Utility Week

UTILITY Week 11th April 2014

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

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8 | 11th - 17th April 2014 | UtilitY WEEK Customer centricity Research A customer-centric company is one that places the customer at the centre of its business and focuses on delivering what customers want over and above other priorities such as sales targets, operational issues or investor interests. Despite the obvious upside for custom- ers, companies that adopt a customer-centric strategy usually do so with an eye to secur- ing a competitive advantage. As consumer power and choices have risen, enabled by vociferous technological development, more and more companies around the world have recognised the need to incorporate customer- centric processes and planning into the very hearts of their businesses. Given the volley of political criticism of the utility sector – particularly energy – over the past eight months, and the consequent unrelentingly negative media coverage, one might be forgiven for thinking it ludicrous to even consider whether utilities might be customer centric. They are just profit-hungry, heartless, dividend-obsessed corporates that sting customers for all they are worth, aren't they? The energy sector's recent referral to the competition authorities would certainly suggest so. But there is another side to this story. Those in the competitive energy supply market have had to respond (as retail compa- nies across the world have) to the rise of the empowered consumer and are forced closer to the customer by political and regulatory initiatives such as smart metering, fuel pov- erty alleviation programmes and retail mar- ket reform. For those utilities that are directly regu- lated – water companies and energy net- works – both Ofwat and Ofgem have been pushing an agenda specifically to force greater focus on the customer. So, to get behind the headlines, Wipro and Utility Week conducted a survey of lead- ing lights of the utility industry. This sought to assess companies' own perceptions of how customer centric they are now and what the prospects are going forward. We focused primarily on regulated utilities. Customer centricity in utilities today Ninety per cent of respondents said customer centricity had become more important to their companies since 2008/09. Asked to rate how responsive to cus- tomer needs their companies are right now (on a scale of 1-5, with 1 being poor and 5 extremely responsive) most opted for a 4 out of 5 rating: 58 per cent overall; 57 per cent in water; 67 per cent in electricity and 33 per cent in gas. This is a very positive stance, and sug- gests there may be a mismatch between how responsive utility managers think their com- panies are to customers, and how responsive customers themselves perceive utilities to be. On the issue of customer centricity itself, respondents were also markedly positive about industry performance today. Asked to apply the 1-5 ranking to how customer cen- tric their companies are at this point in time, the average score came out as 3.8, with gas the most positive (average 4 out of 5); fol- lowed by electricity (3.9 out of 5); with water bringing up the rear with a still-well-above- midway score of 3.6 out of 5. There is a great deal more confidence in customer centricity in operational areas such as emergency management (scored 4.1 out of 5) and field services (3.9 out of 5) than in purer customer functions. Among the areas scored lowest are customer loyalty manage- ment (2.8 out of 5); customer mobile services and customer segmentation (both 3.1 out of 5) and customer self-service (3.2 out of 5). These findings suggest clear areas for investment and attention should utilities wish to continue down the path of increasing customer centricity. Customer centricity intentions for the year ahead Next Wipro and Utility Week sought to estab- lish where utilities think customer centricity in the sector is heading in the near future. Respondents scored 1-5 how customer cen- tric they expected their company to be in 12 months' time. Enormous optimism was displayed. Nobody felt their company would be on a 1-3 out of 5 rating within a year; 38 per cent expected to score 4 out of 5, while a whop- ping 62 per cent – around two-thirds – said they anticipated a 5 out of 5 rating. Clearly, compared with the ratings respondents gave of customer centricity today, expectations of improvement are highly ambitious. For instance, 14 per cent score their company 5 out of 5 today, yet quadruple that proportion expect to achieve a top rank within 12 months. Centre forward In exclusive research by Wipro and Utility Week, energy and water utilities were asked whether they could and should do more to put the customer at the heart of their operations. Overall Water Electricity Gas 3 25% 29% 33% 33% 58% 57% 67% 33% 17% 14% 0% 33% 4 No-one rated their companies 1 or 2 5 Extremely responsive How rEspoNsivE to customEr NEEds is your compaNy today?

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