In an Expert Focus article for Waterbriefing, Chris Cullen, head of sales and marketing at Echo Managed Services and RapidXtra, discusses the upcoming water market reform and examines ways that water companies can gain a competitive advantage by providing unbeatable service and becoming truly customer-centric.

Chris Cullen: Since its privatisation almost two decades ago, the water industry in England and Wales has been strictly regulated and dominated by just a handful of companies, with customers not having any say over which retailer handles their water and wastewater.

However, next year’s market water reforms will see customers given more choice than ever over who supplies their non-household water, which in turn will bring about a number of new challenges for water companies. Competition between existing incumbents, anticipated new entrants to the market, and increased options for customers, will pose huge threats to these companies.

With April 2017 just around the corner, companies are now busy making preparations for non-household competition to come into effect.  And with similar reforms expected to come into effect for household customers from as early as 2020, it is essential that water companies now prepare for big change, with the sector increasingly expected to be characterised by high levels of competition moving forward.

Looking beyond SIM

It is now vital that water companies look beyond the service incentive mechanism (SIM) league table that was developed purely for their industry. Once the market opens, companies will face tough competition from both existing incumbents and new players alike.  And with utilities traditionally performing badly in customer service league tables, when compared to other sectors such as retail and tourism, water companies will need to focus on innovative improvements to drive customer satisfaction and loyalty and offer customers a service that consistently delivers on both price and quality.

Whilst a competitive price will be a key differentiator for customers considering switching supplier, they will also value a retailer that has a customer-centric approach, can offer value added services and resolve any issues efficiently.

So in a changing and challenging environment, what should water companies do in order to stay ahead of the game and build lasting customer advocacy and loyalty?

Building an accurate customer picture

Once the market opens, water companies will need to clearly differentiate from their competitors by having a unique selling proposition which appeals to their target customers. One way to ensure the highest level of service is maintained throughout the entire customer journey is to empower and equip advisors with the most accurate picture of each customer and their individual preferences.

To do so, water companies must have a robust and proven billing and customer relationship management (CRM) solution in place. Utilising the correct customer management, billing and collections technology can help to ensure accurate and on time billing and prevent any bill disputes, as well as providing insightful customer data which can be used to complement the customer service function and drive continuous improvement and service innovation. 

Applying agile customer service

Of course, customer needs and preferences never stand still, and water companies must consider how to respond with agility to evolving customer expectations in what will be a new and unknown marketplace.  Being able to act quickly and reliably and stay ahead of what other companies are offering may help companies to create important competitive differentiation through service innovation.

Also, providing a joined up and seamless service can act as a powerful differentiator. Customers now have multiple communication channels at their disposal and water companies will be expected to provide a consistent and prompt service, whichever combination of channels customers choose.

Research we recently conducted into customers’ preferred channels of communication when interacting with businesses found that 53 per cent of consumers prefer telephone or face to face contact – especially when it comes to complicated enquiries. These findings show that overall customers still prefer interaction with a human, even when they are given a choice between multiple channels. However, the research also highlighted that digital channels are being embraced by customers too, particularly for simpler enquiry types.

In order to satisfy and retain customers, water companies must offer customers both ease and choice; with the speed and convenience of self-service options, teamed with an understanding, empowered and empathetic contact centre advisor team.

It’s also important for companies to use their experience, together with customer insight in order to guide customers to the best channel or channels for their specific needs and preferences.  Equally vital is ensuring that as an enquiry progresses, water companies recognise when to switch channel in order for the customer to receive the best possible customer experience and positive outcome.

Identifying vulnerable customers

Statistics released this month by the Money Advice Service found that 8.2 million adults and 16.1 per cent of the population live with problem debt, and that younger adults, single partners and those who live in rented accommodation are most at risk. In addition, at present only around 17 per cent of over-indebted people actually seek advice, and most wait over a year before reaching out.

Giving customers that find themselves in situations of vulnerability the support and guidance that they need is a vital part of a customer-centric approach. Not only is it crucial that water companies approach each individual case with compassion, they must also recognise that some customers will be unwilling to reveal the circumstances of vulnerability themselves, and so water companies must become more innovative and proactive in their approach moving forward.

It is important for water companies to understand the reasons behind customers failing to pay their bills – income deprivation is not the only factor. Sometimes customers do not fully understand their bill, or they might want to dispute the amount. To determine the customer’s individual reasons for failing to pay, it is vital that water companies treat each case separately. To do this, it is important that companies use all the data and insight available to them and have joined up systems in place throughout the entire debt journey.

Moving forward, water companies must move away from compliance alone, and understand that a box-ticking approach is neither useful nor effective as the market evolves. Here, water companies must recognise that vulnerability is not just about data insight, but is also about ensuring that front line advisors are experienced and skilled in listening to customers and spotting those at risk.

Tackling debt at the early arrears stage

Debt is an increasing challenge for many industries, including the water sector.  However, often having someone to talk to, that can offer helpful advice before debt becomes less manageable, is all that is needed to get customers back on track. With this in mind, the early arrears stage is the most important for rehabilitation.

With water bills issued annually, regular engagement opportunities with customers regarding billing can be very limited, and the payment of a water bills might not be at the forefront of customers’ minds.  What’s important here is that water companies put in place proactive and regular customer engagement strategies around billing times.  Simply contacting customers via a range of on and offline communication channels to inform them that annual bills are soon to be issued and of any related price changes can go a long way to both prevent bill shock and reduce customer arrears.

Ultimately, debt collection must be seen as just another part of the customer journey. Approached correctly, with a good grasp on the importance of customer service, water companies can do more than simply give customers the support and understanding they need to get back on track with payments. They can also ensure customers continue to feel satisfied and positive throughout the process, in turn fostering loyalty and a positive impact on brand reputation – both key concerns in a competitive market.

So how prepared are you?

With reform for both the non-household and household markets on the horizon, water companies must now focus both on how to achieve and maintain compliance, and how they will succeed in the new competitive market. Whilst price will be a key driver in customer choice, companies must also be able to offer a truly customer-centric service.

The delivery of excellent, consistent, efficient and seamless customer service will be more important than ever before. In a world of customer choice, water companies must offer a truly compelling and competitive service, in order to become a retailer of choice.

For more information, visit www.echo-ms.com