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Why digital holds the key to the changing utilities sector

Here we ask him for his thoughts on how utility companies can harness digital to stay relevant as the sector undergoes considerable transformation…

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Where do the biggest opportunities lie for utility companies looking to leverage digital?

The biggest opportunity lies in data.

There are many barriers when it comes to utility companies getting the most out of their data. This is often down to the legacy systems and data silos that have evolved over time.

I have worked with a number of utility companies where the operational data resides in one system, while customer information is in another. It’s a common issue.

A lot of the digital trends that we're seeing, such as personalisation, GDPR and AI (Artificial Intelligence), are going to demand a greater quantity of data, as well as greater control and quality of that data.

If companies can consolidate their data and create a really good view of their customers, it will allow them to be more proactive with their communications to customers and to personalise content to match their needs. That's where they'll start to really differentiate themselves.

 

 

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Where do the biggest headaches lie for utility companies looking to leverage digital more broadly?

I think the biggest problem will be culture. The budget is there, but it's about the risk-taking mentality. Innovation is about trying new things and failing fast. Taking that risk is understandably quite difficult in a regulated industry, and changing that mindset is going to be a challenge.

Though it’s something that Ofwat are really driving; innovation is a key pillar of PR19 and they recently ran a big campaign around this - #SparkInnovation.

 

 

It will be interesting to see how utility companies respond.

 

Utilities will also need to compete for strong digital talent. Last year, Accenture pointed out that there are no utilities included among the Fortune 100 Best Companies to Work For list. Providers will increasingly need customer service agents who can work across channels, and provide personalised, insight-driven energy advice.

They will also need data scientists and digital experience designers. To attract this new wave of talent, utility companies need to demonstrate that they are committed to digital, and to embed this into the employee experience.

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What lessons can utility companies learn from other sectors when it comes to using digital to enhance the customer experience?

Companies in every sector are having to benchmark themselves against digital-first companies, because the digital-first generations are growing up with expectations based on their experience of brands like Amazon or Google. Utility companies have to start looking externally for inspiration on how they can meet these expectations.

More specifically, I think the utilities sector can learn a lot from the digital platform economy.

The digital platform economy offers the same model that water companies have been operating in the physical world for decades: invest heavily in an infrastructure to facilitate the seamless operation of providing filtered water into, and removing wastewater away from, households across England and Wales.

In the digital world, that translates to creating online structures that can enable a wide range of activities – a foundation for new value creation. It’s a strategy typically associated with digital-first companies. Uber, for instance, have created a platform from which it can quickly pursue other opportunities and provide other services – moving beyond its taxi service and venturing into another sector with Uber Eats.

We’re going to see more and more companies adopting this model, and utility companies have to take notice and understand how it could work for them – particularly with deregulation on the horizon.  

How can utility companies use data to take a more preemptive approach to customer experience?

If you have intelligent systems that are capturing data, companies can be more sophisticated about their communications and get in touch with customers before they make enquiries. This could be anything from warning of potential flooding to an interruption to the water supply while work is carried out.

As well as providing better customer service, being preemptive also means the business doesn’t have to handle lots of incoming calls from customers seeking information or reporting problems.

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But first, companies need to have a model by which they can communicate in a proactive way - this is where chat bots work really well.

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Ofwat’s latest price review, PR19, has outlined four key areas in which it wants companies to raise their games: customer service, more affordable bills, innovation and long-term resilience. How can digital positively impact these?

Customer service really comes down to providing a proactive and personalised experience on the customer’s channel of choice. Expectations are changing. Rather than it being a surprise to use WhatsApp or Facebook to interact with a company, customers are starting to expect it.

Innovation and digital go hand-in-hand. But AI in particular will be key; using predictive analytics to see how people consume water, the ways in which pipes perform, and the impact on environmental factors as well - these are all areas in which Ofwat has challenged utility companies to innovate and deliver.

Former Ofwat CEO, Cathryn Ross said it was more than likely that households would manage their utilities through a single intermediary by 2025. How can utility companies start preparing themselves for that change?

They need to prepare themselves for retail - so being able to sell effectively, which most of them have already started doing since the water industry for business customers was deregulated in April 2017. Then they need really good, accurate, up-to-date data, which will encourage companies to work with them, enabling them to provide accurate bills and a great customer experience.

Ultimately, companies need to consolidate their data and unify the operational side of the company with customer information. Only then will they succeed through this period of change.

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