These last few years have given more power to consumers as digital platforms have exploded. There are now more ways for brands to engage consumers on a digital platform; whether that be to support the complaints process or log requests and orders for their products.
The water and energy industries have worked differently in the past when it comes to issues like customer engagement and customer satisfaction. But now, it’s all changing. In the UK, it’s no secret that the energy and water regulators (OFGEM and OFWAT respectively) are doing a lot more to support the end customer to play catch up with other sectors, and enforce fairer competition.
If we look at recent events, OFWAT reported that customers are responding more positively to water utilities, with scores in its Service Incentive Mechanism (SIM) on the rise. The average SIM score across the sector rose from 82.5 out of 100 in 2015-16 to 83.7 in 2016-17. These are very important results to ensure a similar level of satisfaction to other sectors. If they were low, penalties would be issued.
However, OFWAT is taking the SIM up a notch; re-naming it and changing the customer satisfaction parameters to include all customers. Known as Customer Measurement of Experience (C-MEX), it will measure customer satisfaction across the board – not just the satisfaction of the households that proactively interact with a water utility to discuss a bill, or report a leak. That means water utilities need to make a concerted effort with consumers all the time, providing ongoing valuable information, on a regular basis. It comes into force in 2020.
It’s not just happening at OFWAT either. A recent policy consultation closed on customer communications at energy regulator, OFGEM. The objective is to develop overarching guidelines for energy suppliers on how to communicate with customers at the right time, with the right information, and on the right platforms.
This will put the responsibility onto suppliers to fully understand the needs of customers – rather than simply sending them a bill to demand payment. Once the consultation is published, and a new way of reporting communications is potentially established, the ramifications on energy companies could be severe. The suppliers’ licenses could be linked to the perceived satisfaction of consumers, with licenses being suspended if it’s too low. It will be especially difficult for newer entrants if faced with large fines as well. It will definitely be interesting to see the types of reporting mechanisms and parameters OFGEM will deem acceptable, to ensure the energy companies are engaging consumers effectively.
On top of that, the UK Government’s proposed legislation into Parliament, putting a temporary price cap on all standard variable tariffs, and fixed-term default tariffs means OFGEM will begin its consultation on how to do that. Ultimately, this is to stop consumers paying more than they should on bills. Consumers are unaware of the prices involved with “default tariffs” – again, because of questionable customer engagement. And the UK Government and the Competition and Markets Authority (CMA) want OFGEM to address it.
All of this has come at an opportune time for consumers and is causing the utilities to evaluate how they communicate with all of their customer base. We’re at a pivotal turning point for the entire industry: customer engagement and satisfaction is now top of the agenda to ensure the utilities report to regulators in a much more customer-centric way.
It will be very interesting to see what further changes are made in the coming years. These actions should incentivise water and energy companies to act now – and get their house in order when it comes to engaging with consumers on a regular basis, and on a deeper level.
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