Large organisations are known to welcome the prospect of being able to switch their water supplier. Much less is known about the attitude of smaller businesses, despite the fact that under the latest government plans, all businesses regardless of consumption will be able to choose from whom they buy their water.
On behalf of Utility Week, Accent has researched the issue with the principal aim of exploring whether or not there is an appetite for switching among small to medium-sized enterprises (SMEs). The findings show a real split in attitude between larger and smaller SMEs.
Most of the larger SMEs we spoke to (those with more than five employees) were positively delighted at the possibility of being able to switch. They readily recount that they have had to become very keen and aggressive negotiators, very willing to challenge and, if necessary, change supplier in other areas to get the best deal.
These larger SMEs are adamant that price is the key to unlocking their loyalty. One says: “I will definitely change. Basically based on the price. It would be wholly the price initially. With my current supplier I am quite happy with the service but I am sure they could do a better price.”
Such businesses are clearly expecting their bills to go down once the market is opened. Some cynically queried whether the monopoly situation water suppliers have enjoyed afforded them the opportunity to, if not inflate their prices, then certainly be reticent about reducing them. Says one: “Sometimes when you’re stuck with one or a couple of suppliers and you don’t have choice, you’re limited to what you can do and the price you pay. Sometimes you probably end up having to pay a bit too much, which isn’t beneficial.”
Another goes further, commenting: “The cost is extortionate, if I am being honest. We are paying £1,295 for water and waste every six months. We don’t use a lot of water. I am astounded it is so high. We are on a water meter. The monopoly doesn’t help us. I would not say it is a cartel, but it would be nice to go out to the market and shop around for a cheaper price.”
Larger SMEs are relatively well-informed about it purely being the retail front-end that will change once competition comes in. One notes: “The water that will come through the taps and the disposal of the sewage, that network can’t change any more than it would if you change gas and electricity supplier. So I can’t see what they can do that will alter the product. It will be just about who does the billing. It will make no difference who supplies the water.” This attitude is likely to embolden bigger SMEs as switchers, suggesting they will not stick with their current supplier because of loyalty to product quality.
The views of smaller SMEs are in stark contrast to the voracious appetite for change expressed by their larger equivalents. Most felt their current water bill represented very good value for a good service. They spoke only of the probable hassle involved in changing supplier and not of any anticipated potential cost saving. According to one: “We have a policy that we don’t change. It is not worth the aggravation. We pay £X – we have to accept that is what we are going to pay. The more you change them around, the more likely there are to be problems.”
Another was hostile to the very idea of enabling switching: “I’d almost prefer not to have the option. We probably complain if there’s a monopoly and the prices go sky high, but it’s a lot easier. We’re with Welsh Water, that’s it, job done. If you mention electricity to me I start twitching, but water’s never been a hassle.”
An allied concern surfaced: if you achieve a modest cost saving on your bill, then there must be a commensurate reduction in service. The question for small SMEs was not whether, but which, element of the water supply service would be compromised. One says: “It will be a race to the bottom as everyone starts cutting corners and water quality, possibly. If it is a race to the bottom on price, something has to give.”
Of all the SMEs we spoke to, only one was independently aware of the incoming changes permitting choice of supplier in the water sector. This came through an article in his trade press. Indeed, all were astonished and somewhat indignant by the paucity of publicity surrounding this important change. Some felt their current supplier should have taken responsibility for informing them of the change. All preferred to be informed in writing, to authenticate the offer, or through advertising.
In the absence of such proactive activity, respondents said they would instead look to price comparison websites. One explains: “You can’t believe the sales people on the phone. Everyone’s saying they’re the best and you don’t know if you’re coming or going. You’re not sure about charges of switching, whether they’ll be a disruption to the service, other hassles, whether you’ll be charged for engineers coming out. So I’d rather go on the Uswitch website, put in how much we use, etc, see who’s the cheapest and switch to them.”
SMEs were in agreement that outside of current water suppliers, the most natural providers of water would be energy suppliers. In fact, those enthusiastic about switching showed interest in dealing with one company for all their utility services, with the assumption that there would be a discount involved. We found a strong correlation between those who said they would switch water supplier and those who have switched energy supplier.
After energy suppliers, and to a much lesser extent, respondents said they would consider buying water from local authorities and specialist new entrants. Regarding the latter, however, some businesses were concerned about relying on a company without a proven business track record for the provision of such an important commodity as water.
When asked whether they would like to see supermarkets extend their remit to cover water, few showed interest. Some were actively antagonistic. One replies: “Definitely not. They are excessively profiteering.”
In summary, larger SMEs which are historically well versed in switching energy supplier are most definitely prime candidates for switching their water supplier. In contrast, the smaller SMEs will most likely maintain their loyalty to their current water supplier until such times as that supplier gives them cause to change.
Rob Sheldon is managing director of Accent
This article first appeared in Utility Week’s print edition of 16th November 2012.
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