Everflow’s vision of an autonomous retailer

Everflow Water wants to simplify the retail market and has invested in technologies to get there. Utility Week catches up with Josh Gill, founder and chief executive, to hear about his vision for an autonomous non-domestic sector and why he welcomes regulators’ recognition that this is a fragile market and they need to be more hands on.

The non-domestic water retail market, now in its third year, has struggled since inception to deliver the improved service for customers that it was established for. Complaints remain higher than pre-2017 and in September watchdog CCW criticised retailers for “still not getting the basics right” around bills and meter reads.

Gill says his company had a clear objective from the outset:

“Our goal from the beginning was to make utilities simple so that’s what we will continue to do.

“The end goal is to produce the first fully autonomous retailer where we reduce staff costs and redeploy those people into roles that add value to customers that we would rather spend time doing. We are on the journey to reaching a fully autonomous retailer point.”

Gill previously worked at Northumbrian Water , where his roles included leading a project in its Scottish retail division during which time he devised a strategy for growing customer numbers.

Everflow was established in 2015 and, ahead of the English market opening, built a customer base in Scotland choosing to pursue small and medium-sized businesses.

“We learnt a lot from Scotland about market conditions and the best way to attack the English market. We got a few thousand customers there, but it was in the English market we started aggressively going after customers,” Gill says.

This “aggressive” approach included getting brokers onside and operating with absolute transparency so they and customers could see wholesaler charges with what Everflow was adding on top of that, and why.

“We clearly showed how much money we were making from the customers and what services we charge for – billing and meter reading,” Gill explains. “There has been much scrutiny in the broker market with accusations levelled against some that they are ripping customers off, so we wanted to be completely transparent to build trust with customers.”

He say the SME segment of customers were largely overlooked when the market opened and here Gill saw opportunity to work with brokers to bring in customers – 99 per cent of whom came to Everflow through third parties.

“It’s fair to say we’ve cornered that market. The lack of awareness was the biggest problem when the market opened so SMEs were unaware. We decided the best strategy to go after these customers was through brokers who were already in touch with these companies.”

The company has analysed the data in the central market operating system (CMOS) and found that around about 40-50 per cent of customers who have changed suppliers have switched to Everflow. On a supplier point identifier (SPID) basis it is around 20 per cent, but Gill explains that because the business focusses on SMEs it is equivalent to more than 40 per cent of customers.

Gill and his team quickly saw a point of frustration in the speed at which quotes were generated so decided to develop a software platform to speed things up.

The company set up a dedicated technology arm – Everflow Tech – to build its Eclipse platform that gives quotes in minutes instead of days, according to Gill.

The platform is available for Everflow’s competitors to use, which Gill said is not so much giving away the company’s edge but more about finding ways to improve the market for customers and suppliers alike.

“Our competitive advantage is our way of thinking and doing business, so the Eclipse tool is the manifestation of what makes us difference rather than the difference itself. It is good for the market so we are happy to share the software,” Gill says, “I would rather the market operated better for customers than make another few quid.”

By automating tasks such as billing, the company has a vision to redeploy its staff to add value in other ways like making water efficiency meaningful for customers, which for SMEs often comes down to saving money.

Everflow Tech is developing an app that will let customers see their savings by showing the user which fixtures and fittings in their premises could be upgraded to water efficient ones and how much they could save, and even arrange a plumber to visit.

“The only way to engage SMEs is to convert water savings to pounds and pence, otherwise they will wait 10 years until they run out of water – but we want to reach them before that point!”

Promoting water efficiency is a “big selling point” for the company because the savings available by using water efficiently could be up to 20 per cent, which outstrips savings from switching alone of one or two per cent.

The app could be used in domestic settings also to help householders see where savings can be made in a straightforward way.

By carving out areas of differentiation and making the most of technology the company has plans to grow – and is eyeing acquisitions as well as organic growth through its third-party intermediaries.

The immediate future for the wider market is tentative as the impacts of coronavirus hit the already fragile sector.

“There are big challenges ahead. After the initial stage of lockdown there will be difficulties for SMEs in the next 12 months and we will see a lot of those sadly fold, which will add pressure at a time when the retail market is already fragile.

“We are expecting it to be a difficult year for all retailers with a focus on credit collections – as there will be across the wider economy. Ultimately the challenges and stresses it has placed on the market have awoken Ofwat and Defra to look at the market and ask if it will deliver long-term value to customers, or is it still quite fragile? They have realised it is fragile and needs to be addressed.”

He says this focus from Ofwat and Defra is critical for the market to improve by getting beyond worries about reaching a point of profitability and letting retailers think more about improving service.

“If Ofwat can sort the framework of the market out sooner it puts less pressure on that area of business and provides more breathing space to find other ways to deliver value for customers. That is what we really want from this market – to provide more value for customers.”

Gill explains that giving retailers some breathing space will drive those improvements. If Ofwat increased margins by two or three per cent, for example, it would allow retailers to be profitable and show shareholders there is scope for returns.

“Money could then be put back into improving the customer experience – which would inevitably make them more efficient, increase shareholder value and increase customer value,” Gill says.

“Some retailers are so fragile that investors may be put off from putting money into a business that is struggling. But with breathing room it makes it easier to make the business case to improve. It is a fine balance between shareholder returns and investment. It’s a tough question for Ofwat to be thinking about.”

This respite together with greater use of technologies such as smart meters and automation of processes has the potential to give rise to further improvements in the sector. Gill says although the challenges of the next 12 months could lead to retailers folding, the opportunities for the market will lead to benefits for customers.

“It would be disappointing if we saw Ofwat and Defra withdraw to back to pre-Covid levels of engagement. I hope and expect that to carry on and to deliver several outcomes including a greater focus on value for customers.”