Water companies need to change their ways in order to attract higher numbers of customers.
Water companies are caught in a slump. Since 2013 they have been running low on investment, making keeping prices low more than difficult country wide. They are distancing themselves from the will and way of their customers, finding difficulties in connecting with them and offering the support they need to provide to the public.
There seems to be a big gap between what utility companies, generally speaking, think their customer journey is and what it actually is. This is a huge problem for companies wanting to market themselves, wanting to gain more customers and investors, because they do not understand the journey their customers take to find them.
The above image is from Google Think and shows the customer journey of customers within the Home market. Granted this is not exactly the same as a customer in the utility market but the concept is similar enough. Utilities companies seem to forget that their customers are not merely numbers but rather that they are individuals who act as individual units.
Utility companies are caught in a strange kind of limbo, where they are focused on providing service to a very small subsection of their potential audience, making the assumption that customers have to come to them.
What few understand is that there are so many other potential customers they could approach or try to convert. There is no need to focus on those who are only approaching the water company directly, but instead they should focus on attracting customers in other ways. They should keep customers up to date, chat with their clients via social encounters on online media, focus on gaining referrals from good news sources, and even pay for some PPC.
The point is that water companies can afford to engage their customers earlier on in the sales process.
According to a study done by Peter Bailey, in a report for Bath University by the Centre for the Institute of Regulated Studies (pg. 8) he states:
"Competition in the English and Welsh water sector takes a number of forms. These are:
- Competition for water and sewage customers
- Competition amongst contractors who provide services to water companies
- Competition for international contracts
Unlike other privatised utilities in the United Kingdom, the introduction of competition to supply customers with utility services has been slow in the water sector."
In other words, the water industry has been slow on the uptake to provide new customers with their services.
One logical explanation for this is because not all water companies supply to all areas, so there is little competition across the country, but that does not mean companies should sit back and allow whatever is going to happen to them to happen. They can take a far more active role in engaging customers.
According to the Nielsen Group, one major UK water company, who turns over £1bn a year, spent just under £330,000 on marketing in 2013. Another spent just over £200,000. A third spent under £150,000. Finally, a third (again with a turnover of over of £500m - £1bn) spent just under £200,000.
Taking these figures we can compare the water industry to other industries in the UK to see what the percentage of their turnover they spend on marketing. In research done by Gartner in 2013 they showed that the average percentage of turnover spent on marketing is 10.4%. For the water industry it is 0.057%. This is astronomically small in comparison.
The main debate to come to mind is how, if water companies are spending so little on marketing, are they expecting to find new customers, or win customers over?
One of the logical explanations for this is because the water companies see the UK similar to the map below, as made by Water UK.
What the water companies see is a segregated United Kingdom. This is a very basic way of seeing how the water companies divide the UK, however it is not entirely correct. The boundaries are not that solid, but instead are phased and malleable. They move and bend. It is the boundaries where one water company can position themselves ahead of the rest through the implementation of a relatively small amount of marketing. This is all in the short term.
In the long term there are changes on the horizon for the water companies. At the present moment in time there are definitive boundaries, as seen by the image above, as to where the different companies can provide water. This is due to change in the next few years. The land will no longer belong to any particular company meaning water companies will have to become a lot more competitive, as boundaries will no longer matter.
Severn Trent, as one example, will be able to provide water to London. South West Water will be able to provide to the Midlands.
What this means is that the current, present day, market is perfect for water companies to aim to get ahead of the rest. Now is the time for a water company to start a marketing campaign to make sure that when the switch comes they have established the best potential client base they can.