers. We’ve built them right into our system, allowing brokers to add all of their relationships, associate these to products and automatically calculate commission payments. Our users are free to generate SME prices for every supplier, assess the commission return from both options and make recommendations to the customer for every relationship they hold.
Everyone needs a helping hand, and Indirect Suppliers are an attractive option which should benefit your business rather than hinder it. We welcome Indirect Suppliers into the UtilityClick platform.
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