Utility Week

UTILITY WEEK | 19TH - 25TH OCTOBER 2018 | 25 Overcoming existing systems Many larger energy suppliers use "legacy" systems – which are often out-of-date and not fit-for-purpose in the design of customer-centric journeys. At a time of transformation, there is a danger those using such systems may be left behind by the huge technological shift the industry is experiencing. Larger companies are more likely to be lumbered with legacy systems than smaller companies, and some previous attempts to change these systems have been disastrous in the short-run. A well- documented example is the fate Npower suffered after a new IT system was introduced in 2011. The highly-publicised billing issues affected more than 500,000 customers between September 2013 and December 2014, resulting in the company having to fork out £26 million as a consumer redress package. Can energy retailers change their culture to become more "customer- centric", without having to risk such wholesale changes to their disparate back-end legacy systems? MacGregor from Citizens Advice suggests that although legacy back-end systems make the process changes more challenging, cultural change is "definitely doable". Matthew Vickers, chief executive of Ombudsman Services, says: "Ironically, in my experience energy retailers – in common with businesses in other sectors – are often at their least customer centric when changing systems. "It's tempting for any business when updating systems to focus on the process itself rather than the customer. In my view it's vital that a company resists this temptation and stays focused on the human impact of any system or process change." Companies should replace legacy systems, argues Octopus's Jackson. "They need to do so because legacy only gets worse." And this, he says, is something which can be done at scale. Jackson namechecks Greg Reed – chief executive of Homeserve UK – as someone who truly transformed the culture of the company, leading from the front on customer centricity. "His example will be a business school case study in how to do it." Smaller suppliers In recent years, small suppliers have entered the market in force. Unburdened by legacy systems and policy costs, these new entrants are able to offer tariffs at a cheaper rate to draw customers in. However, some have floundered – either struggling financially or going out of business altogether – as fast growth and a lack of investment K E Y F I N D I N G S Every part of a business should "own" the customer, and it is the obligation of every employee to ensure the company delivers for customers. Making sure different departments within the business work effectively together is vital to ensure a smooth customer experience. Smaller suppliers may find it easier to be customer-centric, but as they grow, they must make sure they don't lose that customer-centricity. 1-2-1 personalisation can be achieved whatever the "legacy" technology is in place. A change of culture will help with this process, but is often used as a reason not to progress. Customer journeys have changed: they are now orchestrated in the moment, based on customer needs, rather than being pre-defined. When it comes to data preparedness, some companies are burying their heads in the sand, while others have a well- thought-out long-term strategy to capitalise on new opportunities. It is vital for every company to understand the customer journey. It is arguably the most important thing they do. If a company gets the customer journey right, the benefits are plentiful, and include: improved conversion rates, higher retention rates, and happier customers leading to the Holy Grail of recommendation. To capitalise on the benefits, companies must prove the value of adopting customer-centric practices across the business. The ideal customer journey is accessible, transparent and results in a great customer experience across every part of the business (see diagram, p5) . Cultural overhaul for Homeserve In 2014, the Financial Conduct Authority issued its largest ever retail fine of more than £30 million to Homeserve for "widespread failings", including misselling insurance policies and failing to investigate complaints adequately during the period of January 2005 to October 2011. The FCA slammed Homeserve's senior management for being "reluctant to address risks to customers if there was a cost implication involved" and said the company had developed a "profit-driven culture" where profit targets were met by "taking advantage of existing customers in pursuit of sales". Following the fine, the company's revenues took a massive hit – falling from £358.9 million in 2011 to £288.5 million in 2014. Greg Reed (pictured above) joined Homeserve Membership – the biggest business in the Homeserve Group – as its UK chief marketing officer in 2012, as part of a new exec team brought in to "create and drive a culture" that would help a new Homeserve to emerge as: "a commercially powerful business built on strong principles with the right culture of committed people delivering effortless service to customers". He did this by ensuring employees and customers were put first. Reed was made CEO in June 2017. Since Reed joined the company, revenues have recovered and, in 2018, rose to £365.6 million. R E P O R T

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