Richard Stanbrook, Director at Pennon Water Services shares his views on the first anniversary of the water retail market which opened for business in England on 1st April 2017 - customer choice and satisfaction are key drivers for the marketplace.
Richard Stanbrook: It’s now been 12 months since the largest competitive water market in the world opened for business.
Retailers and regulators should acknowledge the achievements of such a game-changing industry transformation whilst recognising the need to work together in order to maximise the opportunities that are undoubtedly there for both customers and retailers as we begin the second year of trading.
For us at Pennon Water Services it’s been a strong first year. We have helped over 5,000 customers to save money on their retail charges as well as simplifying payment processes and administration through consolidation.
We now manage over 180,000 business accounts and have won high-profile national contracts including Rolls Royce, Unite Students, Shearing’s, Kerry Foods and BMI Healthcare. Our USP is a high level of expertise and service which we have used to deliver a wide range of water related services to businesses including leak detection and repair, Legionella testing, alternative water sources, contingency planning and ‘smart’ meters.
PWS has been recognised as one of the top four ‘champion’ performers in the new market by independent consultant Brodick, based on size and growth and we have scored 96 per cent satisfaction for our customer service – we are particularly proud of this statistic because it has been a key business goal from the outset and is recognition of the professionalism and hard work of our staff.
Still some way to go to reach level of switching regulators envisioned at market launch
In terms of the market as a whole, there is still some way to go to reach the level of switching that regulators envisioned at its launch. The latest Ofwat research shows that fewer than 3 per cent of eligible customers have switched and in February the Consumer Council for Water said that the industry needs to up its game in order to raise awareness amongst customers.
We believe that switching rates to date have been a healthy starting point for the market as this has allowed retailers and wholesalers to adapt to the new trading environment without being overwhelmed by unmanageable levels of demand. Given the scale of the changes, widely regarded as the biggest shake up to the industry since privatisation 30 years ago, it’s perhaps not surprising that some businesses are adopting a ‘wait and see’ approach before deciding if switching is right for them.
The wider political and economic climate has also caused many businesses to adopt a cautious approach to change. As retailers, we need to continue to communicate clearly with our customers so that they are aware of the options that are open to them. However, it is encouraging to see that 89 per cent of large businesses and 48 per cent of micro businesses are now aware of the market. These figures are backed up by our experience which has been that larger, more complex businesses have taken the lead with greater awareness still needed amongst smaller water users.
We know that not all businesses want to switch retailers
We have actively communicated to all of our customers multiple times to inform them of the new market and its benefits. We will continue to communicate clearly with customers about the choices that are available to them but we do know that not all businesses want to switch retailers.
We have received good feedback from our customers about our range of products and customer service and many have said they don’t want to switch. This fits with Ofwat’s recent survey which found that 25,000 businesses looked at switching but decided to stay with their current retailer. One figure from the Ofwat survey that is particularly encouraging is the customer satisfaction ranking of 77 per cent.
It’s encouraging to see that 15,000 businesses are actively considering switching and a further 35,000 plan to engage with the market shortly. We will continue to help educate all businesses as part of our ongoing communication programme and we believe that this will see awareness levels continue to rise and switching levels increase further as a result.
Customer choice and satisfaction are key drivers for the marketplace
Customer choice and satisfaction are key drivers for the marketplace. Competition is driving both efficiency and transparency for businesses with immediate savings available in the retail space. We expect this trend to continue and for all retailers to look to innovate to remain competitive and in line with business expectations, especially when using technology and simplifying the customer journey.
Regardless of other services offered, the quality of the core retailer offering will remain the primary driver for switching and attrition. We have focused on customer service, adopting a partnership approach with our customers so that we make doing business with us as easy as possible. We work on the basis of one bill, one payment date and one number to call. We have also found that the added value services we offer have enabled us to establish a strong reputation for expertise in water saving – helping customers to save money from their bills and to boost their green credentials.
As the marketplace develops and matures we believe that the various retail brands will gain traction and that, as a result, customer awareness of the different retailers will increase meaning that traditional brand values of integrity and authenticity will come to the fore.
Retailers and regulators should recognise successful market launch
Getting the new market launched on time and without any major problems was an achievement that retailers and regulators should recognise as a success. As we move into the second year of trading, the sector should work together to ensure that customers continue to benefit from competition and the savings and efficiencies that they can realise as a result.
Switching has largely gone smoothly with the processes and systems involved for both retailers and wholesalers working well. Initial issues with regard to data quality and billing have improved but this needs to continue so that the customer experience of the new market is as good as it can be.
MOSL and Ofwat should ensure no unfair barriers to entry or exit remain
In terms of future trends, we would expect to see some consolidation in the market and also some book transfers from retailers with short term business plans. We would look to MOSL and Ofwat to ensure that no unfair barriers to entry or exit remain but that there is transparency for businesses at the point of sign up concerning plans retailers might have to sell their contract during its term. We believe that this will benefit customers and the market as a whole.
PWS has a long-term approach based upon added value partnership rather than short term, transactional gain and we believe that this gives our customers confidence in both us as a retailer and the open marketplace itself. MOSL and Ofwat also need to ensure appropriate regulation for third party intermediaries and to promote consistency across wholesale business processes, avoiding complexity for both retailers and customers.
Stability and transparency will help the marketplace to develop as it enters its second year and we believe that by working together retailers and regulators can achieve a healthy, growing trading environment that helps customers to achieve savings through efficiencies and helps retailers to achieve realistic, sustainable margins through innovation.