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BUSINESS / FINANCE / REGULATION Why utilities should care about their customers By Alain Bollack, Director, EY With a US$18.8 trillion investment to make in infrastructure over the next 20 years, which will inevitably end up on customer bills, utility companies need to demonstrate that they can deliver both value and service. Failure will result in public backlash, as already seen in Bulgaria, and loss of high-margin customers to new market entrants. Building relationships is, therefore, a very serious matter. Banks, supermarkets, telecoms companies have all been down the customer relationship-building route with varying degrees of success. But do customers really care who supplies their energy as long as it is available on demand and does not cost the earth? It turns out that they do. In surveys, utilities typically lag behind other sectors in terms of customer satisfaction and are perceived as faceless machines that prioritise profit over quality service and value for money. 1 The reality is that utility businesses are steeped in legacy practices and behaviours. They are good at selling energy, but not so good at ancillary matters like customer attentiveness, responsiveness and the delivery of value-add services that can make the difference between a mediocre and a great relationship. Utilities need to wise up because today’s customer is increasingly savvy and knows how easy it is to (a) compare prices online and (b) change suppliers. These switched-on consumers are also getting more adept at understanding their bills (especially now that regulators demand greater tariff transparency) and will become increasingly so as smart metering provides instantly visible data on energy usage. Far from being passive users, this new generation of consumer actively makes energy choices based on price, environmental concerns and brand reputation. be the most lucrative and most informed customers who vote with their feet and switch suppliers. These are the customers who will replace their boiler, install micro generation technologies and pay their bills on time or by direct debit. Transparency is a starting point to rebuilding trust and putting the interests of customers first. Utilities need to deliver on expectations with every single transaction by getting bills right; by explaining how they are calculated in layman’s terms; by clarifying tariffs, deals and loyalty programmes and informing customers why the renewables tax gets passed on to consumers. They also need to listen to customers and understand what they want from their suppliers and resolve complaints swiftly and fairly. These basic common-sense practices, when delivered by the right people with the right training and technical competency, can help to rebuild the company’s reputation with customers and bolster the brand. Unfortunately, will and understanding are not always matched by capability. Some utilities are seizing the initiative. Customer churn, for instance, has decreased dramatically among companies that implement smart metering because it gives users up-to-the-minute stats on the energy they use and the way in which consumption behaviour (say leaving the heating on while out at work or using the washing machine for a half-full load) influences the monthly bill. Armed with knowledge, informed consumers make better choices about how and when they use energy and this, in turn, can lower carbon footprints and positively impact household expenditure. This louder customer voice coincides, of course, with rising energy costs as utilities decarbonise their existing infrastructure to comply with governments’ green agendas and grow their renewable generation capabilities. This all comes at a cost – an estimated US$18.8 trillion by 2035 – that gets passed onto consumers in their energy bills. However, from the outside looking in, there is a perceived disparity between rising profits for utilities and soaring bills for householders. That fragile thing called trust The notion of trust between utility and customer is damaged and the scene is set for growing customer dissatisfaction. Should utilities care? Of course they should. In deregulated markets, it will 1 In Utilities we Trust? EY, Franklin Covey, YouGov Survey (UK) March 2013 The rise of smart customers, EY worldwide surveys 2010 and 2011, www.ey.com/smart 52 METERING INTERNATIONAL ISSUE - 4 | 2013