We have benefited as a business from said opportunities thanks to our target audience. When a market is deregulated, the micro-SME market is often overlooked. There is a focus on industrial and commercial customers, or domestic when it comes to energy, and no-one champions the micro-business. Apart from us.
Verastar has been a licensed provider of gas since 2012 and an electricity supplier since 2013. The same year saw us become involved in the Scottish water market when we acquired Clear Business Water. We focused on providing a challenger brand to the incumbent, which has led to 26 per cent market share.
From this success, we became involved in the business water market in England at the market design stage. Despite the achievement of the market opening on time, there is still an awful lot of work to be done to make the market function for small businesses. We have been providing feedback to Ofwat that there needs to be a substantial change in wholesale costs so that people can get the benefits that they were supposed to get when the market opened. As Wics begins to conduct its market review we are also providing feedback based on our experience and lessons learnt here. The Scottish market has been open for ten years, has been competitive for about five and should be looked to as the blueprint for the English market. It is vital that PR19 delivers a competitive market for the benefit of businesses throughout England.
Monopoly suppliers are the backbone of the industry and the ones making the profits. Going forward there needs to be greater onus on regulators to challenge this to the benefit of retailers and ultimately customers.
We recently made the business decision to switch to 100 per cent renewable electricity, at no extra cost to the customer. The RE100 campaign where businesses commit to using 100 per cent renewable energy is gaining traction, again with large-scale businesses as the focus. We are pleased to be able to offer the benefits of going green to the micro-SME market, so they can be part of this movement too.
There has been very little genuine innovation in service provision in the past 20 years other than enabling self-service. With the opening of the water market there was an opportunity to aggregate utilities and our offering has gone further than that with our communications and insurance products.
This correlates with the wants of customers, which has also changed over the past two decades. People are increasingly busy and have less time and less patience to deal with administrative tasks. This has never been truer than for our target audience of SME business owners. Ofwat’s Open for Business review stated that “around half of customers (48 per cent) said consolidating different utility services to the same retailer was an important factor when considering switching” and Verastar has been ahead of this curve by simplifying essential services and making running a business easier.
Brokers are a vital catalyst for people to change their supplier. Our proposition enables a single broker to offer multiple service points, which is therefore cheaper for the customer. I see aggregating services together, and giving the benefit of this to the customer, as the only direction for brokering to go in. You need to be there, or you may struggle.
In a digital age, there is an expectation by the customer for things to happen instantly, which puts an increased burden of service on to the provider. There’s a technology challenge here to provide the service that meets expectations and I see that only accelerating with artificial intelligence, machine learning, chatbots, and all the rest. However, I see these technological advances bringing a level of automation to the service element that, if harnessed correctly, could improve service and lead to a signification cost reduction, ultimately for the benefit of the customer.