Open Water. The start of a multi-utility revolution?

With the UK's non household water market now open, the landscape has become much more competitive. With businesses able to choose their water retailer, both new entrants and incumbent companies are facing a new series of potential opportunities and threats.

Things are changing. Thousands of businesses have already switched supplier, there's been a string of mergers, acquisitions and consolidations amongst suppliers, and businesses from the energy sector have started to evaluate the option to compete in the sector.

Several energy companies have already either applied for a water retail licence or already been granted their licence, as they look to extend their dual fuel offering into a true multi-utility package.

So, as new entrants look to enter the market, what considerations should they keep in mind?

The water customer
It goes without saying that understanding water customers and their individual requirements will be a vital aspect of any successful customer service strategy. The customer base is likely to be highly varied, with sole traders, small businesses and large multi-site corporates looking for different services and prioritising different needs.

That's not to suggest that energy companies are not already highly capable when it comes to understanding and segmenting their customer base. However, developing a deep understanding of the particular nuances of the water sector will be essential to add true customer value and stand out in the marketplace.

Getting technology right
For new entrants, billing water customers will bring fundamentally different challenges to those they currently face. Investing in a water specific billing system which contains all the features the water industry needs out of the box, and that can integrate with their existing solution, is likely to be beneficial.

Ensuring billing, a key customer touchpoint, is reliable and accurate will be crucial. In recent research, customers rated water companies higher than the energy sector when it comes to how well billing is handled, so new entrants would be advised to prioritise billing systems and processes.

Balancing technology and the human touch
Today, technology is playing an evermore increasing role in customer service. Retailers are having to maintain a consistently high level of service across multiple on and offline channels in order to provide a well-rounded service that satisfies customers.

This will not be an issue that is unfamiliar to the energy sector. However, for energy companies looking to enter the water retail market, the real challenge will come from building a professional level of water sector knowledge to provide the level of service business customers expect. Customer service teams must be able to handle water, sewerage, metering and billing contacts efficiently and effectively from day one. And, with tight operating margins, this must be achieved at low cost, balancing cost-effective self-serve options with knowledgeable and effective customer service agents.

Relationships with wholesalers
Avoiding disruption in the customer journey will be a key priority, and developing a strong relationship between a retailer and wholesaler will be critical in ensuring this happens. It's a new market, and customers who have been used to a non competitive market may become confused as to who they should contact for a service problem, for example low water pressure, or inconsistencies with meter readings.

The focus must remain on the customer at all times. That's why retailers must have a robust communications strategy in place with their wholesalers in order to avoid confusion for the customer. If customers feel they are not receiving the service levels they expect, or that their is a lack of ownership of their issue, they make look elsewhere. And once gone, it could be difficult to get them back.

The debt challenge
Debt is a growing challenge in most industry sectors. And, whilst incumbent water companies may fully grasp the issues associated with water debt, newer entrants may not. This must be quickly overcome. In a market with low margins, retailers could easily run into cash flow problems if they incur debt from non paying customers, as the wholesaler must be paid for the water they provide no matter what.

It will be vital for retailers to weigh up which new customers to accept through accurate customer profiling. The may decide, for example, not to take on customers in bad debt, or to place their focus on early intervention strategies, ensuring an non payment issues are dealt with promptly and not allowed to escalate.

It's an exciting time as suppliers and customers become accustomed to the competitive nature of the new market. Energy companies looking at entering the market must remain agile in the fast evolving marketplace and truly understand the nuances of the water sector before they jump in.

Chris.