Service demand to rise with water bills – What next for suppliers?

Service demand is set to rise for water suppliers. More households are facing cost-of-living pressures, with Water UK forecasting a 6% increase in bills from April.

Preparing for this demand is crucial. And while people and processes are fundamental to the performance of any servicing operation, their importance is amplified when supporting vulnerable customers.

We’ve been working with Energy and Water clients throughout the cost-of-living crisis, recently helping a large supplier to enable a ~£5m cash uplift. In this blog, we offer practical guidance on managing the latest phase of the crisis, focussing specifically on people and process.

Increased pressure from Ofwat and the ICS

Service failures will be costly in 2024 as pressure increases from Ofwat. PR24 (Ofwat’s 2024 Price Review methodology) is set to be published in the coming months, while poor service continues to be penalised under current PR19 obligations, through C/D-MEX (Customer/Developer Measurement of Experience).

Recently, Ofwat also announced new powers to fine suppliers for poor customer service, which could be as high as 10% of turnover.

This follows the introduction of new vulnerability standards by the regulator, with an expectation that suppliers will have appropriate support in place for those that need it most. So far, their view is that “awareness of the support available for those struggling has continued to remain low.”

It’s crucial that suppliers are embedding proactivity into their customer-facing teams, equipping advisors with the skills and tools for signposting customers to appropriate support options, as early as possible.

Last month’s UKCSI report makes for stark reading, with water companies seeing the largest fall in customer satisfaction, dropping by 4.1 points compared to 1.9 for energy. Utilities also retains the lowest overall score of all 13 sectors.

How to manage increased service demand

Suppliers should focus on two key enablers:

1. People
2. Process

Investing in people

Continuous development of frontline teams

Results are driven by people. To improve operational performance, investing in learning and development should be a strategic priority, to leverage the skills and attributes of your people.

This could mean:

• Assessing service teams and defining the standard of excellence – implement training plans to bridge identified gaps
• Understanding whether, if used effectively, you have the right skills and attributes to service your demand (resource planning)
• Investing in managers and/or quality teams – they’re vital for coaching and developing your people

Conversation quality is key

From our experience, the art of developing effective customer conversations is often missing from advisor training.

Recently, we helped a retailer in our energy practice to transform their approach to collections, upskilling advisors to lean into difficult conversations and offer sustainable payment solutions. Overall, the programme led to a ~£1m increase in cash collections, and ~£200k Bad Debt benefit.

Approaching collections conversations in this way can leave customers feeling educated and supported, helping to strengthen satisfaction scores, rather than driving up call times, repeat demand, and complaints.

It’s important to:

• Review your quality framework - Is it dynamic and evolving to meet the changing demands of your customers?
• Review your service success measures – Are you focussing on quality metrics, such as customer feedback/NPS, first call resolution, and propensity to complain?
• Encourage regular call listening by operational leaders – Are you truly satisfied with call quality?

Build a customer-centric culture

CCW highlights the importance of customer-centric culture, showing how this can create meaningful experiences that strengthen customer satisfaction, loyalty, and advocacy.

Customer-centricity can’t be felt unless it’s upheld by your people and processes.

This can mean:

• Reviewing your cultural aspirations to ensure you have a clear vision
• Establishing the appropriate accountability to drive your culture
• Understanding how your people are feeling and what changes are needed, with a strong communication plan in place to encourage listening

Investing in process

Understand your customers and leverage insights

You should be familiar with the customer types that interact with your brand, including those who are potentially vulnerable. This understanding should be leveraged to deliver a consistent experience for each customer type, achieved by:

• Segmenting your portfolio to inform communication and treatment strategies
• Defining value for each customer type, with key processes mapped out to understand opportunities for waste removal
• Continuously monitoring process performance and sharing with your frontline
• Identifying the key insights you want to generate to best inform decision making
• Referencing insights in steering meetings and performance calls, with clear accountabilities for driving improvement

How can BFY help?

Water suppliers must act swiftly in preparation for increased service demand, with an above-inflation rise in bills forecast for April. At BFY, we’ve helped a number of utilities clients to identify and overcome service challenges, recently supporting a large B2B supplier with transforming its culture.

We also offer a market leading agent conversation programme, pre-approved in meeting the Institute of Customer Service (ICS) accreditation requirements. This tailored course develops the capabilities of your frontline teams, focusing on better connecting with customers, the power of words and actions, and embedding a customer-centric culture.

If you’d like to know more about how we can help, contact Ashley McLeod or Jonathan Paton.