The world is changing. Annual average household growth is predicted to hit 210,000 between 2014 and 2039, and our expanding population is progressively adopting a ‘digital first’ mindset. Utilities companies have to adapt and change to ensure they deliver more of what matters to customers - and here, we discuss how.
Consumer expectations are rising…
...and are growing more sophisticated. They expect convenience, speed and personalisation, and want to interact with companies across an increasing number of digital channels.
Almost half (49%) of 21-34 year olds favour computer or smartphone applications that help improve energy efficiency in the home (Deloitte, 2016). This trend mirrors a wider shift in mindset, as customers begin to expect the pre-emptive experiences offered by leading brands such as Uber and Virgin.
As John Russell, Ofwat’s Senior Director of Strategy and Planning says, “We know that customers don’t compare the service they receive from their water company with the services provided by other water companies. They compare the services they received with companies like Amazon, ASOS and John Lewis.”
It is a case of adapt or die. And there is clearly room for improvement:
- Gas and electricity switches surged by 28% in 2016, reaching 7.7 million in total (Ofgem, 2017)
- Less than half (45%) of household customers in the water industry are likely to recommend their water company to friends or family (Consumer Council for Water, August 2015)
- 33% of people switching providers, cited poor customer service as a major reason (Echo Managed Service, 2017)
Regulators are challenging the sector to find innovative ways to turn this around. It is clear that companies must further empower customers, whether it’s helping them manage their own accounts or making it easier to switch providers.
Change is being driven from all directions
No longer can utilities companies rest on their laurels. With the recent deregulation of the water industry for businesses in England and Wales - following Scotland’s move in 2008 - the opening up of the domestic water market may not be far off. Businesses in the water sector cannot afford to wait until it happens - they must prepare now.
But it isn’t just regulatory pressures, changing consumer behaviour and the possibility of greater competition that weighs heavily on the utilities sector. A new wave of agile disruptors are entering the marketplace, using digital and data to seize market share.
According to the Uswitch Energy Customer Satisfaction Report (2018), newer, smaller energy suppliers are already achieving better satisfaction scores than the big six. In fact, three of the newer entrants accomplished scores of nearly 90% or above.
Some start-ups are forging new industries too, applying smart algorithms to help customers drive better energy efficiency, and developing Demand Side Response, supplying energy to meet demand. This, combined with the rise of the connected home and the advent of digital devices such as smart meters and virtual assistants, means customers are taking greater control of their utilities usage.
Utilities providers can turn it up
Such huge change signals an unprecedented opportunity for utilities companies to increase relevancy and deepen engagement with customers - all the while building a platform on which relationships can grow and be sustained.
It means embracing digital media and embedding it into the operation. It means leveraging technology to anticipate and meet the needs of today’s customers, while driving down costs and streamlining the experience.
Why digital CX matters
Digital CX is at the heart of this transformation. Utilities companies are sitting on a wealth of hugely valuable customer data, and this can be turned into a strong competitive advantage if data insights are combined with digital technologies. It can empower companies to add value to customers, develop new products and services, and keep pace with industry leaders.
By improving communication - a critical area highlighted by both PR19 and RIIO - utilities companies can transform their offerings and elevate the customer experience. Consumers expect added value and personalised content and they want a seamless experience, regardless of the channel they use.
We have identified both the opportunities and the challenges facing this sector in our latest white paper Delivering More Of What Matters, with a focus on the three key pillars that should drive every utility company’s digital strategy: data, personalisation, and communication.
It is not just about adapting to comply with PR19 and RIIO; providers must evolve in order to stay relevant, compete and, ultimately, to thrive. Understanding how digital technologies can enable you to do this is imperative, particularly as new entrants continue to join the fray.
We’ll be speaking about how utilities companies can drive change throughout PR19 and RIIO with artificial intelligence at this year’s Utility Week Live on May 22nd in the Keynote Theatre! Come say hello and chat to us some more on May 23rd.