Here, he tells us how utilities companies can best prepare for the future…
Where do you see the biggest opportunities for utility companies looking to use digital to steal a march on competitors?
Consumers today expect companies to take effort away from the experience and make it really simple and transparent. Utility companies need to make sure the customer is front and centre, and work hard to wrap the service around them.
We are now in a position where, to create genuinely better customer experiences, you can start leveraging intelligence in a much more effective way. Data insights and Artificial Intelligence (AI) are really obvious but underutilised ways of taking it to the next level.
Utility companies have got millions of customers and massive amounts of data, so applying AI to that data offers a really powerful means of adding value - to the business and to the customers themselves.
What challenges are utility companies facing in achieving a customer centric experience?
There are a number of factors.
There are always budget constraints, because utilities companies are regulated and have to be very careful about how they spend their money. But typically it's much more about knowing how to apply that budget in an effective way.
One of the biggest drivers is that customer expectations are ramping up year on year, and the pressure is now coming from outside the sector as people compare their experience with those they had with the likes of John Lewis or Uber.
Consumers are starting to apply the expectations shaped by other brands to the more traditional world of utilities. At the same time, organisations can see deregulation looming on the horizon, and the challenges that will present.
They know they need to get their house in order.
How important is data to the future of utility companies?
Whilst these organisations have massive amounts of data, their customer data is often siloed from their operational data, which can be a huge challenge.
Say a customer’s billing and address information was completely separate from their operational information, with no way of connecting the two. There would be no way that the organisation could piece together the data and be proactive. For instance, if there was an outage, they would have no way of knowing which customers were going to be affected and who they needed to get in touch with.
There is an obvious customer advantage if organisations can proactively tell people that their water is going to be off the next day, for example, but unless you can connect the data there is no way of adding that value.
If businesses can start to imagine what having that connected data looks like, and then understand how applying something like AI can make an impact by identifying patterns and anticipating trends, it starts to get really exciting.
PR19 outlines four key areas in which utility companies have to raise their games. Where do you feel digital can make the greatest impact?
It can impact every area.
Let’s take ‘more affordable bills’. Digital can help companies improve their efficiency by introducing more ways for customers to self-serve. By doing so, companies can move customers to the most suitable - and cost-effective - channels, meaning they have less people calling the call centre. All these things lead to reduced costs, and offer the potential to reduce bills over time.
Digital also enables a deeper understanding of the customer base, helping utility companies to tailor support directly to the people who really need it. That has an impact on affordability, ensuring the most vulnerable customers have the help they need to understand what energy they are using and where they can save costs.
One key difference between PR14 and PR19 is the focus on innovation, which is a really welcome change for this sector.
Using innovative technologies like AI across digital channels to help build insight into customer behaviour - assessing and reviewing what customers are actually doing - will help drive better decision-making about where investment is made.
Innovation is a key part of why PR19 could be so successful.
AI and the Internet of Things are buzz terms. Where do you see these technologies adding value in the utilities sector?
If we look at the explosion of internet-enabled devices that can be used as customer-facing channels, that's when it becomes interesting.
For example, if I could ask my Amazon Echo to give me my meter reading, or tell me when I am using more water or more electricity than expected - based on my usage the previous month - it adds value to me and makes my life simpler.
But we mustn’t obsess about the channel. The true value lies in how such technologies can make the customer’s life simpler and take away pain from their interactions.
Organisations can combine this layer of intelligence with the masses of data they hold, enabling them to focus on particular demographics, certain kinds of behaviours or specific geographical areas. They can then identify the best opportunities to add value or push their messages.
If it's through a home assistant, great, if it's through a mobile device, great. It's having access to that data and intelligence which matters.
There is so much opportunity for AI, but people get scared by the term. All we are talking about is an algorithm that can learn, and make certain tasks faster or cheaper - or just possible.
For example, using AI to handle 80% of the call centre traffic by answering the most common questions will allow agents to be much more proactive, making outbound phone calls and spending longer with the people who need more help.
One of the classic findings from our work with AI in conversational spaces is that you can start to spot patterns from the questions people ask...
Imagine a scenario where lots of people start asking why the water is off in Bolton. That might alert the company to an issue they weren’t aware of as of yet, because not enough people had reported it. Or there might be a correlation between one incident and another that won't necessarily be spotted by humans, but machine algorithms can quickly identify a pattern.
There’s plenty of opportunity for AI to help the customer experience and the business operations to run more smoothly.
How can utility companies prepare for former Ofwat CEO Cathryn Ross’ prediction that households are likely to manage their utilities through a single intermediary in the next six or seven years?
It's almost inevitable that the domestic water market will open, and when it happens I think it will happen pretty quickly. It makes sense that consumers will look for their gas, electricity and water providers together to get the best deal and maximise convenience.
This change means utility companies will need to invest in the customer experience.
Organisations need to get the platforms and the thinking in place to support a system that is all about 4 key things:
- Ongoing improvement;
- Data revision enhancements;
- Being able to personalise and shape the offering and messaging to the right person at the right time; and
- Bringing in that intelligence layer.
These are all crucial things if companies are going to positively influence customer behaviour and retain business.
I think it will be a real challenge for water companies to cope in that new world. We will probably see some of them becoming pure wholesale operators, just running and operating assets, while other utility providers will expand out.
You will get players like British Gas offering water, while new entrants who don't deal with the assets will exist to provide the experience layer - and they will be superb at that one niche thing. They will be the ones who you can access through Alexa, or creating a brilliant app that gives customers unbeatable insights into their energy usage and how to streamline it.
These players are the ones that will win - the innovative front end experience companies, and the big operators who understand the competitive landscape.