Is it worth switching energy supplier for £50 reward?

What could you spend an extra £50 on? Football tickets, dinner out, or perhaps you'd use it to pay off a chunk of your monthly energy bill. Several energy firms are now offering financial rewards or gift vouchers to persuade you to switch. But before you join the herd, check whether it's the right choice for you. Choose unwisely and you risk being worse off, and facing poor customer service.

Refer-a-friend rewards are becoming increasingly common among energy suppliers. 20 of the energy companies whose websites we checked in May 2019 had a refer-a-friend scheme listed online. Most of these rewarded both the existing customer and the switcher.

But while a financial reward is undoubtedly tempting, it shouldn't be your sole reason to switch energy supplier.

Make sure you check Which? energy company ratings when you compare gas and electricity prices using Which? Switch.

Energy firms offering money to switchers

Bulb and Octopus Energy's referral programmes are probably the most visible. Both promote £50 credit for an existing customer and a friend, if they sign up. The tactic seems to be working; both have gained hundreds of thousands of customers in a couple of years. Good Energy and Ovo are both currently running schemes with the same financial reward.

When we checked the websites of 30 of the biggest GB energy firms, eight were advertising incentives of £30 or more for new customers via refer-a-friend schemes. None of the Big Six energy firms were offering one, but some have done previously.

Some offer the reward in 'energy credit', ie an amount paid into your account which you can spend on your gas and electricity bills. Others offer gift vouchers.

The table below shows the companies we found whose new customer rewards total £30 or more. Use it to compare the reward with the likely saving you would make (if you switched from a standard variable tariff costing the maximum permitted by the price cap) and its customer service to see if it's the right energy supplier for you.

Of the four firms offering £50 energy credit or gift vouchers, three scored well in our 2019 energy companies satisfaction survey. Good Energy didn't get a customer score this year as we weren't able to get enough customer responses. In 2018, it finished 19th out of 32 companies.

But two of the firms offering £30 reward for switchers scored below average in our customer survey.

Other energy companies offering incentives

Besides those listed above, we found the following:

• Boost (£25 Amazon, Argos or Tesco voucher), 70% Which? customer score
• Bristol Energy (£20 energy credit), 72% Which? customer score
• Shell Energy - formerly First Utility (Amazon gift card), 66% Which? customer score
• So Energy (energy credit), 78% Which? customer score
• Spark Energy (£20 Amazon, Arcadia or Tesco voucher), 52% Which? customer score
• Tonik Energy (£25 energy credit), 76% Which? customer score

With these, you'll usually need to sign-up via a referral link, dedicated portal, or provide your friend's customer details when you are switching, otherwise you won't get the reward.

What to watch out for with energy referral deals

Blindly following the money via a referral link could land you with a bigger bill than your current deal, with a supplier whose customer service is below par, or trapped in a deal with exit fees equal to the switching bonus.

But it could also be the extra sweetener for joining a supplier that could save you money and offers top-notch service.

Before you switch, consider the following:

• Could you save more money with another company? If you're switching primarily for the reward, then it's worth comparing gas and electricity prices of companies across the whole market to see if you could save more by going with another supplier, even if it doesn't offer a reward.
• Will you get good customer service? The top-scoring energy firm in our survey has a referral scheme, but so too do some of the lowest scoring.
• Is there an exit fee? If you find a cheaper deal or want better service before your deal has expired, will you have to pay more than the initial reward to leave?
• Do you have to buy a specific type of tariff to get the reward? Variable ones can raise their rates when prices go up, leaving you potentially paying more. Fixed deals secure your rates for a set period, but can also tie you in with exit fees.
• Are there other terms and conditions which affect you? Check whether the tariff obliges you to have a smart meter or pay by direct debit, for example.