The Critical Focus Areas For Utility Companies In 2019

utilities

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In 2018 we have seen a shift within the utilities community. There has been a definitive shift from talking about customer experience improvements to realising it is something that must be delivered now. Utility companies know they are not exempt from the impact of the demands of the Individual Economy - ‘IConomy’. Customers know what they want, where they want and when they want it and this applies to everything in the sector from boiler repairs to repairing water leaks.

Consumers are conditioned to expect real-time, relevant information that relates to their service direct to their smartphone. Connected companies such as Amazon, Uber and Deliveroo are setting the benchmark for utility providers to follow. Consumers want to be able to track in real-time where their engineer or technician is and when they can expect delivery of the service. They want complete transparency, control and the service to be punctual. Our research with YouGov found that 71% of respondents cited negative physical and emotional impacts arising from service appointments, one of the areas that regulators are increasing their focus on.

In 2019 we will see service providers make the shift to address these issues. Utility companies are now starting to utilise technology and alternative service delivery models - from the use of real-time digital communications which enables automated and intelligent interactions between service providers and consumers, to the use of smart lockers to store parts which will help speed up the completion of jobs.

Moreover, the utilities industry as a collective are seeing the growing need to work collaboratively, to share best practice and harness innovative solutions for today’s consumer.

We are fortunate to be working with a number of the industry’s most informed and influential thought leaders. Their predictions for the things that will have the biggest impact on utility services through 2019 fall into three core themes:

  1. Implementation of customer experience improvements to exceed regulatory requirements;
  2. Intra and external to industry collaboration; and
  3. Improving the tools and user experience for the field workforce.

The experts expand on these themes and provide other predictions for how we will see utility services change in 2019.

  1. Implementation of customer experience improvements to exceed regulatory requirements

In a recent interview, Rachel Fletcher, CEO of Ofwat, stated water companies “shouldn’t need to rely on Ofwat to tell them what good [customer service] looks like” but “we will never hesitate to step in where we see standards slipping”. Ofwat are ‘stepping in’ in 2019 with new customer experience mechanisms in the price review rewarding water companies for delivering innovative customer experience over and above complaint handling and day-to-day customer service. The decline of rules-based regulation to principles-based regulation in Ofgem is also a move to ensure enhanced customer satisfaction.

“At a strategic level, water companies are likely to pay more attention to their ‘social purpose’ – to give greater consideration to how they serve a broader set of stakeholders (customers, citizens, communities, environment) beyond their shareholders. This is in keeping with wider business trends, and of particular relevance to water companies in light of the legitimacy challenge they face, and the essential nature of the service they provide.

At a practical level, 2019 will see the price review – which will set price and service levels for 2020-25 – finalised. The process has already been customer-centric; companies have engaged with some 5m customers in drawing up their business plans which were submitted to Ofwat in September 2018. The industry has also put forward an ambitious package, including a 13% investment hike on the back of an average 4% price cut. Early next year, Ofwat will grade the plans, and we are likely to see further shifts in what companies will deliver for customers – particularly more stretch for firms whose business plan outcomes don’t compare well with those of their peers.

Once the price review kicks off in 2020, there will also be a new customer experience incentive mechanism in play, C-MeX. This will be a positive development as it will take into account the satisfaction of customers in general, rather than purely the views of those who have engaged with their water company for one reason or another.”

“Regulators continue to increase their focus on customer experience, using both penalties and incentives to drive same-year measurable improvements. 2019 will show that the companies that out-perform the industry continuously focus on providing transparency and control to consumers, rather than running a project to meet the minimum regulatory requirements.”

  • Tim Andrew, CEO, Localz

While providing transparency to consumers on operations, such as when service-personnel are going to arrive is now a standard expectation, it is also important to be aware of the need to help consumers understand the nuances of regulatory protections and product options available to them so that they can be confident in their choice of service provider where applicable.

“As technologies continue to develop at a fast pace its essential that consumer protections in utility markets remain relevant. Consumers won’t always see or understand market boundaries, but it’s important that they can make decisions and engage with confidence”

  1. Intra and external to industry collaboration

The significance of partnerships across industry, not just sector, and building up an ecosystem. An openness to the challenges of current pain points in the system. Sharing learning and experience within and beyond the industry and therefore best practice of innovative solutions that meet customer demand.

“In order to increase the adoption and deployment of innovative solutions in the water industry, we need to work collaboratively to identify and progress both the challenges and the potential solutions. We need published ‘challenge roadmaps’ for the sector (company specific and common challenges) and better processes and mechanisms to overcome the barriers to innovation. Competition between water companies should not prevent collaboration. The collaborations should span across all stakeholders, including academia, supply chain, end users, practitioners, regulators and NGO’s. The Water Innovation Hub (formed as part of TWENTY65) is a key example of how this can work in practice successfully”.

  • Caroline Wadsworth, Water Innovation Hub Manager, TWENTY65

“In our daily lives we take a great experience from one industry, and get frustrated when that isn’t available in another. As a business, trying to meet, let alone exceed consumer expectations by taking input from just an internal or single industry perspective is futile. Cross-industry collaboration and product development is critical.”

  • Tim Andrew, CEO, Localz
  1. Improving the tools and user experience for the field workforce

Continuous pressure to innovate and improve the user experience for team members through digital strategy that also increases employee retention and engagement.

“User Experience is fundamental to us, it is not just about the interface it is about how the app makes the user feel. With an expansive field user base we don’t have the luxury of being able to schedule training or briefings without severely impacting productivity, therefore solutions “just need to work” and users need to be able to pick them up and use them intuitively.”

  • Mike Burns, Technology Innovation Manager, British Gas

“One of the biggest gains to productivity and efficiency is to make the digital tools used by team members as simple and intuitive as possible. We have a guiding rule in Localz that technology shouldn’t ask the user to do something that it already knows the answer to. Following this allows us to remove unnecessary complexity which in turn makes the tool easier to use.”

  • Tim Andrew, CEO, Localz

(Conclusion - Tim Andrew, CEO, Localz)

To thrive through and not just survive 2019, it is clear that the Utilities sector needs to quickly improve communications surrounding their service experience to get closer to the minimum expectations of today’s consumers.

The good news is that this is very achievable with the addition of transparency around operations and a collaborative mindset. It will be interesting to review 2019 to see who has embraced the opportunity.

By Tim Andrew, CEO and Co-founder at Localz and a network of partner contributors.