ccg chair workshop future customer engagement in the water … · 2020. 5. 20. · a) what the new...

CCG Chair workshop

Future customer engagement in the water sector: how

regulation can inform, enable and encourage this.

7 October 2015

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Introductions

Image © mikecco

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Aim of the workshop

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1. To welcome and introduce the new CCG Chairs.

2. To highlight the crucial role that effective customer engagement must

play in PR19.

3. To provide Chairs with the opportunity to contribute to our policy

proposals on customer engagement – in particular on:

a) what the new frontier in customer engagement could look like;

b) how CCGs can challenge companies to get there; and

c) how Ofwat can appropriately support the CCG process in this

context.

4. To provide Chairs with some early signals about our high level

direction of travel for water 2020 in respect of customer engagement.

Agenda

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10.00

10.15

10.55

11.35

11.50

12.15

12.30

Welcome and introduction

Water 2020: what does good

customer engagement look like?

Water 2020: the role of the

CCGs and Ofwat

Break

An example of engaging

customers from the energy

sector

Round up and next steps

Close and lunch

David Black

Cathryn Ross

Georgina Mills

Julien Lancha,

Advizzo

David Black

Water 2020: what does good customer

engagement look like

Cathryn Ross, Chief Executive

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PR14: The biggest customer conversation the sector has seen

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Water 2020: using our regulatory tools to drive value creation and

allocation

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Creating value

“More for less”

Outcomes and customer

engagement

Well functioning markets

Effective monopoly regulation

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Risk and reward package

Customers – lower bills, social tariffs

Investors –maintaining confidence

Environment –

addressing challenges

Allocating value

Water 2020: key questions for our future regulation of the sector

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KQ1 How do we regulate to encourage service providers to focus on their customers

over the longer term, rather than focusing their effort around periodic price reviews?

KQ2 How do we build on the customer-focused approach to the 2014 price review

(PR14) and promote and maintain genuine customer engagement that drives

companies’ businesses?

KQ3 How do we regulate to encourage service providers to discover new ways of

delivering outcomes to customers, which reduce cost and improve service?

KQ4 How do we encourage service providers to discover and reveal the efficient cost of

providing services?

KQ5 How can we best align the interests of investors, management and customers?

KQ6 How can we maintain investor and customer confidence through the transition to

any new arrangements?

Customer engagement – PR14 principles

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Reference: Involving customers in price setting - Ofwat’s customer engagement policy statement, page 9 (Ofwat, August 2011)

http://www.ofwat.gov.uk/future/monopolies/fpl/customer/pap_pos20110811custengage.pdf

In 2011 we published seven principles to shape the engagement process:

1Water companies should deliver outcomes that customers and society value at a price they

are willing to pay

2Customer engagement is essential to achieve the right outcomes at the right time and at the right price

3

Engagement should not simply take place at price reviews

Engagement means understanding what customers want and responding to that in plans and ongoing delivery

4It is the companies’ responsibility to engage with customers and to demonstrate that they have done it well

5

Customers and their representatives must be able to challenge the companies throughout

the process. The engagement process should ensure this challenge happens. If this is not

done effectively, we must be able to challenge on customers’ behalf. In doing so, we will fulfil our duty to protect customers.

6Engagement is not a ‘one-size-fits-all’ process, but should reflect the particular circumstances of each company and its various household and non-household customers

7The final decision on price limits is entrusted to Ofwat. We will use a risk-based approach to challenge company plans if this is necessary to protect customers’ interests.

http://www.ofwat.gov.uk/future/monopolies/fpl/customer/pap_pos20110811custengage.pdf

What do we think good customer engagement look like?

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Greater use of

wider

intelligence on

customer

priorities

More genuinely

interactive forms of

customer engagement

(beyond various types

of survey) from

companies

Greater weight on

interactions with

customers within

the control period

Companies viewing

their customers as

partners, working

with them to help

deliver services

efficiently

More customer

involvement in the inter-

generational issues

facing companies

Making comparative

information more

visible and better

understood

What do you think good customer engagement looks like?

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?

• We do not have the monopoly on good ideas and want to draw on

your experience and expertise.

• What do you think good customer engagement looks like?

• Practical examples?

Water 2020: the role of the CCGs and Ofwat

Georgina Mills, Director, Customer

Engagement and Outcomes

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Promoting and maintaining genuine customer engagement that

drives companies’ businesses: Role of CCGs

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CCG

collaboration?Scope of

CCG’s remit?

Role of

comparative

information?

CCG

membership?

Role of CCGs: assurance vs. representation?

CCG

independence?

Promoting and maintaining genuine customer engagement that

drives companies’ businesses : Role of Ofwat

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Guidance?Facilitating

collaboration?

Communication?Publishing

information?

Successor to

the Customer

Advisory Panel?

What it isn’t:

• No way that Ofwat is inserting itself between company and customer –

companies own the relationship with their customers;

• To provide detailed or prescriptive guidance to companies or CCGs.

What it could be:

• To facilitate the CCG process with the aim of strengthening the challenge

function, e.g. by facilitating collaboration between Chairs and/or sharing

information.

Customer engagement: Sharing experience

from other sectors

Richard Khaldi, Senior Director, Customers

and Casework

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Successfully Engaging Customers to Deliver Mutually Beneficial Outcomes

17| ADVIZZO ConfidentialADVIZZO Executive Summary

Water and Energy are not always the most gripping of

topics…

9 minper year

Accenture public information


Dealing with water service is not engaging…

and sometimes disappointing...


Most utilities don’t give people many reasons to think

otherwise

Signs up for service

Pays bills

& complainsEnds Service

Today’s experiences are typically basic,and not particularly informative


Applying Behavioural Sciences to the Water Industry

• “Providing a proactive and simple new experience to utility customers will make them

immediately happier so likely more open to Behavioral change and by fact more engaged”

• “We recommend to the Water Utilities to apply the MINDSPACE approach to their current

project challenges. In basic terms, MINDSPACE represents the tools for changing behaviour

and can be apply in such project to make customer more engaged and happier”

- Paul Dolan – London School of Economics

Messenger

Incentives

Norms

Defaults

Salience

Priming

Affect

Commitments

Ego

M

I

N

D

S

P

A

C

E

We are heavily influenced by who communicates information

Our responses to incentives are shapes by predictable mental shortcuts, such as stronglly avoiding losses

We are strongly influenced by what others do

We go with the flow of pre-set options

Our attention is drawn to what is novel and seems relevant to us

Our acts are often influenced by sub-conscious cues

Our emotional associations can powerfully shape our actions

We seek to be consistent with our public promises, and reciprocate acts

We act in ways that make us feel better about ourselves


Existing Similar Experiences in the Energy


Opower: Pioneer in Behavioral Customer Engagement

» Hundreds of field tests of different feature sets,

messaging approaches, and program designs

» Largest ongoing consumer survey of utility

customers in the world Only major Designer

Interface team dedicated to modifying energy

consumption

» Largest body of smart meter consumer data

studied by any vendor in the world

Behavioral science DNA Opower design principles

Opower public information


Applied Behavioral Sciences in the Energy

Conservation messages printed on door hangers and left on homes

£££

Turn off AC &

Turn on Fan

Environment

Turn off AC &

Turn on Fan

Citizenship

Turn off AC &

Turn on Fan

Zero Impact on Consumption

Neighbours

Turn off AC &

Turn on Fan

6% Drop in

Consumption Opower public information


Some example of Behavioral Sciences concept

Social norms• Descriptive and injunctive norms are leveraged to

motivate and reinforce positive behavior change

Commitments• Commitments to perform an action

make people more likely to act



Some example of Behavioral Sciences concept

Loss aversion• People perceive losses as larger, more impactful than

identically-sized gains

Social proof• When people are not familiar with a

situation, they are likely to do what everyone

else does

• Cialdini and Paul Dolan explores this

concept in depth, including its more negative

implications: groupthink and the bystander

effect



Other Similar Experiences in the United States

• WaterSmart Software focusing on Water Saving

• Simple Energy with a Point and Reward Approach


Behavioural Customer Engagement Produces Measurable

Results

Call center

volume

10-

15%

decrease in high bill

calls during months or

quarter with the

highest call volume

Digital

engagement

20-

40%

Of report recipients

go to the web portal

Customer

satisfacti

on

5-

8%

increase in customer

satisfaction

and brand recognition

Energy or

Water

Saving

2-5%decrease in Water

Consumption Market Benchmark


So, how do we engage people with their Water

Utilities ?


First, you have to get their attention...


…provide insights

Behavioral science Design


…provide insights


…and then, customers will take charge


…as a result…less complaints and better knowledge of

customers


…and help millions people Save Water, Energy and Money

“Providing a proactive and simple new experience to utility customer will make them

immediately happier so likely more open to Behavioral change”

- Paul Dolan – London School of Economics


Support “Customer engagement” through Behavioral Sciences

Active

Happy

Passive

Neutral

Understands water bills Trusts utility company Participates in utility programs Becomes Loyal Installs HEMs and Efficient Appliances

Saves Water, Save Money Decreases Call Complaints E-Bill, Others Water Conservation Pay on Time, Reduce Debt

Behavioral Software by Design

Utility Transformation through the

Disruptive Combination of Machine Learning and Behavioural Science

Round up and next steps

David Black, Senior Director, Water 2020

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Next steps

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2015 2016 2017 2018 2019

Issues challenges

and way ahead

discussion document

Design consultation

July Dec

Decision

on design

May

Retail

goes live

April

Method

consultation

June

Final PR19

method

Oct

BP submission

July

RBR

results

Dec

Draft

determin-

ations

May / June

Final

determin-

ations

Dec

Licence engagement

NHH retail review18 month period for price

review

Indicative Water 2020 timetable

ccg chair workshop future customer engagement in the water … · 2020. 5. 20. · a) what the new...

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