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Water Deregulation - A Short Sharp War

As a large specialist B2B telemarketing agency, you might wonder what we might have to say of note about the imminent deregulation of the water industry.

But with 25 years of experience of taking new and existing propositions to market, capturing market feedback and understanding what drives companies to buy or switch providers, we feel we are well placed to identify a major opportunity for the industry and give some useful insight. And, the conclusions we have drawn may prove interesting reading. 

The most fundamental of these is that for water companies, the rush to win new customers will be a ‘short sharp war’. The reason for this belief is that the battleground for this particular ‘war’ will not be price or customer service but convenience - the ability to consolidate all water bills into one supplier.

If our reasoning is correct, then we would also argue that telemarketing will be the most effective channel to deliver this message. Telemarketing works best when the benefit is clear, easy to communicate and evidence and when it can immediately resonate with the target audience.

Our own research and extensive experience (including in the energy sector) has revealed that consolidation of a customer’s billing into one water supplier is likely to be the single biggest benefit customers see emerging from the deregulation of the water industry.

Why not price?

For most companies, leaving to one side the limited number of non-household customers that consume five mega litres of water per year, their water bill is simply not big enough to worry about. Many SME owners and corporate manager’s reaction to the much bigger bills for gas and electricity is frequently - ‘I have more important things to worry about’ than a few hundred quid on my gas and electricity bill.’ If the same manager has to do a bit of work to get a quote ‘Can you find us your last water bill?’ It makes switching even less likely.

Why not customer service?

Currently water companies all provide a commoditised offering. With increased competition all will inevitably be looking at how to differentiate their service offering and show innovation. However, the challenge is that in general water is always available and services nearly always works. There is very little need for a lot of customer interaction which makes communicating a differentiated service offering harder.

Sink

Why convenience?

Price and service are not to be discounted as sales arguments but we believe that they are less likely to resonate than the simple equation of greater convenience.

If a water company can demonstrate that it can bring offices, properties, depots, factories which currently sit across two, three or more water companies and integrate them under one supplier, this is an attractive proposition for a customer. An invoice costs the average business between £10-£35 to process – the larger and more distributed the business, the greater the gains.

Importantly, we believe that once they have moved to a new supplier, offering a single invoicing point, they will have less reason to switch again. Hence it will be a ‘short sharp’ war, in direct contrast to the other major competitive utilities whose competitive landscape often resembles World War One –attritional, fought from largely entrenched positions and often for relatively small gains.

The importance of ‘knowing your customer’

Our second conclusion is that profiling certain types of customers will reveal significant opportunity. The reality is there are distinct target customer groups for whom consolidation of water billing is a very real plus. They might be from vastly different sectors or have profoundly different business models, but they all have something in common, their business infrastructure is distributed nationwide. They might be hard to spot or identify at first, but with a degree of a data analysis and build, water companies with enough foresight can build a very healthy, focused segment to target.

We’ve created a few example segments below:

Multi-site: retailers, delivery depots, car dealers, care home companies, pub groups, ALMOs

Straddlers: Organisations and businesses that have a location or business area that crosses water company borders e.g local government, housing associations, etc

Hidden prospects: the company that has a small headquarters in your area that has e.g 2 large factories in another part of the country – this is obviously both an opportunity, and a threat.

Property Managers: Commercial landlords large and small, generally charging water rates as part of a building service charge. This means there are a whole range of companies in rented office space who will not be water company customers and could be a distraction when building target segments.

The challenge of course will be knowing who these customers are, identifying them in the CRM and developing a ‘go to market’ strategy that will allow you to target them before the competition. In our experience of working with a water company during a contamination incident, the ability to reach out to both domestic and commercial customers to put in some redress was severely hampered by a simple lack of contact details: very few phone numbers, or even names in the case of business customers. Some may have email addresses –most will not. It’s probably fair to say that up until now much of a water company’s corporate energy has been rightly focused on delivery and improvement of water and sewage services. In a new competitive marketplace, this data is essential for communication and marketing – something will inevitably have to change.

Below is direct quotation taken from a from a government forum which sheds light on the potential struggle of the ‘straddlers’ group to uniformly manage water as a utility:

“I am a local government officer working trying to cut down the amount of council officer time spent on (amongst other things) querying various water companies about which properties they do and do not serve with 1) water supply and 2) sewerage. Our area of responsibility is Gloucestershire so I wanted to produce two GIS layers of the county that delineate the water and sewerage areas of responsibility for the various companies.

So far we have had a response from one company (GIS shapefile) but the other water companies seem to have maps of varying detail on their website, and or rely on information provided by "check your postcode" services, seem to be just incorrect in some cases, and misleading in others, particularly near to the boundaries of the various companies' areas.“*

Our final conclusion is subjective but in our experience we believe that companies WILL switch, even for these small gains. And, unlike the opening up of energy or telecommunications, there is no ‘overpowering’ national incumbent with entrenched customer loyalty, or the name ‘British’ to trade off (British Gas still maintains a very strong market position and British Telecom still retains 85% of fixed line rentals in the UK).

What Should You Do?

If these ideas have some resonance within your organisation, you may want to ask yourself the following:

  • How can we put together an easy to explain, easy to change offer that leads with the convenience message?
  • How can we find out who to deliver it to - the actual organisation and the contact methods (phone numbers, emails) and the contact names?
  • What are the threats and opportunities within our own territories?
  • Do we have the internal sales expertise, capacity and agility to be ready for the ‘short sharp war’?

We’d be delighted to explain how we can help.

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