CUSTOMERS AND TRANSITION

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CUSTOMERS AND TRANSITION

CUSTOMERS AND TRANSITION

In our fifth and final report in the run up to Utility Week Live at the NEC in Birmingham on May 21-22 Nadine Buddoo looks at the changing expectations of customers and a growing population and what this means for energy and water companies.

The profile of the consumer has changed significantly in recent years. With access to social media, the adoption of new technologies and a growing focus on sustainable consumption, utilities are increasingly faced with the challenge of accommodating their customers’ evolving expectations. 

In a recent survey conducted by Insight Advantage for Utility Week Live, utilities professionals were asked how much customer expectations and habits are driving transition across their business. Scoring on a scale of 1 to 10, respondents currently rate these customer trends at 6.1, but believe the impact will increase to 7.4 over the next five years.

The adoption of new technologies and the digitisation of energy and water networks is not only changing consumer habits, it is also impacting the way utilities engage with their customers. “Digitisation both changes the nature of customer engagement, and also provides much greater information about customers, assets and consumption, enabling much more efficient operations,” explains Duncan Barnes, partner at Deloitte Digital.

Barnes notes that another key trend is the quickening pace of urbanisation, with increasing numbers of people moving to cities, particularly in emerging markets. “This means utilities and energy businesses need to figure out how to generate enough power, in a variety of ways, for a population that is likely growing faster than capacity is. This will drive the rise of smart cities and their use of clean and green power,” he adds.  

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As well as engaging with the Yorkshire Forum for Water Customers, the company has established an online community with over 1,000 customers and has worked with stakeholders in various ways including research projects, monthly customer trackers, focus groups and round table events.

As utilities seek to learn more about their customers, they are faced with consumers who are increasingly aware of the environmental implications of using energy and water from unsustainable sources. With customers becoming more committed to reducing their carbon footprint, utilities are consequently keen to ensure their offering reflects this growing environmental concern.

DIVERSIFIED SERVICE

Shell Energy, previously First Utility, recently conducted a survey with market research company Ipsos Mori which involved more than 1,800 household electricity bill payers across the UK. According to the findings, 59% of the bill payers surveyed want to power their homes with renewable energy sources. “As a result, Shell Energy provides its customers with renewable electricity as standard, all the while ensuring good value and rewarding loyalty by offering fuel discounts at Shell service stations across Great Britain,” says Colin Crooks, CEO of Shell Energy Retail.

All of Shell Energy’s electricity comes from 100% renewable sources, including wind, solar and biomass. Its renewable electricity is certified by Renewable Energy Guarantees of Origin (REGOs), which guarantee that for every unit of electricity customers use, a unit of renewable electricity is put into the grid by renewable generators in the UK. As the demand for REGOs grows, this creates more opportunities for renewable generators in the UK to grow too.

Alongside Shell Energy’s recent rebrand, it has also shifted its customer proposition and is in the process of defining what its customers want going forward. While the business is currently unable to share all of the further changes it will be making as a result of this process, there are some interesting plans on the horizon.

“We will be rolling out a range of smart home technology offers throughout the year, starting with smart thermostats and home electric vehicle charging all with the aim to offer greater convenience to householders and help make homes more efficient,” adds Crooks.

According to the UWL survey, the average tipping point for mass take-up of electric vehicles (EVs) is expected to be 2027. Ensuring the EV charging network has the capacity to contend with drivers’ future demands is becoming a significant priority for the energy sector. Shell Energy has joined forces with EV charging specialist New Motion to offer customers EV home charging solutions suitable for all electric cars, powered by renewable electricity with charging speeds of up to 7.4kW.
As well as EV charging solutions, Shell recently expanded its offering of smart energy storage and energy services with the acquisition of Sonnen. The company’s SonnenBatterie is a smart solar storage system that integrates with new and existing solar systems. The business is tapping into the anticipated adoption of residential storage batteries as savvy consumers grasp the opportunity to both generate their own energy and potentially sell it.

Following the acquisition announcement in February, Mark Gainsborough, executive vice president, new energies at Shell, said: “Full ownership of Sonnen will allow us to offer more choice to customers seeking reliable, affordable and cleaner energy.
“Together, we can accelerate the building of a customer-focused energy system in support of Shell’s strategy to offer more and cleaner energy solutions to customers.”

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Better experiences, from the inside out

Changing to a new service model needs people.  Engaged employees deliver a better service to customers – and that of course generates real returns. But to do that they need to trust their technology and feel properly equipped to do their best work.

Over the past few years Amazon have main-streamed the ‘I need it now’ model of service, and the way consumers interact with suppliers is changing as a result. You can see how this is being reflected in utility companies, who are shifting from the old way of doing things to engage with their customers differently.  The reasons are simple: reduce complaints, increase service levels and keep everyone happy (especially the regulator). And that shift isn’t just process-led, it’s a case of changing attitudes too.

Often, that shift comes from the inside first. With leaders who show emotional intelligence – and look to understand staff needs – being the ones who succeed. This extends all the way up to the CIO and is their foundation in providing the right technology and innovation. It’s a fact that’s reflected by research from Gartner who report that 90% of a CIO’s success in driving transition depends on emotional intelligence.

Happy employees are more productive – another fact

It sounds obvious, but when employees are motivated, their organisation thrives; a fact not only found in a study by the University of Warwick but in the Harvard Business Review too.

But this can be easier said than done. It starts with less saying, and more listening. Hearing the concerns of those who work with you, and those you work for.

At a recent sprint event led by O2 Labs, Northumbrian Water Group (NWG) took this approach and explored how technology can enable ‘healthier, happier and safer employees’. And based on staff feedback, NWG went on to develop a number of wellbeing apps to address their challenges. 

“When people have great experiences at work and are happily and healthy, they are able to provide unrivalled experiences to our customers,” says NWG’s Head of People Transformation, Lynn Perry. “So the incentive for businesses to really crack this issue is there, it′s just a case of us applying innovation to the problem and seeing what solutions we can come up with.”

SHARE YOUR OWN CHALLENGE

To transition means to listen. We’re here to listen to you. Talk to us at our Challenge Wall at Utility Week Live – we’ll be at stand F56.

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CONSUMER EXPECTATIONS

The Sonnen acquisition is a clear signal that the energy sector is transitioning, with companies eager to display their credentials as customer-focused, clean energy leaders. But is this enough to meet the often diverse and challenging needs of customers across the UK? And is it possible for utilities to truly keep up with customer expectations while also maintaining profit margins?

For Laura Sandys, CEO of consultancy Challenging Ideas, the answer is a resounding yes. “Utilities can most certainly [meet customer expectations and maintain profits] if they add value to their consumers lives and take away all the hassle,” she insists. “Intermediaries and those who are building new value around energy will make great margins – those that continue to sell vanilla energy without any added value will become tightly squeezed commodity companies.”

To break the shackles of “vanilla” services and tired business strategies, utilities are turning to their customers for greater insight into their current expectations and future needs. While there are a raft of new customer engagement panels and groups being established across the utilities sector, diversity and inclusion must be made a priority so that such panels are truly representative, says Matthew Vickers, chief executive and chief ombudsman, Ombudsman Services.

“For individual providers, it comes down to listening to your customers, understanding their ever-changing needs and demonstrating that they have a voice that is valued and listened to. This isn’t just the right thing to do, it makes good business sense as it will aid customer retention,” insists Vickers. “Consumers will shape the future of the industry, whether utilities like it or not.”

For utilities to innovate and transition successfully, engaging consumers and winning their trust and confidence is crucial. And a key part of that relationship is delighting customers with an excellent service and facilitating a rigorous complaint-handling process that ensures any problems are fixed quickly when they do arise. Vickers adds: “By paying the right level of attention to complaints, utilities can spot trends and make improvements to how they serve customers.”

The growing emphasis on customer centricity across utilities is hugely encouraging. This commitment to engaging and empowering customers as they embrace new technologies and seek more choice from utilities could well be the remedy to an unsettling period that has seen many firms battling market uncertainty and slipping profits.

CUSTOMER TRENDS

According to the UWL survey, the key customer trends currently impacting utilities include:

  • Digital and apps
  • Virtual environments
  • Social media usage
  • Lower overall consumption
  • Personalised location services
  • Reliability concerns
  • Supply and price of energy
  • Micro generation

YORKSHIRE WATER'S FIVE GOALS

As part of Yorkshire Water’s long-term strategy, it has set out five key goals which are top priorities for the business over the long term. The company has shaped and agreed these goals with customers and stakeholders based on its analysis of future pressures and opportunities. The five goals are focused on:

CUSTOMERS

Develop the deepest possible understanding of customers’ needs and wants, and develop a service tailored and personalised to meet those needs.

WATER SUPPLY

Provide customers with enough safe water, while not wasting water and always protecting the environment.

ENVIRONMENT

Remove surface water from sewers and recycle all waste water, protecting the environment from sewer flooding and pollution.

TRANSPARENCY

Be a global benchmark for openness and transparency.

BILLS

Use innovation to improve service, eradicate waste and reduce costs so customers do not worry about paying bills.

EMPOWERING CUSTOMERS TO PROTECT THE NETWORK

Across Yorkshire there are hotspot areas where Yorkshire Water’s sewers have become blocked, mainly by customers pouring the wrong liquids down toilets and sinks. One hotspot is the Bradford Moor area in West Yorkshire. Within three years, the company cleared 85 blockages at the location and spent £2.8 million refurbishing the sewer network in a bid to keep it flowing.

“We knew this area needed a different approach to managing the sewers and that the investment alone was not going to solve the problem,” says Paul Chapman, head of insight at Yorkshire Water. “Customers were using sinks to dispose of cooking oils as they were not aware of, or did not have access to, alternative disposal routes.”

Yorkshire Water teamed up with Living Fuels (a company that turns used cooking oil into carbon neutral electricity), Bradford Council and the Karmand Community Centre to set up the country’s first domestic waste oil collection service. “Together with our partners, we visit customers in the area, explain to them the problems that are occurring and provide each household with a fat, grease and oil collection tub,” explains Chapman.

The tubs are collected regularly and taken to the Karmand Centre where oil is sold to Living Fuel, which uses it to create bio-fuel. The tubs are then cleaned and returned to customers in the area to start filling up again. The Karmand centre receives the proceeds of the sale.

“There have been incredible levels of support within the local community for this initiative, a large proportion of which is due to the continuing support of the local community champion, the Karmand Centre,” says Chapman. “Their network and place within the community is an essential part of the project and one ingredient that projects like this need to succeed.”

There are clear signs that the scheme is already having a positive impact. Blockages have reduced from 85 in three years to just one in the first 18 months since the scheme was launched. “This is proof that customers really can make a difference if they change their behaviours,” insists Chapman.  

Initially, the trial only included 85 homes. However, since the launch in August 2016, the number of households involved with the scheme has trebled to over 250. Chapman believes the success of the initiative is partly due to the collective effort embraced at a local level. “This scheme shows how customers can participate and benefit from helping solve problems with us. We intend to engage with customers like this going forward,” he adds.

“The pilot confirms that there are substantial benefits to be had from this innovative community partnership. The impact delivers natural capital benefits by reducing sewer blockages, avoiding pollution incidents and sewer flooding.

“It also delivers financial capital benefits – we don’t have to spend money clearing blockages or cleaning sewers, but also the community centre benefits from selling the waste oil. It delivers social capital benefits by building relationships and working partnerships with the local community.”

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SMART OR DUMB METERS?

Utilities are often criticised for failing to engage with consumers and deal with complaints swiftly. Gillian Guy, chief executive of Citizens Advice, is no stranger to the criticisms often levied at utilities, but she believes the sector is improving.

“We’ve seen some positive steps, but there’s definitely still room for improvement,” she says.

“A key challenge for suppliers will be meeting a range of consumer needs and preferences, against a backdrop of technological change.”

Guy believes the promise of technological advancements, such as smart metering, will reduce the number of problems for customers and help resolve complaints more efficiently. Ideally, smart meters should help to transform the way consumers engage with utilities in their homes.

Real time information can put consumers in control – from ending the need for estimated bills to considering how to reduce energy or water usage and making customer homes more efficient.

In theory, smart meters should reduce the number of billing complaints, but in practice the majority of issues received by the Citizens Advice consumer service concerning smart meters are about problems with bills.

For energy customers, there is hope that enrolment and adoption of existing SMETS1 meters into the Data Communications Company (DCC), and the rollout of SMETS2 meters will help improve the switching experience and ensuring accurate billing for consumers.

For water customers, the Consumer Council for Water (CCWater) remains confident that switching to a water meter could help thousands of households reduce their bills. The water watchdog says switching to a meter could save billpayers more than £100 a year, with most water companies giving customers up to two years to trial one and switch back if they want to.

“Switching to a meter won’t suit everyone but in some cases households are delighted to discover they can make a considerable saving,” says Andy White, senior policy manager at (CCWater). “Water companies also offer a wide range of schemes designed to help ease the pressure on low-income customers.”

CUSTOMER COMPLAINTS

According to Citizens Advice consumer trends data*, the three most common types of energy issue between March 2018 and Feb 2019 were:

  • Billing errors (46 per cent)
  • Advice/information – this includes questions about how to switch supplier, pricing, and how to contact a particular company (13 per cent)
  • Metering (11 per cent)


The three most common detailed energy issues in the same period all fell under the broad billing error category:

  • Catch up bills (10 per cent)
  • Disputed bills (10 per cent)
  • Failure to credit/refund (8 per cent)


*Please note, this data is for consumer service contacts in England and Wales (and unknown location contacts) only.