Utility Week

24 | 8TH - 14TH JUNE 2018 | UTILITY WEEK Customers Analysis U K utilities seem bogged down in a quagmire of public trust issues. The legitimacy of company profits has been called into question across the sector, creating doubt over the ethical integrity of industry leadership and its investor organisations. For years now, the sector has lurked at the bottom of cross-industry league tables for customer satisfaction, where trust is a key determining factor. To some extent, this situation is both created and exacerbated by political rheto- ric and national media reporting. However, there are few in the industry who would deny it does not also have fundamental roots in real customer experience and the complexity of market structures, which seem opaque to consumers. The utility sector's struggle with con- sumer trust matters for a number of reasons, including the limiting impact of low trust on company growth, customer retention and the accessibility of performance rewards for regulated networks. But perhaps the biggest reason that trust is a critical strategic concern for utilities is that they are providers of essential services to individual consumers and businesses. Without these services society and the economy would cease to function. And so, although the privatised nature of the UK utilities industry means players in the sector have commercial drivers, their essential ser- vice role means they must also act as guard- ians of vulnerable customers and generally nurture legitimacy in the eyes of customers. Failing to do so could provoke revolt and disruption on a monumental scale. This is a reality that was abruptly brought home to sector leaders in 2016 when a Labour party pledge to renationalise utilities should it gain power garnered significant public support. In the face of such clear demonstra- tions that low public trust could so heav- ily impact the future of utility companies, firms are keenly aware they must act, both individually and collectively, to restore and protect trust. Looking to a smart future, the opportuni- ties to do this are manifold and hold great promise for firms. Data-driven relationships and a decentralisation of industry infrastruc- ture and technology could offer new revenue streams, enhanced efficiencies and align- ment with a low-carbon, sustainable future, which can only be positive for utility brands. This said, the very same trends also run the risk of generating dystopian perceptions of utility motivations when collecting and exploiting customer data. A smart future holds as much threat to levels of trust in the industry as it does promise. Recognising the significance of industry trust challenges to the current and future sustainability of utilities businesses, Utility Week partnered with global business process technology specialist WNS Global Services in 2017 to create a Customer Trust Council, comprising industry leaders from across the energy and water value chains with respon- Regaining customer trust will need more than low prices We present an executive summary of exclusive research by Utility Week and WNS into why some customers don't trust utilities – and what can be done to change it. 6 MAY 2018 6 5 4 3 2 1 I N A S S O C I 2 EXECUTIVE SUMMARY / Research fi ndings Overall, our research uncovered a consensus across all utility types and representatives of consumer groups that there is not a simple and direct correlation between price and trust. Or in other words, driving toward lower prices for utility services will not guarantee an increase in public trust in the sector. It was observed that consumers are capable of holding confl icting views about the trustworthiness of companies and the value for money they receive for the services those companies provide. And that customer readiness to pay more for quality services is generally lower in the utilities sector than it is elsewhere – a propensity which is exaggerated in the energy sector due to the infl uence of price comparison websites in aiding consumer choice. Beyond reducing prices, it was agreed by all research participants that a focus on "fair" pricing is paramount to increasing levels of trust in companies and the sector, and that this relies on improving price transparency. In the energy sector in particular, it was acknowledged that despite strong efforts on the part of many suppliers and network companies to 10 9 8 7 6 5 4 CONSUMER TRUST PRICING/ COST 7.2 /10 8.2/10 8.1/10 6.8/10 TRUST TRENDS According to the Institute of Customer Service's January 2018 UK Customer Satisfaction Index… UTILITIES SCORE UTILITIES SCORE 7.5 /10 CROSS-SECTOR AVERAGE 7.7/10 CROSS-SECTOR AVERAGE 5 Bristol Water 4 4 M&S Energy 3 3 Yorkshire Water 1 2 Utility Warehouse 1 Ovo Energy Utility Warehouse and Scottish Water Ovo Energy M&S Energy and First Utility The TOP FIVE COMPANIES for customer satisfaction on price/cost are: The TOP FIVE most TRUSTED UTILITIES in the UK are: HIGHEST RATED: NON-FOOD RETAIL SECTOR HIGHEST RATED: NON-FOOD RETAIL SECTOR explain energy more needs transparency, of costs on understand compare energy A number the way of in energy pricing prominent contributors, allocation of complexities structure based standing charges, format from The signifi price that this energy pricing to greater comparability according to it means companies advertise tariff It was felt perpetuating among a minority energy pricing "postcode has also been of dissatisfaction the water sector reliance on unmetered for charging. UWRR WNS 2018 MASTER V4.indd 6

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