Alan Newman, Enterprise Manager, Utilities at customer experience management specialists Quadient, discusses how water companies can revamp their communications strategies to improve customer experience.

Alan Newman: In today's cost-conscious climate, companies are under increasing pressure to improve customer experiences. Water companies face a unique challenge, as customers lack the option to switch providers if they're dissatisfied. To address this, Ofwat introduced new regulations in February, granting the authority to impose fines of up to 10% of a company’s turnover for subpar customer service.

Historically, water companies have struggled to effectively connect with their customers. Recent water bill increases have only further strained customer relations, with the public, politicians and campaigners alike, condemning water companies for raising prices to fund customer service improvements.

Water companies need to significantly revamp their communication strategies to overcome major challenges such as low digital adoption, sluggish smart meter rollouts, and an overall lack of engagement and transparency. The environmental and economic push for smart water meters presents a chance for these companies to improve customer experience (CX). However, without personalised communication, achieving these goals will be difficult.

Turning the tide on CX

Utilities companies struggle to meet let alone exceed customer expectations, as many consider the relationship to be purely transactional. But the industry hasn’t done much to change this perception. In June, Citizens Advice found that customer service ratings across the energy industry were among the lowest ever between January and March, with average ratings having fallen by 10.5% compared with the same period in 2021. Meanwhile for water companies, Ofwat reported a fall in customer satisfaction across most companies in 2022-23, with 230,000 household complaints during this time.

Customer satisfaction remains low for water companies due to unclear and impersonal communication. For example, Southern Water’s campaign to promote water-saving devices was met with scepticism on social media platforms such as Reddit, due to poorly targeted communication. Customers received generic messages about water conservation without addressing specific needs or usage patterns, leading to low engagement.

Ineffective communication by water companies is also evident in their smart meter rollout. Smart meters will play a significant role to reduce water and energy consumption, allowing homeowners to more easily track their water use and take steps to manage their consumption behaviour. But water companies are struggling to communicate these benefits to customers – with only an estimated 13% of households having smart meters installed as of March.

The smart water rollout has been controversial, with customers seemingly left unsure on why smart meters are a good thing. Such scepticism mirrors earlier experiences with energy companies, where many were left to believe smart meters only benefited the company not the customer. As a result, energy companies have failed to meet smart meter targets – and it looks like water companies are heading the same way.

The impact of low smart meter adoption is a vicious cycle. Without smart meters, water companies can't collect the vital data needed to understand and meet customer needs effectively.

Making waves with personalised messaging

Water providers need to re-consider the channels and messaging they are using to communicate with customers. Look at the controversy around smart meters – it’s not enough to mix advice on cutting consumption into marketing emails. These can end up getting lost or being left unopened because the message is too generic.

Instead of blanket messaging, companies need to recognise that everyone’s motivations are different. To effectively persuade customers to adopt smart meters, companies should leverage customer data, such as consumption patterns, to understand what would convince each individual. For example, homeowners who are interested in intelligent home technology may be intrigued by the smart features of meters, like the ability to integrate with other devices for more efficient household management. On the other hand, individuals with a strong emphasis on sustainability may see smart meters as a practical step towards environmentally responsible living.

The key to understanding these motivations lies in segmenting customers into personas based on their preferences and behaviours. By doing so, water companies can tailor their communications to each persona, using the most effective channels and messages for that individual. Water providers already have a wealth of information on their customers, and with 71% of consumers expecting personalised experiences and 76% feeling frustrated when they don't get them – companies should use this to their advantage. Water providers can also use existing data to create customer journey maps to track how individuals react to communications and then adjust and improve their messaging strategies accordingly.

This unique access to customer data places water companies in a position to influence consumption behaviours, reducing both cost and environmental impact. But if they fail to utilise this data effectively, their communications will not connect with customers – no matter how important the message.

The ripple effect

Water providers need to make sure they collect data throughout the entirety of the customer life cycle. Data collection and analysis shouldn’t stop once the smart meter is installed but should be a consistent part of the company’s model. Every interaction, from billing inquiries to usage reports and feedback surveys, provides valuable insight into customer needs and behaviours. This knowledge enables companies to tailor services, improve communication, and enhance overall customer satisfaction.

Continuing with outdated, blanketing messaging will keep water companies from effectively connecting with customers. What they need is a comprehensive data-guided approach to CX, allowing a personalised approach that will better position them for long term success.