Ofgem data shows that 7.7 million UK energy customers felt so dissatisfied with their supplier in 2016 that they switched to a different company – a 28 per cent increase on the number of switchers in 2015 and a six-year high. It is fair to say that a trend is developing, in no part fuelled by well-funded marketing campaigns from consumer groups, and now the topic has become politicised as election battle lines are drawn over an energy price cap.
In truth, customer experience (CX) has long been a problem for the sector and, according to the 2017 UK Customer Satisfaction Index (UKCSI), utilities continue to perform poorly despite some minor improvements. Of the 13 sectors that UKCSI assesses, only the telecoms and media sector fared worse than the utilities sector in the eyes of customers.
From a customer’s perspective, price and experience are the only points of differentiation in an industry where competing suppliers offer the same product. However, one of the core customer challenges the industry faces is the nature of the product. Customers have been conditioned to take energy supply for granted. Utilities are a commodity purchase, which lack the excitement and anticipation of buying, say, a new iPad. This makes an effective CX strategy crucial in customer attraction and retention.
Against the backdrop of an environment where customers are more empowered and informed than ever before, the quality of their experience is even more critical. According to research firm Gartner, 89 per cent of companies now compete mostly based on customer experience, compared with 36 per cent five years ago. For utilities, the advent of smart metering and the Internet of Things will dramatically accelerate customer interactions over the coming years, meaning CX should be a board level priority.
If evolving trends and hard data fail to motivate business leaders to make CX a major priority, then the heavy hand of government is standing by to mandate improvements. For example, the UK’s water market is set for its biggest transformation since privatisation as it opens for competition between suppliers. Gone are the regional monopolies and in come new market entrants, many intending to port their expertise in customer service from sectors where good CX is part and parcel of growing your revenue.
CX catch-up
However, performance suggests that only a handful of current industry leaders across the utilities sector are taking CX as seriously as they ought to.
The issue is compounded by the fact that the industry is late to the CX party. Over the past decade, brands in highly competitive consumer sectors such as retail and hospitality have pushed each other to offer a level and type of customer experience that was unheard of just a few years ago. The performance of other sectors has shifted overall consumer expectations, meaning all brands, regardless of sector, are expected to provide high standards.
Making headway requires a change in focus, which starts with senior industry leaders. Looking at how other industries profit from good CX, utilities need a shift in emphasis where, rather than being utility suppliers that happen to have customers, they should see themselves as customer service businesses that happen to supply utilities.
This is the stance that has been adopted and embraced by utilities in the US where the industry performs considerably better than in the UK when it comes to CX. In fact, it is a trend seen more broadly across the US where the CX market is more mature than in Europe, and where interest in CX has led to the creation of top executive positions such as customer experience officers, or CXOs.
Back in the UK, challenger utilities have been quick to recognise the importance of good CX and have successfully leveraged it. Brands like Ovo Energy and energy and telecoms supplier Utility Warehouse are two of only a handful of utilities companies to make it into the UKCSI Top 50, alongside the likes of Amazon, First Direct and Waitrose.
How can utilities improve CX?
Our research has shown that improving customer experience need not be a daunting task for businesses. The most important factor in both customer satisfaction and loyalty is simply delivering on reasonable customer expectations. Despite this, there is a trend for organisations and brands to attempt to “surprise and delight” their customers by offering over-the-top perks instead of first ensuring the foundational aspects experience.
Customers simply want brands to keep their promises: it is consistently delivering to customers’ expectations that builds trust – and the emotional loyalty that utilities will need to thrive in the new world.
Meeting expectations is particularly important to UK customers. Our report shows that they are more likely than customers in any other country to report feeling disappointed if expectations are not met. In developing their CX strategy, utilities businesses would be wise to avoid high-risk, high-reward marketing tactics because it is easier to disappoint than to excite Brits.
Finally, and most importantly, the key to success lies in deep analysis of the customer experience you provide. In its infancy, the CX industry used crude mechanics like mystery shoppers to get a handle on the way customers were treated and their actions. Today we take a much more forensic and real-time approach to understanding customer perceptions, which delivers powerful insights based on structured data (scores, ratings and metrics) as well as unstructured “human” data (social reviews, chat, emails and comments).
Only with this information to hand can utilities hope to truly understand their customers and turn the tide of dissatisfaction which has dogged the industry for so many years.