Business Customer Insight research 2020

We collaborated with the water regulator, Ofwat, to commission research between January and March 2020 to investigate business customers’ experiences interacting with the water and wastewater non-household retail market in England, which fully opened in April 2017.

This research was used as part of Ofwat’s third annual ‘state of the market‘ review of the business retail water market, and is the third year in which we have collaborated with Ofwat in producing this research.

Our researchers, BMG, surveyed 1,847 businesses, charities and public sector organisations (of all types and sizes) – a representative sample of businesses eligible to switch supplier in the market. Within this number, 841 businesses had switched retailer or renegotiated terms with their current retailer. The researchers also held in depth interviews with 56 small to medium sized businesses.

The aim of the research was to look at:

• Awareness of the market.
• Overall satisfaction.
• To what extent they have engaged with the retail market (and how).
• Experiences of searching for market information and comparing what retailers offer.
• Problems being encountered and issues causing complaints.
• General views of the retail market.

The researchers also interviewed 28 Third Party Intermediaries (such as brokers) for their views of the market. Many business customers are approached by these third parties and use them as a way of getting better deals in the market.

The research was conducted before the coronavirus pandemic lockdown in March 2020, which saw many businesses temporarily cease trading.

Key findings:

• 58% of all business customers are aware of the market (up from 53% last year).  This rises to 96% awareness among larger businesses – a significant increase in market awareness for this group of customers, which had 65% awareness in last year’s survey.
• 4% of business customers have engaged with the market by either switching or renegotiating terms with their current retailer, the same percentage as last year.  8% of switchers experienced problems with the process, an increase on the 5% of customers who said they had experienced problems in 2019.
• Take up of water efficiency services remains low, but we have seen a slight increase compared to last year. 7% of switchers and re-negotiators received water efficiency advice or leakage control services from their retailers, compared to 4% in 2019.
• 91% of switchers reported that the benefits they received either met or exceeded their expectations, an increase on 84% in 2019.
• Overall satisfaction with the water market as a whole is at 60%, a decrease compared to the 64% expressing satisfaction with the market last year. This decrease was driven by an increase in the number of customers who were ‘neutral’ about the market (i.e. were not satisfied nor dissatisfied). 9% said they were dissatisfied with the market.
• The largest motivating factor for business customers to renegotiate or switch is still to reduce bills, in line with earlier research.  38% were motivated to switch or renegotiate to lower their bills, while 23% were motivated by the possibility of consolidating their bills (for example, if they have multiple business premises).
• 78% of businesses said they were satisfied with their retailer, a lower level compared to the 80% who expressed satisfaction with their retailer last year.
• Of the customers who were dissatisfied with their retailer, 69% of them cite billing issues as a reason (common examples include inaccurate meter readings and bill calculations, or not receiving bills at all). This is slightly higher than the 68% who gave this as a reason for their dissatisfaction last year.
• 34% of business customers that had engaged with the market did so via a broker, the same percentage as last year. (The rest were either approached directly by a retailer or did their own research on what the market offers).
• 17% of customers said it was difficult to find information or make comparisons, a significant increase on the 8% of customers who held the same view last year.

Depth interviews with 56 small to medium sized businesses revealed:

• There is generally low awareness of the market and what it offers.
• Those that had engaged with the market were generally satisfied with the benefits they received (mainly from lower bills) after they had switched or renegotiated.
• Of those customers who were aware of the market but had not switched or renegotiated, or were previously unaware of the market before the interview:
  • They were not interested in engaging with the market due to the marginal bill savings on offer for their business;
  • They had a lack of time to engage with the market; or
  • They had a general lack of interest.

A small number stated that they currently had an issue with their water bill(s) which they would need to resolve before considering switching.

Third Party Intermediaries (TPIs) also provided their views of the market:

• Many of their clients are not motivated to switch by the low level of bill savings on offer.
• However, many are attracted by other benefits on offer such as consolidated bills, or the multi-utility deals some TPIs can offer.
• TPIs state that their main issue of concern with the market are billing problems and the accuracy of some retailers’ bills. In some cases, TPI’s said they would not recommend some retailers to their clients as they viewed them as ‘unreliable’.

The research shows that while overall market awareness among customers is increasing, relative to larger businesses, many smaller businesses still do not see any benefits from switching or renegotiating that justifies the effort to engage with the market.

As the number of customers who find it difficult finding information about the market has increased better information is needed to help them more easily explore what is on offer and make comparisons. However, of those that have switched, satisfaction with retailers has increased, although satisfaction with the market generally has declined. The level of dissatisfaction caused by billing problems has also increased. This shows that more needs to be done to address the root causes of these problems (such as old or inaccurate meter readings) to help increase customer satisfaction in the future.

Every two year’s we also survey over 2,000 business customers across England and Wales on their water and sewerage services. Whilst our last ‘Testing the Water’s‘ survey in 2018 results can’t be directly compared with this Customer Insight research, it does indicate some improvement in satisfaction with retailers (70% in 2018, compared to 78% now). However, satisfaction with how retailers handled customer contacts was only 55% in 2018. The level of dissatisfaction caused by billing problems in the 2020 Customer Insight research shows that there is still room to improve.

We are planning to carry out the next ‘Testing the Waters’ survey of business customers in late 2020, with the results expected in early 2021, as part of our ongoing work to track how well business customers are being served by the water sector.