Turning on the tap on digital transformation in the utilities sector

Profile picture for user slauchlan By Stuart Lauchlan November 25, 2018
Utility firms need to get their digital transformation acts in gear in order to meet changing customer experience expectations.

One of the most frustrating things in life has to be engaging with the customer service arms of utility firms. While the likes of BT have taken customer contempt to an art form, you can’t beat a wasted hour arguing about a meter reading or a change of tariff with an energy or water company for sheer bloody-mindedly awful service.

That’s going to have to change, according to a new white paper from Navigant which caught my eye. While primarily focused on the energy sector, there are learnings and warnings for all forms of utility provider, the main one being - transform your customer experience (CX) if you want to stay competitive in a deregulated, disrupted and increasingly connected market.

The white paper argues that customers are now looking for a “truly seamless CX” that is empowered by digital best practice and is bringing service-level expectations to bear from very different sources to the legacy utilities sector:

Customers are coming to expect higher levels of service from their utilities. This comes in part from a shift in consumer expectations in other industries, whether it be media services (Netflix), lodging (AirBnB), or retail (Amazon). The common thread in these industry shifts is digital disruption, with customer-centric thinking winning out in the end. These revolutionary business models have used technological innovation at the offerings—and platform—level to provide seamless, fast, and convenient service to customers…

…Industries such as music, telecommunications, and taxis demonstrate how technological innovation and meeting customer demands can slice through traditional business models and regulations, leaving long-standing incumbents behind Well-known platform companies today—such as Uber (car/taxi) and Spotify (music)—have used technology innovation and data to deploy disruptive products and services.

The main learning here:

If utilities are determined to evolve how they engage with their customers, the gaps between digital best practices and current utility accepted practices are an important place to start. Digital offerings have been shown to have a tangible impact on customer perceptions and experience. According to ForeSee’s 2018 Utilities CX Insights report, 80% of customers would forego the call center if provided with an ideal online experience. This works to not only placate customer expectations, but also help utilities’ bottom lines, with up to $8 million in annual call center savings per provider.

Navigant offers a to-do lists for utilities and energy companies to improve their prospects in this new environment:

  • Focus on customer centricity - Utilities must create a culture of relentless customer focus, where the entire organization aligns around what customers want, supported by the right governance, processes, tools, and incentives.
  • Innovate with agility - Utilities will need to take chances in deciphering what works best for their customers.
  • Build a brand customers love - Now is the time to explore creative tools and solutions, such as the gamification of energy savings, voice-activation capabilities, and online utility marketplaces.
  • Use digital channels - Utilities should seek out ways through digital and proactive communication to make the journey easier both for the customer and the utility.
  • Prioritize integration - Having the correct connections and endpoints for third-party integration between energy usage and a smart home or smart thermostat creates internal efficiencies, enables stronger data analysis, and empowers a brand to more seamlessly interface with its customers.
  • Partner or perish - The market is adding new players rapidly, and established market players are expanding their capabilities and finding ways to partner across industry sectors to formulate new go-to-market strategies.

Putting into practice

Now none of that is particularly rocket-science and could equally be applied to, for example, banking. But the utilities sector has operated under varying degrees of regulation around the globe, with some markets effectively leaving utilities delivery under effective monopoly control. And if you have a monopoly, you don’t really need to make customer care too high a priority..

But that’s changing. Take the UK water sector as a case in point. Since last year, millions of businesses, charities and public sector bodies in England and Wales have been able to choose a preferred supplier rather than rely on one with a regional monopoly. (Scotland began to deregulate its water market back in 2008.).

The idea is to allow more choice of provider, but also to rely on competition between providers to drive up customer service standards and foster innovation. That’s the theory at least. In practice, it’s early days, although Steve Mogford, CEO of United Utilities, the UK’s largest listed water company, serving the North West of England, argues that results can be seen. He points to a recent Institute of Customer Service Customer Satisfaction Index  in which his firm was top-placed water and sewage company as well as being the most improved utility company overall:

Innovation and use of emerging technology has been key to our improvements in customer satisfaction. Customers want to interact with us when they want using the channel of their choice. We now have around a third of our customers registered from the My Account portal, allowing them to interact with us digitally. Over 43% of all customer contacts are now automated, the highest in the sector, and customers can move home, change to direct debit and check water quality using the portal.

Earlier this year, we launched a fully functional app to provide customers with a mobile portal. We made a great start with 4 million in payments taken by the app in the first seven months of operation and a few weeks ago, we extended the app functionality to provide customers with the capability to report a leak helping us with GPS location, photograph and classifying the nature of the leak - a trickle or a gusher?

Such digital innovation not only boosts customer satisfaction, but also cuts operating costs, he adds, citing a 24% reduction in ‘cost-to-serve’ since the introduction of the app:

Proof that good service costs less. Our digital transformation and customer service has led to 78% of customers now paying us by direct debit. Not only does this help reduce our cost-to-serve, but also allows to focus time and effort on those customers that really need help and support.

It’s the same story at Severn Trent Water, where CEO Liv Garfield has also been focusing on customer research and understanding with a view to building greater engagement:

We were so pleased with the most recent independent tracker to see that we are now the most trusted company in England in our sector and it fears like it’s really in the DNA of our company and it puts us in a really strong position for the future. Now trust, you have to earn it, you have to maintain it.

That’s where new customer-centric tech comes into play:

We have now got a brilliant community, an online chat community of 15,000 customers that have already reached dialogue with us and can give us real time insights in what they are thinking, how they are feeling, answer questions for us on where we should go next on particular topics.

We are really excited about new innovations that are coming out that how we engage with customers. One thing we went live over the summer was the opportunity for customers to Facetime live to our engineers, to raise a problem and to actually show that problem live…customers get real-time diagnosis It’s really popular with customers and it’s a quicker time-to-fix typically on the issue. And of course it’s much effective as an end-to-end process.

Tech is top-of-mind at United Utilities as well. The provider has rolled out a mantra of Systems Thinking, a tech and data-centric program that uses emerging technologies, such as Artificial Intelligence, 3D printing and Virtual Reality to run the network more efficiently. The use of such tech is intended to deliver £450 million of savings between 2020 and 2025. Mogford explains:

We're using Virtual and Augmented Reality to improve the creation and subsequent operation of assets. Laser scanning is being used to create digital models of existing sites, within which we can overlay virtual representations of new assets pre-construction. With this and 3D printing, we are seeing reductions of up to 90% in the downtime for projects on site, along with cost savings of around 30% compared with traditional methods.

And there’s more to come, he adds:

With innovation as one of our core values, we are always looking for ways to deepen this culture across the business and we recently introduced an employee innovation app that engages our workforce in offering up ideas and in the co-creation of solutions to different challenges in the business and the response to this has been tremendous.

My take

This is all encouraging if it’s put into action and the promise is delivered upon consistently. I’ve yet to see it being put into practice with my current water provider, but look forward to the day when competitive pressure forces a change of approach.