English deregulation is set to reward Scots providers with new revenue opportunities and will raise the bar on customer service
EIGHT years on from deregulation and the non-domestic water and wastewater services market in Scotland is both mature and maturing. Suppliers have entered the market with a variety of USP boasts to satisfy an increasingly sophisticated range of demands.
Director at Hamilton- based Clear Business Water (CBW) John O’Donnell suggests innovative internal infrastructure is at the root of his own company’s success.
“Information systems, people we can rely on to produce accurate billing systems, a customer portal that’s second to none – we have all of that back of house infrastructure that a lot of companies lack,” he insists. “It’s one of our strongest USPs. We are ultimately backed by a multi-million organisation whose view is to build the business and expand it in Scotland – and with more than an eye on 2017 (English deregulation).
“When we came into the business, three and half years ago, Business Stream (Scottish Water’s commercial enterprise) still had 98.5 per cent of the market. The only other companies doing anything then were the English water suppliers who were more interested in attracting larger corporates.
“We capitalised on that (and) it made us a small business specialist in the water market.”
CBW has switched more than 30,000 customers. “Broadly they are in the SME category, however we now have a corporate sales team who are making in-roads to larger accounts. We feel that more and more we are selling on quality – like our e-billing. Our meter readers use electronic technology. It is constantly communicating with the back office – it can detect a meter reading that is out of calibration with the last three or four readings.”
Hugh Brown, sales director at 2013-established, Ayrshire headquartered Cobalt Water publicly announced a near 100 per cent satisfaction from a sampling survey conducted when the business was a mere two year old.
“Our clients were properly surveyed,” he notes. “We’ve got just over 3,000 customer now. Our main focus has been in the populous areas of the central belt and up towards Aberdeen, Dundee and Perth. We do both SME and corporate,” Brown responds. “When we started (we) very quickly acquired a number of large clients, those who spend a lot of money on water. But we realised we needed a crosssection. If you lose one ( large customer) then all your eggs may be in the big market.”
Another main claim, aside from an 18 per cent average saving, is the ease with which switching can be accomplished. “It’s very simple,” says its SD.
“All we ask for is confirmation of the supply point ID. We pride ourselves in the fact that we don’t make mistakes. So we ask for sight of a customer’s recent bill. That clarifies. We’ve built reputation and trust. We’ve got about five per cent of the (Scottish) market.
“Because of deregulation in England next year we’re increasingly seeing English providers getting ready for that deregulation and quoting for businesses in Scotland. Next year is a great opportunity for Cobalt to look after Scottish clients who have sites south of the border. And a huge opportunity for new relationships with businesses in the south.Margins are likely to be smaller in England, initially. But our focus on service will become even more important.”
Tony McHardy is Sales Director at United Utilities Business. He n ow has another t i t l e, per tinent to customers f rom September onwards. As Corporate Director of Water Plus, a joint venture between United Utilities Business and Severn Trent Services arm, he will be stewarding what will be the UK’s largest water retailer.
The move will simultaneously rebrand United Utilities Scotland’s operations and make ready for English deregulation.
McHardy says: “One of the reasons for establishing the joint venture is about getting economies of scale and of efficiency to allow us to operate across all areas of the market. A competitive market delivers several things, choice being one. But it also raises the bar on service – so service becomes a differentiator for your business.
“If I take the corner shop by example – they’ll want to manage their account online. They might not want to see an account manager on a regular basis. The large industrial customer will probably want an account manager as well as water efficiency or process advice.
“That large industrial customer could end up losing a lot more money through inefficient water use or process use. That’s of greater value to them than just the cheapest price.
“As a result of that venture we will produce a cost to serve which is at the top quartile of the marketplace; we can be very price competitive through scale. We have a lot of customers who say to us they want us to be more than just a retailer. They want us to become their water industry experts, helping manage consumption. Some of the smaller retailers won’t have that experience or expertise.”
Head of Commercial at Source for Business (SFB), Graeme Milne, agrees. SFB is the water services brand of the FTSE250 Pennon Group plc. Its portfolio includes England’s South West Water and national recycling to renewable energy firm Viridor. The customer service main centre is in Bournemouth. It first received its operations licence in September 2014 and started recruiting customers in the summer of 2015.
“Since s ecuring our f i rst customer in Scotland in July last year, our aim has been to help businesses save water and money and operate more efficiently – from independent retailers to hoteliers, to farmers and manufacturers.
“We group businesses by their industry. We don’t focus on how much water they use, or the (financial) value of their business; rather, we choose to concentrate on how they use the water – and make sure we’re experts on that.”
Efficiency is important in water use. From hygiene management to reducing network leakage and reinforcing resilience, SFB has developed a set of added value services under its Aquacare programme.
“We can carry out water audits and data analysis to help businesses understand how they are using their water,” Milne adds. “If a customer wishes to reduce their consumption, we can offer tailored advice and a range of resources – from zero-energy pumping solutions to leak detection and repair.”
And he admits Scotland has offered a good test bed for the English open market. “Participating in the market in Scotland means we’re already dealing with customers switching and we understand what drives them to take the plunge.”