Utility Week

Customers UTILITY WEEK | 19TH - 25TH JANUARY 2018 | 25 Market view I f changes come about anything like those proposed by the Reshaping Regula- tion report released late last year, energy companies are going to have to make some significant shis in the way they handle customers. The report painted a picture of the long- term destination of energy systems and proposed a new set of regulatory principles focused on how customers consume energy rather than how suppliers want to engage with them. While some of the potential sce- narios may be considered far-fetched, and the report failed to touch on what happens should the industry face a Corbyn-led gov- ernment committed to inflexible regulation (if not nationalisation), there is an underly- ing theme that all utility companies should take seriously now: a sector-wide failure to put the customer at the centre of how they do business. Just to reinforce how customer behav- iour is changing: in 2016 nearly five million energy customers swapped their energy supplier. With about 28 million customers for electricity that means nearly one out of every five customers in the market opted to change. Customers don't respond to engineering Our work with the water industry suggests that however hard customer teams work to improve service outcomes, it is the technol- ogy and the engineering that surrounds it that excites people in utility businesses far more than providing frictionless service, and there's no better place to see this than in their digital executions. A quick review of energy websites shows a focus on acquiring customers and selling services but far less on customer service and supporting current customers to engage eas- ily and effectively. Many energy suppliers offer "better" tar- iffs through online-only registration, encour- aging more of their customers to sign-up and engage online because this is usually more convenient and a lower cost acquisi- tion for the energy supplier. Many have had significant struggles to register for these tar- iffs leading to a suspicion that, while energy suppliers are aer customer data, they are not that keen on making it easy to access the best price – even for digitally-savvy customers. Water and telecoms companies are no better. Indeed, despite not having to com- pete in the domestic market, many water companies have not worked out that friction- less self-service is an essential component to retaining customer goodwill, although it will be interesting to see whether the move to a competitive business sup- ply market shis that per- spective somewhat. Many still expect cus- tomers to access their accounts through customer numbers (which are difficult to recall) or impose challenging password restrictions for rarely used online accounts. One of the key issues for custom- ers is that the wrong people own the website. Just take a look at the following water com- panies' home pages for example: Thames Water, Anglian Water, and South West Water. With the exception of South West Water, none of them clearly and immediately pre- sent the customer with options for what they want to do as the primary engagement when customers land on their site. They promote their investments, their corporate social responsibility and their latest branding, but few talk directly to the customer. From our work across this sector we know that around 80 per cent of customers who use digital channels are looking to self- serve, for example paying a bill or report- ing a meter reading. These then split into two groups – regular monthly bill-payers who input a meter reading or pay a bill, and irregular users who may pay an annual bill or are looking to report a leak or register a house move. Of the latter group, most fail in their attempt, mainly as a result of not get- ting through the barriers thrown up by the producer mentality. And when the customer fails, there is no other choice than to pick up the phone to the company. This is painful for the customer, but also for the utility, because the cost associated with call handling is a major outlay. As it stands, the digital options offered by utilities tend to serve the functional needs of a trans- action, rather than offering convenience to the customer. Turning this approach on its head can increase the effectiveness of the digital channel by more than 50 per cent. The barriers to engagement are one of the reasons most customers do not choose to manage their accounts through the digi- tal channel, the other a lack of education for customers about the existence of digital options. Recent research suggests that in water only about 20 per cent of customers choose to self-serve. The key challenge faced by utility compa- nies generally (energy, water, telecommuni- cations and broadband) is to build customer faith that they come first. This is not an easy task and is as much about culture and mindset as it is about improved digital effec- tiveness: nothing is stopping any company engaging customers first with the customer agenda rather than with a producer perspec- tive, but most seem not to want to do it. It has been shown that there is a signifi- cant commercial gain to be had by moving ahead of any future regulation changes and ensuring that customer service sits front and centre of what you do. Responding to the customer can bring millions of pounds of savings that could help reduce bills. The consequence of not doing this not only increases the likelihood of mar- gins coming under pressure as regulation tightens, but also the risk that a future gov- ernment will take back control of the sector playing on significant customer dissatisfac- tion. Given the state's track record in deliv- ering utility services and investing in the future, this move would be to the detriment of both shareholders and customers alike. Nick Shaw, director of digital, Good Growth Get ahead of the curve Utilities should put the customer at the centre of everything they do – that way they will beat regulatory expectations and reap real business benefits, says Nick Shaw. "Utilities' digital options tend to serve the functional needs of a transaction, rather than the convenience of the customer"

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