Water market reform: How can water companies stay ahead of the competition?

To improve customer trust and confidence, Ofwat has set out plans to introduce greater competition to the water sector. At present, a handful of companies dominate the market, but once it opens up it is predicted new entrants will be attracted into the sector.

For non-household customers, market reform will come into play as soon as April 2017, and two of the UK’s largest water companies, Severn Trent and United Utilities, have already announced they will join forces in preparation for the changes.

For household customers, it is possible competition will come into effect by 2020, and once this happens every household will be free to choose their supplier. The changes are hugely significant, opening up the retail market to all customers – business and household – rather than just the 50-plus megalitre a year market, and water companies will be entering unchartered territory. In a world of customer choice, water companies will need to offer a compelling and competitive product to stay ahead of the competition.

In this new space, water companies must look beyond the Sim (service incentive mechanism) league table, which was designed for a non-competitive market, and be ready to offer a market-leading experience. The penalties for bad service will be driven by customers and not Sim alone.

While price will undoubtedly be a key driver in supplier choice, customers will also favour a company that is straightforward to deal with, resolves issues quickly and puts them at the heart of the operation. High service levels can provide one of the few true differentiators in a competitive marketplace, and water companies would be wise to learn from truly competitive best practice sectors such as retail, which constantly top customer satisfaction tables.

In order to stay ahead in a competitive market, water companies can differentiate by offering unbeatable customer service across multiple contact channels.

To do so, they must use in-depth customer insight to determine when customers favour human contact, or when self-service is sufficient.

To strike the right balance between human interaction and technology, the use of insightful customer data must be complemented with real human insight and emotion.

At the heart of any water customer service operation is its billing and customer relationship management solution. Reliable and accurate billing is crucial to ensure great customer service and it also helps eliminate any unnecessary bill disputes. As water companies separate their wholesale and retail operations, finding the right solution that provides all the tools needed to compete effectively in the new market will be critical. In addition, the speed and ease with which the solution can be deployed will be vital to achieve compliance in time for shadow market opening.

To supplement a robust and proven billing system, water companies must also offer agile and dependable customer service that not only takes into account each individual customer and his or her differing needs, but that can also flex up and down in line with customer demand. While technology can offer speed and convenience for customers, it is the advisers dealing with enquiries who can really make the difference.

Echo recently conducted research around customer contact preferences and found that 53 per cent of people prefer to deal with service providers over the phone or face to face compared with digital contact channels, especially when it comes to dealing with complicated situations. Truly grasping this distinction, and offering self-serve options backed up with an empathetic contact centre adviser team will be key in staying ahead in the new competitive landscape.

The entire utilities sector is facing considerable challenges when it comes to managing rising levels of customer debt. In 2014, it was recorded that 2.5 million UK households struggled to pay their water bills and that customers had collectively around £2.1 billion of debt.

It is not just income deprivation that leads to customers failing to pay their bills. A customer may not understand the bill, or dispute the amount. To ensure all these factors are taken into consideration, companies must use data and insight together with joined-up systems throughout the entire debt journey.

Customers must be placed at the heart of every debt collection process and treated as individual cases. A box-ticking, one-size-fits all approach is no longer appropriate.

Debt must be seen as part of the customer journey – engaging customers and broaching each case with understanding is crucial.

Listening to each customer, getting to know them and offering advice and assistance before the debt becomes a bigger problem can help customers to get back on track.

Working with a specialist partner early when bills are due can really add value and help to build and protect customer relationships.

It is at these initial stages that it is important to identify customers affordability issues. With non-household market opening drawing closer and a competitive household market looming, water companies must ensure they are compliant, competitive and ready to meet the challenges ahead.

They must also focus on strategies to retain customers, build loyalty and attract new custom, in a market where it will become increasingly harder to do so.