As the new non-household retail water market launches in England, Evan Joanette of the Consumer Council for Water (CCWater) explores the opportunities and challenges that the changes could present for more than 1.2 million businesses, charities and public sector organisations.
After years of intricate planning and preparations, water retailers finally started competing to provide over a million businesses and other non-household customers in England with services like billing, meter reading and managing queries from 1 April 2017.
Retail competition signifies a monumental change in the water sector landscape. Water companies in England (and Wales) had been regional monopolies since the industry was privatised in 1989. But their non-household customers have now become part of the world’s largest competitive retail water market.
As the consumer body for the industry, CCWater conducted research and spoke to business representative groups for years leading up to market opening. We discovered most businesses liked the idea of choice but they also expected a considerable bill saving to switch. However, in a retail market which only represents about 10 per cent of the bill, customers were unlikely to see volumetric prices for water slashed.
Nonetheless, customers pre-registered their interest to switch thousands of water and sewerage supply points to a new supplier the moment the market opened. National vehicle parts repair outfit, Kwik Fit, was reported to have switched all of its sites to a single retailer and Greene King, the pub retailer and brewer, decided to provide its own retail services through a process called self-supply. It suggests factors like streamlined and efficient customer service and billing could already be creating waves of customer interest in the water market, despite the lack of deep pricing discounts.
Although the market is now open for business, the first challenge to service providers is to show customers where the entrance is. Within days of the market going live, we had already heard from some customers who said that the lack of a price-comparison website or tool made it hard for them to find and compare what was on offer. And some found retailers were unable – or unwilling – to offer any tariff information to them. Retailers must find ways to engage customers in a clear and time-effective manner if they intend to succeed.
Retailers who inherited customers from their parent water companies have a lot to lose. Agile new competitors could woo customers away with promises of one-to-one account management, specialised on-site services like water efficiency auditing, and even bundling with other services like energy or telecoms.
Time-poor customers may find a great deal of value in a retailer who actually listens when they say they can only deal with suppliers at certain times, or on certain channels. Or a retailer that delivers on promises to call ahead before trying to take meter readings from a locked cupboard that requires the owner to travel many miles to unlock it.
Reliability and flexibility
Small businesses, which may not be the most accessible customers individually, might be valuable in large numbers. Service failures that affect a considerable number of customers, like failed direct debits, incorrect bills or bungled meter readings could suddenly push many of them towards another retailer.
Some customers bemoan the water industry’s lack of flexibility when it comes to bills. The quarterly or six-monthly billing cycles offered by water companies – and the bills that seem to come weeks after they were dated – do not suit efficiency-conscious customers. Before the market opened, some businesses said they expected retailers to generate more frequent accounts and consolidate billing across multiple sites.
Some retailers are likely to offer billing cycles that can match their customers’ payment terms with their own clients. They also say they will contact their customers directly if their consumption changes drastically. This kind of personal attention, particularly at the SME level, could be very attractive.
Looking at their management teams, you can see that some retailers are determined to make a mark on customer service. Few are setting out to be asset experts like their water company cousins. A focus on customer service, rather than an intimate knowledge of where pipes are buried, will often work out fine. As a one-stop-shop for queries, retailers can work behind the scenes to ask the wholesaler for answers to standard operational queries which will be relayed to the customer in good time.
When things go wrong
But while the proportion of customers who experience a service outage like a water supply interruption or sewerage blockage, is small, what happens when something does go wrong?
Market codes help retailers and wholesalers manage their processes and financial settlements and only broadly set out what to do in an emergency. The actual interactions between the retailer and wholesaler in the heat of the moment, the resolution to the problem and the management of the customer’s expectations and communication won’t follow any tidy scripts.
Having around 20 retailers interact with 20 wholesalers will create hundreds of permutations on the customer experience. Multi-site customers and their retailers who work across multiple wholesalers may find that a lack of consistency eats into profit margins.
And what about legacy issues that new retailers inherit with new customers? No central system was created to manage this kind of soft customer data. We are certainly expecting previous retailers to budge up if the new retailer needs to flesh out a service history.
One thing that will not be changing is CCWater’s commitment to support all non-household customers, as we have done for more than a decade. Individual customers who cannot resolve disputes with their retailers can come to us for help. At the same time, we will closely monitor which retailers and wholesalers, avoid problems – or fix them most efficiently.
We will also go back to non-household customers with new research this year to ask them about their experiences of engaging with the market. These findings, together with the information we receive from resolving customers’ complaints, will help us to play a key role in improving the marketplace.
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