Julien Lancha, Chief Customer Officer at behavioural science software firm Advizzo explores the key roles data and behavioural science play in delivering more effective customer engagement.

Julien Lancha: Customer engagement has been slowly climbing to the top of the priority list for water utilities. The UK Customer Satisfaction Index (UKSCI) highlighted the scope of the problem, suggesting energy and utilities are behind other sectors by about 3.7 points when it comes to customer satisfaction scores. Furthermore, OFWAT – the UK’s water regulator - made customer satisfaction a focus for the PR14 regulatory cycle. So why is this?

This could possibly be down to the regional monopolies each utility holds – they already have the residential customers without facing competition. However, new guidelines from regulators are set to change all that.

After 2020, OFWAT – the UK’s water regulator - will introduce the C-MeX (Customer Measure of Experience) to monitor the satisfaction levels of all water utility customers. It will replace the Survey Incentive Mechanism (SIM). The C-MeX has a wider brief – to assess customer satisfaction overall, even if the customer does not interact directly with the utility company to pay a bill, or make a complaint etc. This is the first time a customer can evaluate a utility’s entire customer engagement strategy, encouraging a more proactive approach with consumers, otherwise penalties could be issued.

Previously, ‘customer engagement’ in the utilities sector involved the very basics. It included bill distribution, bill payment, leak reports and general complaints. As we are now in a more consumer-driven world, customer interactions need to be a lot more multi-dimensional. Thankfully, new technologies are helping to make this happen.

However, we are not just talking about smart meter technology, or a way of making a complaint via Twitter. Smart meters are a great asset for any household, but they cannot change customer satisfaction overall (nor can they alter engagement levels without additional support). They do allow easier access to household consumption numbers, but without further insights that help customers take back control over consumption, it will not change the customer’s relationship with the utility company. For example, if a customer receives a bill that’s higher than usual, they will not care whether they have a smart meter – they will want to know WHY.

So what should water utilities do to get ready for the upcoming changes?

Well, this is where you need the support of data and behavioural science. Using methods derived from data and behavioural science, for example, incentives, goal pursuit, social norms and cognitive dissonance, you can change the way consumers think about natural resources, and the guardians of natural resources – the utility companies.

With data informing each of these methods, water utilities can deliver personalised insights about household water consumption, creating a mutually beneficial dialogue that helps both the utility and the consumer change their actions as a result of input from the other. It helps utility companies gain a better understanding of their customers, and then identifies the best ways of engaging their customers on the issues that matter most to them.

One effective way of starting off this process is using a technique called “social norm messaging”. Consumers receive “nudges”, informing them of their consumption compared to similar households in their area. This raises their awareness around what is socially acceptable, and makes them acutely aware of how to lower their bill and become a more sustainable household.

All of this aims to motivate people to adjust their behaviours. If you then add personalised tips to reduce consumption as they become more motivated to change, then they are more likely to follow the advice of the utility companies.

These days, consumers have so many outlets to start a conversation with a brand. If you add in data and behavioural science as way of making each of these conversations more fulfilling, a water utility company could triple the likelihood of their customers interacting with a piece of content, or email. This supports the new way of looking at customer satisfaction ahead of new changes in regulation.

It is now time to change the water sector’s customer engagement strategies once and for all.