What matters most: The expectations of a new generation of water and energy consumers

What matters mostThe expectations of a new generation of water and energy consumers

What matters most. The expectations of a new generation of water and energy consumers. 2

Contents • Foreword• Methodology• Executivesummary• Theperfectstorm• Researchinsights• Calltoaction

What matters most. The expectations of a new generation of water and energy consumers. 3

Foreword

Britain’swaterandenergyconsumersarehavingthetoughestoftimes.

Energycompaniesarefacingaperfectstormofbadweather,pricingandpoliticalpressurethathasseentheindustrygrabtheheadlinesforallthewrongreasons.

Watercompanieshavebeeninthenewstoo.Eachhave

proposedpricingstructurestotheregulator,rangingfrom

pricecutstopricerises.Legislationismakingitswaythrough

Parliamentofferingtheprospectofmorecompetitioninthe

waterandseweragemarkets.

Transformationisintheairandonascalenotseen

sinceprivatisation.

Andthenthere’stheweather.Thepasttwoyears—andthis

winterinparticular—haveseensomeofthemostextreme

storms,floodsandsnowfallsfordecades.Thechallengein

maintainingserviceshasbeenextraordinary.AndBTknowsthis

atfirsthand.Indeed,overtheholidayperiod,wemadearecord

numberofrepairsandprovisionsashighwindsdamagedoverhead

infrastructureandfloodssweptawayundergroundcables.

BTunderstandsthechallengeofdeliveringservicesinthese

conditions.Andweserveasimilarmarket,rangingfromsingle

personhouseholdsthroughSMEstolargecompaniesandpublic

sectororganisations.

Wecan’tchangetheweatherbutwedounderstandtechnology.

Wecanhelpcompaniestransformtheirbusinessandbeagile

enoughtocopeandthrive.Ouradvancedcontactcentres,

manageddataservicesandfieldforceautomationsolutions

helplargeorganisationsimproveproductivityandefficiency.

We’veusedourownportfoliototransformthewaywerun

BT,improvingourservices,competivenessandenvironmental

performance.

WebelievethatourexperienceandexpertisecanhelpUKwater

andenergycompaniesmakeasimilartransition.Thisreport

showshowandwheretobeginthatprocess–withthecustomer

andknowingwhat’simportanttothem.

Itmakesencouragingreadingandwelookforwardtodeveloping

itsideaswithourcustomersinthewaterandenergyindustries.

Robert McGinnVice President, UtilitiesBT Global Services

What matters most. The expectations of a new generation of water and energy consumers. 4

Methodology

ThisBTreportisbasedonthefindingsofasurveyof2000UKwaterandenergyconsumersconductedduringSeptemberandOctober2013byindependentmarketresearcherVansonBourne.BTcommissionedthesurveytofindoutwhatpeoplevaluedintheirrelationshipwithwaterandenergycompanies—overandaboveprice—andtoexploreconsumers’appetitesfornewserviceinnovations.Respondentsinterviewedneededtobeinvolvedinhouseholddecisionsrelatingtoand/orpayingwaterandenergybills.

Whatisyourgender? (BASE:Allrespondents-2000)

Howoldareyou? (BASE:Allrespondents-2000)

Whatisyourannualhouseholdincome(beforetaxesandotherdeductions)? (BASE:Allrespondents-2000)

What matters most. The expectations of a new generation of water and energy consumers. 5

Executivesummary

• Mind the generation gap-olderandyoungerpeoplehavemarkedlydifferentattitudestowaterandenergyservices.Forolderpeople,pricepredominates.Youngerusersaremoreevenlysplitbetweenthosewhomostvaluecustomerservice,thosewhomostvaluepriceandthoseconsiderbothequallyimportant.

• Younger consumers are open to more engagement with water and energy companies with a view to improving service, but are harder to please.

• There is a groundswell of trust. Consumers–especiallyyoungerpeople–broadlytrusttheirwaterandenergyproviders.Incontrasttosomerecentheadlines,mostpeoplearesatisfiedwiththeirutilityprovider.

• There is appetite for ‘smart services’ —enabledbysmartmetersandremotelymanagedbythewaterorenergycompany.

• Utilities must tailor service packages to different age groups:smartmeterswillgiveutilitycompaniestheinformationtheyneedtotailorproductstocustomersegments.

• Don’t neglect the basics:customersstillwantaccurateandtransparentbills,responsiveserviceandtobeonthebesttariffs.

• Water and energy companies should build on smart meters and big data with omnichannel customer relationship managements systems to learnaboutandinteractwithcustomersinwaysthatwerenotpossiblebefore.

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Theperfectstorm

Unlikeanyotherservice,wedonotchoosetobuywaterandenergy.Becausetheymeetourmostbasichumanneedsforfood,shelterandwarmth,wemusthavethem.Sofailuresofprovision(oreventhethreatoffailure)cancausegenuinedistressandwidespreaddisruption.

Intheautumnandwinterof2013-2014,Britain’swaterandenergycompaniesfacedtheworstweatherfor20years.FromtheSaintJude’sdaystorm,whichwreakedhavocnationwide,totidalsurgesknockingoutpowertohundredsofthousandsofhomesoverChristmas,waterandenergycompaniesfacedunprecedentedchallengesinmaintainingsupplies.

Disruptioninmanycoastalcountieswassevere.Butfollowingcontroversialpricehikesbytheenergyindustryonlymonthsbefore,thepublic’spatiencewasthinandpowercompaniesweresummonedtoParliamenttoexplaintheirperformance.

In the public eye

Itisclearthatpublictrust—orlackofit—isnowamajorissueforwaterandenergycompanies,particularlytheenergysector.Indeed,judgingbynewspaperheadlines,energybosseshavenowreplacedbankersaspublicenemynumberone.

Sohowshouldwaterandenergycompaniesgoaboutrebuildingconsumertrustandboostingtheirengagementwithcustomers?

Societyisinthemidstofaneveracceleratingtechnologicalrevolution.People’sbehavioursarechanging,drivenbyconvenient,round-the-clockaccesstotheweb.Consumersareempoweredlikeneverbeforeandthemoretechnologypeoplehaveaccessto,themoredemandingtheybecome.

Inretail(andmanyotherindustries),we’veseentheemergenceofmultichannelcustomerengagement–viaonline,telephone,mobileorstore-basedsaleschannels.Thishasbeenquicklyfollowedby“omnichannel”shopping.

Omnichannelofferscustomersthechoiceofallthepreviouslymentionedsaleschannelsbutinaddition,tiestogetherbackgroundsystemsandprocessestodeliveraseamlessbrandandserviceexperience.Indeed,manyshoppersnowaccessmobileappsin-storeorviewthewebastheytalktocontactcentreagents.Andtheyexpectconsistentinformationandserviceastheyhopfromonechanneltothenext.

Technology-empowered,“autonomous”customershavealltheinformationofthemarketattheirfingertipsandarenotloyal.Behardtodobusinesswith–orofferapoordeal–andthey’llgoelsewhere.

Thisistherealityofmodern-daycompetition.Asmarketsderegulatethisisthechallengetheywillface.

Mind the generation gap

Theresearchfindingsinthisreportrevealstrikingcontrastsinhowdifferentagegroupsvaluetheserviceswaterandenergycompaniesprovide.Atoneendofthespectrum,younger,“autonomous”customersfocusnotonlyonpricebutonabetterdealoverall,encompassingarangeoffactorssuchasbundledservices,sustainabilityandremovalofeffort.

Incontrast,olderpeoplehaveanarrowviewaboutthevalueofwaterandenergyservices,focussingalmostsolelyonprice.Forconsumersaged55yearsandabove,onlyeightpercentsaidthatservicewasanimportantfactorintheirchoiceofcompany.

Theresearchfindsthatyoungerpeoplearemoredemanding.Butthey’realsomoretrustingandmoreopentonewservicesthatcouldhelpmanagewaterandenergyuse.Eightysixpercentofyoungerpeoplesaidtheywouldtrustwaterandenergycompaniestoremotelymanageenergyorwaterserviceswithintheirhomes.

What’smore,90percentofyoungerpeoplesaidthatifcompaniesimprovedcommunicationsandresponsetimes,itwouldboosttheirrelationshipwiththem.Thiscomparesto76percentofpeopleaged55andabove.

Thegoodnewsisthatnewtechnologies,suchasomnichannelcustomerrelationshipmanagementand‘bigdata,’offerwaterandenergycompaniesthechancetolearnaboutandinteractwitheachcustomerlikeneverbefore.Byusingnewcustomerservicetechnologies,companiescouldpersonalisehowtheycommunicatewithpeople,tailorofferstoindividuals’circumstancesandbeeasiertodobusinesswith.

What matters most. The expectations of a new generation of water and energy consumers. 7

Theperfectstorm

Sustained effort

ThirtypercentoftheUK’sCO2emissionscomedirectlyfromhouseholdenergyuse.

Inspiteofrisingwaterandenergybills,consumerscoulddomoretoimprovetheenvironmentalperformanceandefficiencyoftheirhomes.AcrosstheUK,householdscouldbelosing£1.3billionbynotfullyswitchingoffcomputers,televisionsandotherdevices,saystheEnergySavingTrust.

Thewaterindustryisvulnerabletoclimatechange.Extremesofweatherfromdroughttodelugeputpressureoninfrastructure,operationsandinvestmentplans.Newsof“hosepipebans”notonlyupsetspeoplebutrilesgovernmenttoo.

Theresearchfindsthatsustainabilityisimportanttoallagegroupsbutyoungerpeoplegiveitamuchhigherpriority.Almostfouroutoffive(78percent)saidthathelptoreducetheircarbonfootprintwasanimportantfactorintheirchoiceofcompanyversuslessthanhalf(48percent)ofolderconsumers.

Therelativelylownumberofolderconsumersseeingsustainabilityasaprioritycontrastsstarklywiththeirfocusonprice.Ifthepriceofenergycontinuestoriseinthemedium-termfuture,theonlysustainablewaytocontrolbillsisforhouseholdstomanageconsumptionmoreefficiently.

The engagement challenge

Water,gasandelectricityareallplainvanillaservices.Whoeveryouchoosetobuyfrom—wherechoiceisavailable—thesameproductcomesoutofthesamenetwork.Ifcompaniescannotdifferentiatetheirproducts,thentheyneedtodifferentiatetheirserviceandvalue.

Consumersrarelygetintouchwiththeirwaterandenergyproviders.Whentheydo,itisusuallybecausetheyhaveaproblemwithservicesupplyorthebill—andtheytypicallywanttotalktosomeoneurgently.Theresearchfoundthatthephoneispeople’smostfavouredcontactchannelwhendealingwithwaterandenergycompaniesandthisisafairlyconsistentfindingacrossallagegroups.

In2011,theBigSixenergycompaniesreceivedfourmillioncomplaints.Almostaquarter(23percent)ofthosewhohadaproblemwithanenergysupplierdidnothingaboutit.1

Millionsofcustomersfindtheirtariffsconfusingandbillsbaffling.Infact,theresearchfindsthemostimportantfactorforallagegroupsinchoosingaprovideris‘ensuringI’monthebesttariffatalltimes’(93percent).

It’sclearthatifwaterandenergycompanieswanttore-buildtrust,thenclearandtransparentbillingmustbeoneoftheirhighestpriorities.

Here’s to the future

Betweennowand2020energysupplierswillberesponsibleforreplacinggasandelectricitymeterswithsmartmetersineveryhomeandbusiness.Smartmeterswillcommunicatedirectlywiththeutilitycompany,providingaccuratemeterreadingsanddetailedusagedata.Thegovernmentsaysthesmartmeterprogrammewillcost£12.1billionandprovide£18.6billioninbenefits.

Theresearchsuggeststhatsmartmeteringwillalsoprovideopportunitiesforwaterandenergyproviderstotransformtheirrelationshipswithcustomers.

Ifpositionedproperly,itsuggeststhatthereisagenuineappetitefornewservicesbuiltaroundthisdata.Indeed,itisthesenewsmartservicesthatoffercompaniestheopportunitytopersonaliseservicestocustomersinwaysthatwerenotpossiblebefore.Using“bigdata”gatheredbysmartmetersandtakingintoaccountconsumers’usage,servicescouldbetailoredtodelivertheoutcomespeoplewanttoachieveandvaluesuchasreducingbillsorminimisingtheirenvironmentalimpact.

Ifwaterandenergycompaniescancombinebigdatawithomnichannelcustomercontact,theycanmovetheirofferingsupthevaluechainandrepositionthemselvesasserviceproviders.

1http://www.which.co.uk/news/2012/01/energy-firms-could-owe-millions-in-compensation-276174/

What matters most. The expectations of a new generation of water and energy consumers. 8

Researchinsights

Theresearchfindingsindicatethattherearesevenprincipleinsightsintohowutilitycustomersthinkandbehavetoday.

1. One size does not fit all – mind the generation gap

Utilityproductsmayhavelittlevariation,butthatisnottrueoftheircustomers.Olderandyoungercustomersdisplayquitedifferentattitudestowardstheirutilityprovidersandservice.

Olderconsumersaremorelikelytovaluepriceovercustomerservice,thoughalmosthalfconsiderbothtobeequallyimportant.Youngerconsumers,however,aremoreevenlysplitbetweenthosewhomostvaluecustomerservice,thosewhomostvaluepriceandthoseconsiderbothequallyimportant. Inamarketwhereserviceprovidershavelimitedcontroloverpricing,thereisscopeforusingcustomerserviceasadifferentiator,especiallyfortheyoungergenerationofhouseholders.Theflowofdatafromsmartmeterswillgiveutilitiesinformationtheycanusetoidentifyuniquecustomertypes.Thiscanthencreateinnovativeproductsandremoteservicesthatcouldhelpthembettermanagetheirconsumption,reducetheirbillsandtheircarbonfootprint.

Oldercustomersarealsosignificantlylesslikelythanyoungercustomerstofeeltheirutilitiesprovidercouldtakeactiontoimprovetheirrelationship.

Whendecidingtostaywithautilitiessupplier,towhatextentdoescustomerserviceandpricingfactorintoyourdecision?(BASE:Allrespondents-2000),splitbyrespondentage

Towhatextentwouldthefollowingstrengthentherelationshipyouhavewithyourutilitiessupplier?(BASE:Allrespondents-2000),showingpercentageofthosethatstatethesereasonswouldhavealotstrongerrelationshipandthosewhowouldhaveasomewhatstrongerrelationship,splitbyrespondentage

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Researchinsights

2. Younger consumers are much harder to please

Themajority(88percent)ofconsumersweresatisfiedwiththeoutcomeofthelastcontacttheyhadwiththeirsupplier.However,youngercustomersaremuchhardertoplease.Basedontheirmostrecentexperienceofcommunicatingwiththeirutilitysupplier,youngerrespondentsweredistinctlylesssatisfiedthanoldercustomers.

Thinkingaboutthelasttimeyoucontactedoneofyourutilitiessuppliers,howsatisfiedwereyouwiththeoutcomeofthiscontact?(BASE:Allrespondents-2000),showingpercentageofthosewhosaidtheywere‘verysatisfied’

3. Most consumers would trust their supplier to remotely manage services

Smartmeteringwouldallowutilitiestoremotelymonitorservicesfortheirconsumersandalertthemtoexceptionalusage,forexample,orwhenanewtariffisavailable.Itwillalsobepossibleforproviderstoremotelymanageservices,withtheconsumer’sexplicitpermission.Sothepowercompanycouldturndownthecentralheatingiftheweatherwarmedup,orthewatercompanycouldturnoffthesupplywhenthehouseholdergoesonholiday.

Consumerswill,however,onlybeopentotheseextendedservicesiftheytrusttheirprovider.Encouragingly,theresearchindicatesthatamajorityofconsumerswouldtrusttheirutilityprovidertodeliverremoteservices(althoughalmosthalfofrespondentswouldbenervousaboutit).Themajorityofconsumerswouldrequireaguaranteethattheycouldoverridethesystemwheneverneeded(63percent),theabilitytowithdrawfromtheservicewithminimalnoticeiftheywerenothappyatanypoint(59percent),andtheabilitytopilottheserviceforalimitedtimebeforeagreeingtoit(57percent).

Thegenerationgapisveryapparent.Youngerrespondentsaresignificantlymorelikelytohavefaithintheirutilitiesproviders.86percentofyoungerconsumerssaidtheywouldtrustutilitiestoremotelymanageenergyorwaterservicesintheirhomes.

Wouldyoutrustyourutilitiescompaniestoprovideservicesthattheywouldmanageforyouremotely(suchasswitchingonandoffmajorhouseholdappliancestoreducewaterorelectricityuse)duringhourswhenyourhomeisnotoccupiedoratnight?(BASE:Allrespondents-2000)

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Researchinsights

4. Most consumers would expect a remote management service to be free

Themajority(59percent)ofconsumerswouldexpecttheutilityprovidertoprovideremoteservicesfreeofcharge,aspartofanoverallservicepackage.However,nearlyoneinfour(24percent)wouldbepreparedtopayfortheservicebysharinganycostreductionwiththeutilitycompany.

Howmuchofapremiumwouldyoupayfortheseservices? (BASE:Respondentswhoareinterestedinhomeremotemanagementsystem-1245)

Consumersdonotwantanymoregadgets,stronglyrejectingtheideaofadedicateddeviceforremotelymanagingservices.They’dprefertousePCs(desktopsandlaptops),smartphonesandtabletstointeractwithoroverridearemoteservice.Perhapsunsurprisingly,peopleaged55yearsorabovestronglypreferthePC(51percent).

5. Telephone remains a principal method of contact

Themostpopularformofcommunicationistelephone.Almosthalf(49percent)ofconsumerswillcontactsuppliersbytelephone;56percentoftheyoungestgroupofrespondentschosethephonelasttimetheycontactedtheirsupplier.Emailisthesecondmostpopularchannel,beingusedbylessthanafifthofconsumers.

ThisisalsosupportedbyfindingsfromBT’s2013AutonomousCustomersurvey,whichalsofoundthatphoneremainsthemostpopularcustomerservicechannelacrossmanyindustries,holdingitsowndespitethegrowthofalternativecontactchannels.2

Ofcourse,thephonealoneisnotenough.EightytwopercentofAutonomousCustomerrespondentswantedarangeofchannelstomeettheirneeds.3Butswitchingchannelsexposeshugegapsincustomerservice–just17percentthinkswappingbetweenchannelsiseasyandgivesthemaseamlessexperience;69percentofconsumerssaythey’reoftenaskedtorepeattheiraccountdetailsonthesamecall.4

Simple,seamless,omnichannelcustomerserviceisessentialtomakethemostofthebigdatadeluge.Utilitiesarenotaloneinfindingithardtodo.

6. Young and green

Thegenerationgapisparticularlyapparentinattitudestosustainability.While78percentoftheyoungestpeople,18to25yearolds,valuehelpfromtheirutilityprovidertoreducetheircarbonfootprint,only48percentofpeopleaged55yearsorabovesharetheirview.Ironically,theolderagegroupistheonemostfocussedonpricesbutthesurveysuggeststhey’renotlinkingcuttingconsumptiontoloweringbills.

Overall,morethanthreefifthsofconsumers(68percent)wouldbewillingtopayforenergyorwater-savingequipmenttohelptolowerenergyuse,butagain,youngerpeoplearemuchmoreenthusiasticthantheirparents.

Thissuggeststhatmoreneedstobedonetoeducateolderconsumersontheeconomicaswellasenvironmentalbenefitsofreducingconsumption.Ultimately,inamarketwherepricesaresettocontinuetorise,managingconsumptioncouldbetheonlypracticalwaytocontrolorreducebills.

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What matters most. The expectations of a new generation of water and energy consumers. 11

Researchinsights

7. Customers still want clearer tariffs, accurate bills and better communication

Whilecustomersrespondpositively(ifcautiously)totheideaofnewservices,theirwishlistremainsprettyconstant.Theywantafasterresponsetoqueries,tobealwaysonthebesttariffandgetbillstheycanunderstand.Infact,themostimportantfactorforallagegroupsinchoosingautilityprovideris‘ensuringI’monthebesttariffatalltimes’(93percent).Sixtyeightpercentofpeopleexpecttheinformationtheygiveanorganisationinoneplace(viaitswebsite,forexample)tobeavailableinanotherplace5,sotheydonothavetokeeprepeatingthemselves.

Smartmetersandbigdatashouldhelputilitiesmeettheserequirements,butonlyiftheorganisationisabletobringtogetherallitsdata,information,processesandchannelsofcommunicationsothatithasasingleviewofeachindividualcustomer.Itcanthenbegintooffer‘smartservice’,activelymonitoringservicestoidentifyproblemsorproposenewtariffsandgenerally‘rememberingthingsforcustomers’.6

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What matters most. The expectations of a new generation of water and energy consumers. 12

Calltoaction

Theintroductionofomnichannelcustomerrelationshiptechnologiesandthensmartmeterswillbeagamechangingopportunityforutilitiestointroducenewservicesandbuildbetter,differentrelationshipswiththeircustomers.Obviously,theutilitycompanyhastowanttotaketheopportunity;itwillhavetoinvestinthetechnologicalinfrastructureandknowhowtoturnrawdataintorealinformation.Butgiventhatcommitment,thefuturelookspositiveforutilitycompanieswhich:

1. Recognise the diversity of your customers

Thereisabigdifferenceintheattitudesandexpectationsofconsumersofdifferentages.Youngerconsumersarehardertoplease.Olderconsumersaremainlyinterestedinkeepingcostsdown.Thepowerandenergyrequirementsofsomeoneinasharedflataredifferentfromthoseofthefamilynextdoor.Utilitiesneedtobeabletoidentifycustomertypesandrespondtotheirspecificneedswithmorepersonalisedproductsandservices.

2. Embrace big data to develop smart services

Smartmeterscangiveutilitiesunprecedentedinformationabouthowindividualhouseholdsconsumepowerandwater.Theymustbepreparedtohandlethisvolumeofdataandfindwaystotranslateitintocustomerknowledgethatenablesthemtobuildnewservicesandcustomerservicemodels.

3. Positively communicate the benefits of existing and new services

Utilitiesalreadyhaveregularcontactwiththeircustomersthroughthetraditionalmeterreadingandbillingprocess.Bysteppingupcontactvianewcommunicationchannelstheycanhelpcustomersunderstandhowtheywillbenefitfromnewproductssuchasremotelymanagedservices.

4. Improve the quality and clarity of billing

Moreaccuratebillsthatareeasytounderstandwillhelpimprovetrust.Smartmeterswillhelputilitiescreatemoreaccuratebills,aswellasencouragingconsumerstotakemorecontrolovertheirconsumption.

5. Become easier to do business with

Consumerstreatutilitycompaniesthesamewaytheytreatanyothercompany.FiftypercentofUKconsumerssayloyaltytocompaniesisathingofthepast–upfrom44percentin20107.Theautonomouscustomershopsaround.Consumersincreasinglyexpecttocontactserviceprovidersatatimeoftheirchoosingusingtheirdeviceofchoice.Makeitdifficulttobuyorgetintouchandwegoelsewhere.Thatmeansofferingseamless,multichannelcontactbackedbyadvancedcustomermanagementsystems.

BT understands the challenges the UK water and energy companies face and we have the knowledge and experience to help. Our portfolio includes smart networks, contact management solutions, unified communications, robust security products, powerful data centres and cloud services, all supported by consulting expertise. BT manages 10 billion minutes per year of inbound calls to our enterprise customers’ contact centres. We understand voice; we understand contact centres and we’re enabling new online channels such as social media. This makes us the partner of choice to help organisations deliver an outstanding customer experience.For more information, visit: www.bt.com/utilities

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