New research suggests 38% of consumers would instantly review their water supplier if and when the domestic market opens to competition, while 48% would consider a single supplier for gas, electric and water if it reduced their overall bill costs.

The findings form part of a report by Echo Managed Services which examined the behaviours, attitudes and experiences of 1,000 UK households towards their service providers and the factors which motivate them to switch suppliers.

It also revealed that more than one in 10 consumers say they are increasingly likely to switch their business to a service provider which is viewed as more “ethical” than the competition. 

Among the other reasons for consumers to switch providers, 33% said they would change suppliers as a protest against poor customer service, 18% would switch as a reaction to poor handling of a claim and 20% would switch if acting on the advice of experts in the media.

Another 16% say they would switch providers if their current supplier became involved in a public scandal, like being exposed for poor customer service, or instances similar to the 2015 emissions scandal at Volkswagen.

1 in 5 customers would review supplier within 12 months of domestic water market opening

Commenting on consumer appetite for water competition, the research says the water companies will need to learn quickly from their experiences in the new non-household market should the domestic market open.

The opening of the commercial water market to competition has put pressure on companies to ensure their propositions and customer service are up to the standards needed to entice and retain customers, the report says.

Nearly one in five (19%) say they would review their services within 12 months of the market opening, with a further 7% indicating that they will switch immediately, putting a significant number of customers suddenly up for grabs.

However, water does not appear to be a priority switch for customers - 57% of consumers are no more or less likely to review their choice of water supplier than other utilities, if and when the household water market opens to competition. Almost a third of customers (29%) said the chances of them reviewing their water supplier was less likely than reviewing their other utility providers.

For 14%, water is top of the list when it comes to utility providers they are likely to review, and they would  be more likely to review this than other utilities and services purchased.

The report cautions that at this stage survey respondentsare voicing their opinion without knowing what benefits will be on offer, so opinions could easily change when supplier propositions become more concrete.

Trust and customer satisfaction

The research provides some interesting insights into trust and customer satisfaction, with customer trust in the water sector higher than other utilities, in particular energy, which could lead some consumers to remain loyal to theircurrent provider.

However, customer satisfaction levels in the sector are still some of the lowest in the UK alongside energy and telecoms and the satisfaction and trust rating for different water companies varies widely, reflecting a varying difference in customer service and cost.

Propensity to switch is not only likely to be influenced by price savings; satisfaction with their current water supplier and how well that company meets their needs will play a key part if and when the sector opens to competition.

Water: price related switching factors

One difficulty that water suppliers may face in a competitive market is around the levels of price discount that customers will expect. According to the report, 44% of consumers said they would be enticed to review or switch suppliers only if they could make a saving of 20% or greater, 24% of customers would be enticed to switch for savings of 10% and 13% would switch for a 5% saving.

However, it is unlikely that retailers will have the opportunity to pass on such large levels of discount against current water bill levels. In addition, given the likely margin in the sector, suppliers should be wary about creating a price war that results in a race to the bottom.

With trust and transparency issues a top switching frustration for 28% of consumers overall, the report says the water sector should seek to avoid repeating the errors made by businesses already operating in competitive markets.

It also suggests that non-financial switching motivators are an important consideration for the water market given the limited level of price discounting that is expected to be available.

For example, non-financial perks are important for 25% of customers, better customer service is a big issue for 17%, while one in five (20%) would consider switching to a supplier with better “green” credentials. A multi-utility bill is also described as enticing for 10% of consumers and 5% would welcome the chance to change provider due to trust issues with their current supplier.

The report concludes that quality of customer service, investment in innovation and creating value added services could help water retailers to set their offer apart should the household market open, and living up to promises will be vital.

Click here to read the report in full.