Blog | Mar 4, 2021

Meeting Changing Customer Expectations in the UK Water Industry

Meeting Changing Customer Expectations in the UK Water Industry

Across every sector, even within a regulated industry such as water, changing customer expectations are at the heart of business strategy. Instead of acting as passive recipients of a standard service, today’s empowered consumers are looking for proactivity, personalization and value from their providers.

And while it is not possible for consumers to switch water suppliers as they can bank accounts or mobile phone service providers, there is now a framework of incentives and disincentives in place that encourage customer-centric thinking by water companies.

A carrot and stick approach

This carrot and stick approach is firmly at the heart of Ofwat’s 2019 price review (PR19) and preparation for AMP7, the seventh Asset Management Period planned by the UK water industry, which is due to run from 2020 to 2025. As part of this preparation, all regulated UK water companies set out detailed business plans outlining how they would meet the needs of their customers during AMP7 and beyond.

Their plans included elements such as what companies proposed to invest in improvements, what they would charge customers, how they would support vulnerable customers and how they would ensure the long-term resilience of their infrastructure and operations.

Ofwat’s PR19 also introduced a new era in terms of the customer measure of experience (C-MeX), which means people can complain to the regulator not just about the quality of services in their own locality but also outside it. It could be that a customer lives in one area of the country, for example, but spots flooding on the street within another area – they would be allowed in this case to alert the company concerned and lodge a complaint.

Further to that, complaints can be made via any channel, including social media, and must be logged and followed up effectively, while the regulator is now within its rights to contact customers on a randomized basis to test their views. Ofwat encourages the companies providing monopoly services to deliver better services by using incentives.

Alongside C-Mex, Ofwat introduced the Developer Services Measure of Experience (D-MeX), which measures the quality of services to developers and other third parties.

Each of the 17 water and wastewater companies regulated by Ofwat is now ranked for C-MeX and D-MeX and receive:

  • a positive financial payment if they do better than expected (outperformance).
  • a negative financial payment if they do worse (underperformance).

Performance is then published in two league tables, so that not only are water companies encouraged to improve the service they provide through incentives, but run the risk of reputational damage if they consistently underperform their peers.

How can water companies up their game?

As previously noted in the first of this series of blogs, water companies providing a monopoly service face a series of interlinked challenges, including a technical and engineering skills shortage, ageing infrastructure and legacy IT systems.

Customers don’t only want to see reduced water bills, high quality, safe supplies and slick processes when they move to a new property, but they increasingly expect water companies to make a positive contribution to the environment.

Ofwat asked three companies to share their insights into the development of their customer-centric business plans for 2020-25. James Bullock, Director of Strategy and Regulation at United Utilities said that the first thing to remember is that “creating a successful business plan is a continuous process, one built on ongoing engagement with customers and a continual stream of insights to consider”.

“We understood early on what customers valued most – improved services, more resilience, a commitment to protect the environment and a desire to deliver “more for less” with lower bills,” he continued. “It enabled us to work on where we could best identify efficiencies, and where our culture of constant innovation could help drive greater value.”

Continuous improvement enabled by intelligent automation

It’s this notion of continuous improvement, enabled by intelligent automation, that can help water utilities move forwards. Instead of thinking in terms of a big bang approach in which legacy systems are completely replaced, water companies can reimagine both internal and customer-facing processes and implement them quickly.

Intelligent automation allows digital workers to access and check customer data just as human workers would. The difference is that they can do it all faster, more accurately and with no office hours-based time restrictions.

This empowers human workers with the time and bandwidth they require to solve problems for customers, to make final decisions when experience and empathy are needed, and to listen to customers and what they really want from their water company.

Beyond office-based processes, intelligent automation can also help with asset management and maintenance planning. Such processes become especially pertinent when water companies start to include internet of things (IoT) technology to predict maintenance and repair needs, gathering data from sensors out in their physical infrastructure networks then using intelligent automation to feed this back to engineering teams for scheduling into work routines.

Navigating the new era of C-MeX and D-Mex means there has never been a better time to investigate how intelligent automation can help improve the accuracy and speed of data capture, customer communications and maintenance planning activities. Trying to carry on with the old and traditional ways of operating in a swiftly transforming market is no longer an option.