Sustainability in a global pandemic: What role must water companies play?

Arthur Mitchell, engagement manager at PwC's Strategy& division, considers how water companies can support customers through this difficult time while balancing the sustainability impacts of increased consumption during lockdown.

The Covid-19 pandemic has had a sudden and wide-reaching impact on our lives. The shift to a home-working environment has, perhaps unsurprisingly, resulted in much greater use of our main utilities.

Against this backdrop, how can water companies strike the right balance to deliver their environmental targets while truly supporting their customers?

The impact on the water sector and customers

In the water sector, companies have seen increased pressure on their already limited resources – with consumption rising steeply during lockdown. This comes at a time when water companies are already working hard to reduce overall consumption with the aim to mitigate the impact of climate change and water scarcity as the UK’s population rises.

These increases will directly result in larger bills for many customers and as a result, companies are likely to experience higher levels of bad debt (exacerbated by the economic backdrop of the pandemic). Where customers are hit with unexpected higher bills, or face increased challenges to pay existing bills, water companies can expect to see a rise in customer queries and complaints.

With winter fast approaching, we may well face a perfect storm in this regard as residential occupancy and consumption rise at the same time as government support scales back.

While customers have a clear role to play in reducing their consumption, the responsibility must also lie with water companies. If customers are equipped with the right information, incentives and support, we could see a reduction in short-term consumption, supported by increased trust in water companies. If customers are not supported, we could be set back in our drive for a greener future.

Maximise the benefit of data for metered customers

Covid-19 has accelerated our move to a digital world, with even the slowest digital adopters being pushed to shop, bank and engage with utilities online.

Unfortunately, water companies have lagged in this regard compared to other sectors. For customers with a meter, water companies must ensure they are, at a minimum, providing access to their metering data alongside targeted insights on how to reduce consumption.

Yet why not go further? With customers spending more time at home, there is an opportunity for water companies to use gamification tools and incentivisation to drive up engagement and to achieve greater reductions in water consumption through behavioural change.

Expand support for unmeasured customers

While water companies cannot provide all customers with usage data due to limited meter penetration, they can support unmeasured customers in other ways. Water companies should use metering data to offer customers insights based on personas, localities or property types. Customers do not require perfect data to change their consumption habits – perhaps they simply need a well-timed nudge to point them in the right direction.

If customers see that water companies are making efforts to better serve them through useful and transparent data insights, they may begin to view water companies in a better light.

Doing the right thing for customers

It’s likely that greater consumption will lead to higher bills and, with increasing pressure on pockets, could result in more customer queries and complaints. In addition, even those with the best intentions may find that right now is not the time to make significant changes to consumption habits. Against this backdrop, many customers are not likely to be receptive to insights on their consumption habits.

Instead, water companies should focus on doing the right thing for their customers ahead of achieving short-term benefits. If, in the current environment, customer service agents are able to resolve problems effectively, with empathy and kindness, water companies can start to improve on their generally low satisfaction scores among customers.

While this may seem counterintuitive given the immediate need to reduce consumption, water companies cannot be seen to be taking advantage in the current circumstances. Any perception that they are acting in their own interest will lead to customer satisfaction levels falling further. In this scenario, water companies will be unable to influence much needed reductions in consumption after the pandemic when customers are more receptive to change.

To get there, water companies must accelerate their digital transformation

In order to support their customers, water companies must continue to evolve. In particular, they must accelerate their digital transformation.

Digital transformation is required if water companies are to effectively manage and utilise key data, nudge customers through data insights and surface the right information for customer service agents to resolve customer complaints effectively and in a timely manner. Without this rapid shift towards digital, water companies will continue to struggle to change behaviours.

In fact, if water companies are unable to deliver their own transformation, the desired reductions in consumption will remain a pipedream and we will have one less lever in our aspirations for a truly green recovery.

Mitchell is co-author of PwC’s report Metering, a catalyst for transformation in the water sector