Evolving and uncertain times in the water sector mean companies may soon face an uphill battle to maintain customer loyalty, retention and trust. Many water companies are already working hard to put processes in place to ensure they stay ahead of the competition as non-household market opening draws ever closer; including streamlined products and services, providing added value, and great customer service. And, of course companies will have a close eye on the possibility of household competition, maybe as early as 2020, and will be starting to think about ways to a gain that all important competitive advantage.
One important customer service element which will need attention is the quality of the customer billing experience – something we see as a key opportunity in maintaining successful customer relationships and achieving sustainable success. The importance of billing in the water sector hit the headlines in September this year, when a report by the Consumer Council for Water revealed that written complaints had increased for over half of water companies in England and Wales, with billing and charges accounting for over three in five of the complaints.
Concerning statistics, considering that recent research we conducted with 1,000 UK consumers revealed that one in seven customers would definitely switch supplier if they encountered bad billing, while almost half would at least consider it. In this same research, respondents put water companies below other service providers including mobile phone, credit card, and telephone companies when it comes to billing. So, with this in mind, what should water companies consider when it comes to this crucial aspect of customer service?
1. How customers want to receive bills and pay
Unsurprisingly, our research revealed that over half (57%) of people prefer online billing. But worryingly, for bill payers who noticed an impact since they’d moved online, one in three said they are less aware of what they pay each month – a stark warning to service providers to find better ways of engaging with online bill payers, or risk escalating problems being stored up for the future and potentially becoming invisible to customers.
Whilst there is a notable sway towards online billing, it can’t be ignored that a significant minority of people would still rather receive a paper bill and it’s worth noting that the preference for paper billing is greater from lower income households – 31% of people in the less than £10,000 pay bracket prefer paper bills, compared to 19% in the over £40,000 pay bracket.
Water companies therefore need to be aware that by introducing charges for paper bills, or completely removing the option of paper bills, they risk frustrating almost a quarter of their customer base, the impact of which will only worsen as the market opens.
Direct debit is not right for everyone
65% of consumers favour direct debit as their regular method of payment – and it’s clear to see why given the easy set-up, convenience and security. However, some clearly still like the feeling of control they get through manual payment.
Trying to push customers, regardless of their circumstances, onto direct debit arrangements when it’s not entirely right for them can actually serve to undermine trust and damage relationships – particularly since such arrangements have hit the headlines in recent years for being seen by customers as an ‘invitation for service providers to help themselves’, regardless of the amount due. Therefore, it’s important to give customers choice, and for the ones that do select direct debit; ensure they’re on the best tariff for their needs; that fixed monthly payment amounts are fully explained; that you invite them to communicate and make it easy to query payments, in order to maintain customer trust.
2. The prevalence of good and bad practice
Our research uncovered common occurrences of both good and bad billing practices. Where there is good practice, it is clear that both the customer and the service provider benefit. Often reducing the likelihood that a payment is missed, or helping a customer feel better about the deal they are getting for services. It can also help sell additional products or services, with 19% of households appreciating having such items of interest brought to their attention. Bad practices flag up the recurring themes most mentioned by customers – inaccurate billing, poor support with managing finances, and a lack of clear and transparent communication.
Correcting some of these most common issues should be straightforward, with investment in the right systems and skills. However, the balance can be harder to get right when it comes to keeping lines of communication open. Unwanted communications are both irritating for customers and expensive for service providers. Knowing when to communicate proactively, for example with warning of a higher than expected bill, comes down to knowing your customer. Identifying the patterns that indicate where such communication will be wanted, or giving customers the ability to tailor the alerts received. Adapting systems in this way, grouping customers, and altering the thresholds that trigger automated communications, can help get the service levels exactly right.
3. Baffling bills – the number one improvement customers want is better clarity
One in four consumers said the biggest change to billing they’d want is greater clarity. For 30% of customers, bills have become easier to understand over the past few years, but 70% of people said they had stayed the same or become harder to understand. Worryingly, despite considered efforts from regulators, schemes, and service providers to make bills easier to understand, consumers are still regularly confused by some of the most common terms used on bills. Chargeable value is one of the worst offenders, with almost three quarters of respondents unclear what this term means, while simpler terms such as ‘account balance’ baffle almost one in three.
Here, it’s important not to assume that customers understand common billing terms, and instead consider simplifying terminology and explaining clearly what each term means. Many water companies already have website areas which attempt to explain water bills in more detail, but our research report clearly indicates that more needs to be done.
Signposting to more in-depth online resources and well-trained contact centre staff can add in the extra level of detail and support that consumers may need. Getting this right will be especially important if plans for the water household market to open up to competition come into fruition in 2020 with water bills likely to become even more complex with additional unclear terms such as tariff information label, tariff comparison rate and exit fees being added into the mix.
4. The impacts of perks and benefits
It’s also interesting to reflect on how impacted consumers are by perks (such as priority tickets, discounted meal deals and travel discounts), which are most common in more competitive sectors such as telecoms. Around a quarter of people we asked said they are significantly affected by perks, with 21% of these saying they’d remain loyal to a service provider offering perks; one in five saying they would decide between similar providers based solely on their perks package; and 4% even saying they’re only with a service provider because of the perks they offer.
However, it’s also important to remember that 17% of respondents said they find perks annoying and would rather they weren’t offered at all. Again, here it really comes down to knowing customers, using each and every interaction to build data, listen and gain a deeper understanding, and tailoring benefits accordingly – offering the right benefits to the right people in order to add real value.
5. Billing in competitive vs non-competitive markets
Water companies can learn a lot from service providers operating in competitive markets, such as mobile and credit card companies, who scored highest with customers. In these sectors where there is the most intense competition for customers, one in three customers scored billing as eight out of ten or above. Here, service excellence can act as a key differentiator, and companies are therefore often more customer-centric.
So, with water companies looking to be the best in time for the retail opening next year, and possible household opening in 2020, will we soon be seeing perks offered as standard, in order to retain and gain new customers? Whatever happens over the coming months and years, the relatively low scores for energy companies within our research should act as a warning for water providers: not to repeat the mistakes of energy deregulation when it comes to billing.
What the water sector can take from this in light of changing times
Clearly, there’s a lot of thinking to be done by water companies, particularly when it comes to the quality of their billing practices. Despite the convenience of online billing and direct debit, water companies must recognise that not all customers respond well to these methods. Likewise, not all customers will want paper billing pushed upon them.
Ultimately, it’s a case of really knowing your customers, offering choice and adapting billing practices in line with each individual. Billing is a key touch point in the customer journey and getting it right will increase retention, loyalty and trust. It’s worth remembering that 14% of customers will not give you a second chance if you get it wrong. Those that take a customer-centric, proactive and open approach will be the most likely to succeed in what will become an increasingly competitive water market.
About Echo Managed Services
Echo Managed Services is a specialist outsourced provider of complex multi-channel customer contact services, comprehensive debt recovery solutions and the developer of the market leading water customer care and billing system, RapidXtra. Echo combines best practice technology and processes with highly skilled and knowledgeable people to provide public and private sector organisations with end-to-end customer contact capabilities. For more information, visit www.echo-ms.com or follow Echo Managed Services on Twitter at @Echo_MS
