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


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Britain’s water and energy consumers are having the toughest of times. …

Britain’s water and energy consumers are having the toughest of times.
Energy companies are facing a perfect storm of bad weather, pricing and political pressure that has seen the industry grab the headlines for all the wrong reasons.

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  • 1. What matters most The expectations of a new generation of water and energy consumers
  • 2. Contents • • • • • • What matters most. The expectations of a new generation of water and energy consumers. Foreword Methodology Executive summary The perfect storm Research insights Call to action 2
  • 3. Foreword Britain’s water and energy consumers are having the toughest of times. Energy companies are facing a perfect storm of bad weather, pricing and political pressure that has seen the industry grab the headlines for all the wrong reasons. Water companies have been in the news too. Each have proposed pricing structures to the regulator, ranging from price cuts to price rises. Legislation is making its way through Parliament offering the prospect of more competition in the water and sewerage markets. And then there’s the weather. The past two years — and this winter in particular — have seen some of the most extreme storms, floods and snowfalls for decades. The challenge in maintaining services has been extraordinary. And BT knows this at first hand. Indeed, over the holiday period, we made a record number of repairs and provisions as high winds damaged overhead infrastructure and floods swept away underground cables. BT understands the challenge of delivering services in these help large organisations improve productivity and efficiency. We’ve used our own portfolio to transform the way we run BT, improving our services, competiveness and environmental performance. We believe that our experience and expertise can help UK water and energy companies make a similar transition. This report shows how and where to begin that process – with the customer and knowing what’s important to them. conditions. And we serve a similar market, ranging from single person households through SMEs to large companies and public It makes encouraging reading and we look forward to developing sector organisations. its ideas with our customers in the water and energy industries. We can’t change the weather but we do understand technology. We can help companies transform their business and be agile Transformation is in the air and on a scale not seen enough to cope and thrive. Our advanced contact centres, since privatisation. managed data services and field force automation solutions What matters most. The expectations of a new generation of water and energy consumers. Robert McGinn Vice President, Utilities BT Global Services 3
  • 4. Methodology This BT report is based on the findings of a survey of 2000 UK water and energy consumers conducted during September and October 2013 by independent market researcher Vanson Bourne. BT commissioned the survey to find out what people valued in their relationship with water and energy companies — over and above price — and to explore consumers’ appetites for new service innovations. Respondents interviewed needed to be involved in household decisions relating to and/or paying water and energy bills. What is your gender? (BASE: All respondents - 2000) What is your annual household income (before taxes and other deductions)? (BASE: All respondents - 2000) How old are you? (BASE: All respondents - 2000) What matters most. The expectations of a new generation of water and energy consumers. 4
  • 5. Executive summary • Mind the generation gap - older and younger people have markedly different attitudes to water and energy services. For older people, price predominates. Younger users are more evenly split between those who most value customer service, those who most value price and those consider both equally important. • 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. • Don’t neglect the basics: customers Consumers – especially younger people still want accurate and transparent bills, – broadly trust their water and energy responsive service and to be on the best providers. In contrast to some recent tariffs. headlines, most people are satisfied with their utility provider. • Water and energy companies should build on smart meters and big • There is appetite for ‘smart services’ data with omnichannel customer — enabled by smart meters and relationship managements systems to remotely managed by the water or learn about and interact with customers energy company. in ways that were not possible before. • Utilities must tailor service packages to different age groups: smart meters will give utility companies the information they need to tailor products to customer segments. What matters most. The expectations of a new generation of water and energy consumers. 5
  • 6. The perfect storm Unlike any other service, we do not choose to buy water and energy. Because they meet our most basic human needs for food, shelter and warmth, we must have them. So failures of provision (or even the threat of failure) can cause genuine distress and widespread disruption. In the autumn and winter of 2013-2014, Britain’s water and energy companies faced the worst weather for 20 years. From the Saint Jude’s day storm, which wreaked havoc nationwide, to tidal surges knocking out power to hundreds of thousands of homes over Christmas, water and energy companies faced unprecedented challenges in maintaining supplies. Disruption in many coastal counties was severe. But following controversial price hikes by the energy industry only months before, the public’s patience was thin and power companies were summoned to Parliament to explain their performance. In the public eye It is clear that public trust — or lack of it — is now a major issue for water and energy companies, particularly the energy sector. Indeed, judging by newspaper headlines, energy bosses have now replaced bankers as public enemy number one. So how should water and energy companies go about rebuilding consumer trust and boosting their engagement with customers? Mind the generation gap Society is in the midst of an ever accelerating technological revolution. People’s behaviours are changing, driven by convenient, round-the-clock access to the web. Consumers are empowered like never before and the more technology people have access to, the more demanding they become. The research findings in this report reveal striking contrasts in how different age groups value the services water and energy companies provide. At one end of the spectrum, younger, “autonomous” customers focus not only on price but on a better deal overall, encompassing a range of factors such as bundled services, sustainability and removal of effort. In retail (and many other industries), we’ve seen the emergence of multichannel customer engagement – via online, telephone, mobile or store-based sales channels. This has been quickly followed by “omnichannel” shopping. In contrast, older people have a narrow view about the value of water and energy services, focussing almost solely on price. For consumers aged 55 years and above, only eight per cent said that service was an important factor in their choice of company. Omnichannel offers customers the choice of all the previously mentioned sales channels but in addition, ties together background systems and processes to deliver a seamless brand and service experience. Indeed, many shoppers now access mobile apps in-store or view the web as they talk to contact centre agents. And they expect consistent information and service as they hop from one channel to the next. The research finds that younger people are more demanding. But they’re also more trusting and more open to new services that could help manage water and energy use. Eighty six per cent of younger people said they would trust water and energy companies to remotely manage energy or water services within their homes. Technology-empowered, “autonomous” customers have all the information of the market at their fingertips and are not loyal. Be hard to do business with – or offer a poor deal – and they’ll go elsewhere. This is the reality of modern-day competition. As markets deregulate this is the challenge they will face. What matters most. The expectations of a new generation of water and energy consumers. What’s more, 90 per cent of younger people said that if companies improved communications and response times, it would boost their relationship with them. This compares to 76 per cent of people aged 55 and above. The good news is that new technologies, such as omnichannel customer relationship management and ‘big data,’ offer water and energy companies the chance to learn about and interact with each customer like never before. By using new customer service technologies, companies could personalise how they communicate with people, tailor offers to individuals’ circumstances and be easier to do business with. 6
  • 7. The perfect storm Sustained effort The engagement challenge Here’s to the future Thirty per cent of the UK’s CO2 emissions come directly from household energy use. Water, gas and electricity are all plain vanilla services. Whoever you choose to buy from — where choice is available — the same product comes out of the same network. If companies cannot differentiate their products, then they need to differentiate their service and value. Between now and 2020 energy suppliers will be responsible for replacing gas and electricity meters with smart meters in every home and business. Smart meters will communicate directly with the utility company, providing accurate meter readings and detailed usage data. The government says the smart meter programme will cost £12.1 billion and provide £18.6 billion in benefits. In spite of rising water and energy bills, consumers could do more to improve the environmental performance and efficiency of their homes. Across the UK, households could be losing £1.3 billion by not fully switching off computers, televisions and other devices, says the Energy Saving Trust. The water industry is vulnerable to climate change. Extremes of weather from drought to deluge put pressure on infrastructure, operations and investment plans. News of “hosepipe bans” not only upsets people but riles government too. The research finds that sustainability is important to all age groups but younger people give it a much higher priority. Almost four out of five (78 per cent) said that help to reduce their carbon footprint was an important factor in their choice of company versus less than half (48 per cent) of older consumers. The relatively low number of older consumers seeing sustainability as a priority contrasts starkly with their focus on price. If the price of energy continues to rise in the medium-term future, the only sustainable way to control bills is for households to manage consumption more efficiently. Consumers rarely get in touch with their water and energy providers. When they do, it is usually because they have a problem with service supply or the bill — and they typically want to talk to someone urgently. The research found that the phone is people’s most favoured contact channel when dealing with water and energy companies and this is a fairly consistent finding across all age groups. In 2011, the Big Six energy companies received four million complaints. Almost a quarter (23 per cent) of those who had a problem with an energy supplier did nothing about it .1 Millions of customers find their tariffs confusing and bills baffling. In fact, the research finds the most important factor for all age groups in choosing a provider is ‘ensuring I’m on the best tariff at all times’ (93 per cent). It’s clear that if water and energy companies want to re-build trust, then clear and transparent billing must be one of their highest priorities. What matters most. The expectations of a new generation of water and energy consumers. 1 The research suggests that smart metering will also provide opportunities for water and energy providers to transform their relationships with customers. If positioned properly, it suggests that there is a genuine appetite for new services built around this data. Indeed, it is these new smart services that offer companies the opportunity to personalise services to customers in ways that were not possible before. Using “big data” gathered by smart meters and taking into account consumers’ usage, services could be tailored to deliver the outcomes people want to achieve and value such as reducing bills or minimising their environmental impact. If water and energy companies can combine big data with omnichannel customer contact, they can move their offerings up the value chain and reposition themselves as service providers. 7
  • 8. Research insights The research findings indicate that there are seven principle insights into how utility customers think and behave today. 1. One size does not fit all – mind the generation gap Utility products may have little variation, but that is not true of their customers. Older and younger customers display quite different attitudes towards their utility providers and service. Older consumers are more likely to value price over customer service, though almost half consider both to be equally important. Younger consumers, however, are more evenly split between those who most value customer service, those who most value price and those consider both equally important. When deciding to stay with a utilities supplier, to what extent does customer service and pricing factor in to your decision? (BASE: All respondents - 2000), split by respondent age Older customers are also significantly less likely than younger customers to feel their utilities provider could take action to improve their relationship. In a market where service providers have limited control over pricing, there is scope for using customer service as a differentiator, especially for the younger generation of householders. The flow of data from smart meters will give utilities information they can use to identify unique customer types. This can then create innovative products and remote services that could help them better manage their consumption, reduce their bills and their carbon footprint. To what extent would the following strengthen the relationship you have with your utilities supplier? (BASE: All respondents - 2000), showing percentage of those that state these reasons would have a lot stronger relationship and those who would have a somewhat stronger relationship, split by respondent age What matters most. The expectations of a new generation of water and energy consumers. 8
  • 9. Research insights 2. Younger consumers are much harder to please 3. Most consumers would trust their supplier to remotely manage services The majority (88 per cent) of consumers were satisfied with the outcome of the last contact they had with their supplier. However, younger customers are much harder to please. Based on their most recent experience of communicating with their utility supplier, younger respondents were distinctly less satisfied than older customers. Smart metering would allow utilities to remotely monitor services for their consumers and alert them to exceptional usage, for example, or when a new tariff is available. It will also be possible for providers to remotely manage services, with the consumer’s explicit permission. So the power company could turn down the central heating if the weather warmed up, or the water company could turn off the supply when the householder goes on holiday. Consumers will, however, only be open to these extended services if they trust their provider. Encouragingly, the research indicates that a majority of consumers would trust their utility provider to deliver remote services (although almost half of respondents would be nervous about it). The majority of consumers would require a guarantee that they could override the system whenever needed (63 per cent), the ability to withdraw from the service with minimal notice if they were not happy at any point (59 per cent), and the ability to pilot the service for a limited time before agreeing to it (57 per cent). Thinking about the last time you contacted one of your utilities suppliers, how satisfied were you with the outcome of this contact? (BASE: All respondents - 2000), showing percentage of those who said they were ‘very satisfied’ The generation gap is very apparent. Younger respondents are significantly more likely to have faith in their utilities providers. 86 per cent of younger consumers said they would trust utilities to remotely manage energy or water services in their homes. What matters most. The expectations of a new generation of water and energy consumers. Would you trust your utilities companies to provide services that they would manage for you remotely (such as switching on and off major household appliances to reduce water or electricity use) during hours when your home is not occupied or at night? (BASE: All respondents - 2000) 9
  • 10. Research insights 4. Most consumers would expect a remote management service to be free 5. Telephone remains a principal method of contact The majority (59 per cent) of consumers would expect the utility provider to provide remote services free of charge, as part of an overall service package. However, nearly one in four (24 per cent) would be prepared to pay for the service by sharing any cost reduction with the utility company. The most popular form of communication is telephone. Almost half (49 per cent) of consumers will contact suppliers by telephone; 56 per cent of the youngest group of respondents chose the phone last time they contacted their supplier. Email is the second most popular channel, being used by less than a fifth of consumers. This is also supported by findings from BT’s 2013 Autonomous Customer survey, which also found that phone remains the most popular customer service channel across many industries, holding its own despite the growth of alternative contact channels.2 How much of a premium would you pay for these services? (BASE: Respondents who are interested in home remote management system - 1245) Consumers do not want any more gadgets, strongly rejecting the idea of a dedicated device for remotely managing services. They’d prefer to use PCs (desktops and laptops), smartphones and tablets to interact with or override a remote service. Perhaps unsurprisingly, people aged 55 years or above strongly prefer the PC (51 per cent). Of course, the phone alone is not enough. Eighty two per cent of Autonomous Customer respondents wanted a range of channels to meet their needs.3 But switching channels exposes huge gaps in customer service – just 17 per cent think swapping between channels is easy and gives them a seamless experience; 69 per cent of consumers say they’re often asked to repeat their account details on the same call.4 6. Young and green The generation gap is particularly apparent in attitudes to sustainability. While 78 per cent of the youngest people, 18 to 25 year olds, value help from their utility provider to reduce their carbon footprint, only 48 per cent of people aged 55 years or above share their view. Ironically, the older age group is the one most focussed on prices but the survey suggests they’re not linking cutting consumption to lowering bills. Overall, more than three fifths of consumers (68 per cent) would be willing to pay for energy or water-saving equipment to help to lower energy use, but again, younger people are much more enthusiastic than their parents. This suggests that more needs to be done to educate older consumers on the economic as well as environmental benefits of reducing consumption. Ultimately, in a market where prices are set to continue to rise, managing consumption could be the only practical way to control or reduce bills. Simple, seamless, omnichannel customer service is essential to make the most of the big data deluge. Utilities are not alone in finding it hard to do. What matters most. The expectations of a new generation of water and energy consumers. 2, 3, 4 The Autonomous Customer 2013 BT & Avaya 10
  • 11. Research insights 7. Customers still want clearer tariffs, accurate bills and better communication While customers respond positively (if cautiously) to the idea of new services, their wish list remains pretty constant. They want a faster response to queries, to be always on the best tariff and get bills they can understand. In fact, the most important factor for all age groups in choosing a utility provider is ‘ensuring I’m on the best tariff at all times’ (93 per cent). Sixty eight per cent of people expect the information they give an organisation in one place (via its website, for example) to be available in another place5, so they do not have to keep repeating themselves. Smart meters and big data should help utilities meet these requirements, but only if the organisation is able to bring together all its data, information, processes and channels of communication so that it has a single view of each individual customer. It can then begin to offer ‘smart service’, actively monitoring services to identify problems or propose new tariffs and generally ‘remembering things for customers’.6 What matters most. The expectations of a new generation of water and energy consumers. 5, 6 The Autonomous Customer 2013 BT & Avaya 11
  • 12. Call to action The introduction of omnichannel customer relationship technologies and then smart meters will be a game changing opportunity for utilities to introduce new services and build better, different relationships with their customers. Obviously, the utility company has to want to take the opportunity; it will have to invest in the technological infrastructure and know how to turn raw data into real information. But given that commitment, the future looks positive for utility companies which: 1. Recognise the diversity of your customers There is a big difference in the attitudes and expectations of consumers of different ages. Younger consumers are harder to please. Older consumers are mainly interested in keeping costs down. The power and energy requirements of someone in a shared flat are different from those of the family next door. Utilities need to be able to identify customer types and respond to their specific needs with more personalised products and services. 2. Embrace big data to develop smart services Smart meters can give utilities unprecedented information about how individual households consume power and water. They must be prepared to handle this volume of data and find ways to translate it into customer knowledge that enables them to build new services and customer service models. 3. Positively communicate the benefits of existing and new services Utilities already have regular contact with their customers through the traditional meter reading and billing process. By stepping up contact via new communication channels they can help customers understand how they will benefit from new products such as remotely managed services. What matters most. The expectations of a new generation of water and energy consumers. 4. Improve the quality and clarity of billing More accurate bills that are easy to understand will help improve trust. Smart meters will help utilities create more accurate bills, as well as encouraging consumers to take more control over their consumption. 5. Become easier to do business with Consumers treat utility companies the same way they treat any other company. Fifty per cent of UK consumers say loyalty to companies is a thing of the past – up from 44 per cent in 20107. The autonomous customer shops around. Consumers increasingly expect to contact service providers at a time of their choosing using their device of choice. Make it difficult to buy or get in touch and we go elsewhere. That means offering seamless, multichannel contact backed by advanced customer management systems. 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: 7 The Autonomous Customer 2013 BT & Avaya 12