The new water retail market is open for business; on the 1 April this year it became possible for businesses in England to choose which company they would like to supply their retail water services.
The move had been in the pipeline since 2011, when the government set plans for a new competitive market outlined in the Water for Life White Paper. With a focus on improving customer service, promoting protection of the environment and increasing competition in the industry, it is one of the most significant changes the industry has faced, bringing with it a range of new challenges.
The open retail water market will work much in the same way as other utility services, with wider utility markets now also being able to offer water services. It is believed this will deliver around £200 million of overall benefit to customers and the UK economy by separating out retail services from wholesale activities.
What does this mean?
In simple terms it means that for an additional 1.2 million eligible businesses and non household customers they now have a choice – the customers are in the driving seat.
Customers can decide who they would like to provide their water, their wastewater services, or both. They can change at any time, for any reason, without penalty, and all this can happen in less than a month.
For licensed water retailers it means they are now competing against each other and have the freedom to tailor services and packages for customers to contend in the open market. The market will provide growth opportunities for existing regional water companies, and brand new companies. Initial investment will be required to set up independent retail businesses, ensuring fair competition, and once established driving a return on investment will be a key focus.
Insights will unlock value
The open retail market is a new market; with that comes limited transactional history or operational trading knowledge. There are no clear market leaders and the market is open to competition.
The good news is willingly engaging with and understanding customers’ and stakeholders’ needs and concerns could be a key differentiator in a new competitive market and will provide those forward thinking water retail companies with a competitive edge.
Staying ahead of the curve
The ability to benchmark, track and evaluate service through customer engagement will deliver a significant return on investment for water retailers.
For over two decades, our team at Explain Market Research have been innovating, developing and delivering research programmes in the utility sector, our main objective always being to deliver actionable insights for our clients. Read our case studies for some great examples of our work in the sector.
We have developed innovative methodologies to deliver insights in a competitive market. We specialise in engaging with customers including embedding behavioural research, trust and confidence, and the engagement of vulnerable and hard to reach customers into our utility sector research projects.
Research and engagement will enable water retail businesses to get closer to their customers to identify the issues they are experiencing at any given time and co-creating to find solutions that improve their experience.
Research will also be important to understand the ideal balance between price and service to enable retailers to shape their service offering. Measuring and tracking customer experience as well as customer advocacy will allow retailers to measure performance as well as areas for service improvement, enabling continuous improvement over time and high levels of customer retention for getting it right.
Contact us at Explain Market Research today to find out more about the solutions we offer. Take a look at our accompanying infographic below.