Regulation & Communication

I read a really interesting book recently – “the undercover economist” by Tim Harford. In one chapter it discussed the concept of free markets and explained why regulation was generally a bad thing in any market. Seeing OffGen’s recent announcement to include QR codes on energy bills I can’t help but feel they’ve got into the detail and this level of control will ultimately stiffle innovation and competition.

The regulator (IMHO) should be protecting consumers requirements and the energy companies should be coming up with innovative, differentiated ways to meet these requirements in addition to adding their own unique value.

So, I thought I’d try and step up from the functional definition (put a QR code on a bill) and try and undertsand the real requirements.

There are three sets of stakeholders – The utility company, the regulator and the consumer.

The regulators requirements can broadly be stated as “treat the consumer fairly” – i.e. don’t do anything you wouldn’t like done to yourself and communicate effectively to ensure the consumer undertsands the service you are providing.

The companies requirements are equally straightforward, maximise my cost/income ratio, have a long term relationship where we can sell you other products and services and we want you to advocate our business to your friends.

So what are the consumers’ reuqirements?

First I want to understand what I’ve used and how much its costing  I want to do this whenever I like not just when you send me a bill.

Second I want to know if I could get more for my money

Third if you change something, I want to understand that change only to the point that I can say “I don’t need to worry about it”.

I received my gas an electric bill recently and my direct debit on gas was increasing from £76 to £96 per month and on electric  from £46 per month to £70. Those are big increases by anyones standards. My energy bill has just gone up by over £400 a year. The particular provider I use has won awards for the clarity of my bill, so I thought I’d find the “why” on subsequent pages.

The price changes were stated in BIG BOLD FONT along with the statement that said your energy usage has changed to the payment needs to go up.

Now, there are at least fourvariables here:

1. How much energy I use

2. The price of that energy

3. External factors, such as the weather

4. Whether previous readings were estimated or actual.

In order to meet my second requirement (if you change something, explain it so I don’t need to worry about it) is not met by the information on the bill – nor is it met by putting a QR code onto the bill that takes me to a comparison site.

What I need to see is my usage in the context of price changes and the environment, so look at changing both the way i use energy (maybe) and the provider if appropriate.

That segways nicely into another of my favorite topics, multi-channel engagement. I tend to avoid the word “Omni-channel” as I think it implies that you do the same thing across every channel, whereas, for me , multi-channel customer experience tells me that I can expect an engagement that uses lots of channels that complement each other.

Print is a useful medium. It has reflective properties that make it easier to read than a transmissive tablet screen. I can make notes on the piece on it that will persist regardless of how many years in the future i choose to retrieve them.

Web & Tablets are good at interactivity and exploration allowing me to look at things from different points of view.

Mobile is great for checking something quickly or carrying out a simple transaction.

.. Connecting these envrionments toegther creates a genuine multi-channel experience, so I can point my phone at my bill to pay it. Jump from the bill to the web to explore my usage and compare it with similar households and from my mobile I should be able to view and regulate my daily usage.. and Ideally tag all my devices so I can control them from same said mobile.

Some of this is being done today, but we are still away off from a truly connected experience across the full range of channels.

In summary, my opinion is that regulators should stick firmly to broad directional themes, otherwise it risks destroying the market – you only have to look at the impact of the target culture on the NHS to see how this can go wrong. Now we’ve all moved on a bit and talk about patient outcomes, leaving hospitals free to make sensible decisions on how care is best delivered.

This leaves providers free to innovate and differentiate themselves. Providers should then focus on how they can create the best customer experience using each channel for what it does best and using technohology to connect them together.

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Kill Bill Volume 1

One of my colleagues, Amanda, produced a blog last week about the governments plans to ask utility providers to include QR codes on bills, so we can all jump to a price comparison site and see if we are being ripped off. I promised I’d read through it and provide a technology perspective on what organisations should do to deal with the ever increasing complexity of information and channels that content has to be delivered through.

However I got sidetracked into thinking “why”.

My first thought, on reading Amanda’s blog was “wow, the worlds complicated today”. I grew up in the 1970’s  and there was the Gas Board that pumped gas into your home for X pence and the Electric Board who provided, yep you guessed it electricity for Y pence per kw/hour. I don’t think there were different residential tarrifs, I vaguely remember something called Economy 7, which encouraged you to use electricity at night but apart from that life was simple.

Then in the late ’80s we told Sid that our lives were far to simple and could he come along and complicate them for us.

Now, there is an array of energy providers, different tarrifs, incentives to sign-up because I can earn reward points of one type or another… that’s better isn’t it, consumer choice, all hail the free market.

Hmm, lets look at that for a second. These providers aren’t making their own Gas, it’s not like I’m buying a different product where one can claim to produce Gas that heats quicker and cooks better than the competition, they are all buying from the same wholesale market.

It’s not that one is more reliable in term of product delivery, said product comes into my home through the same infrastructure regardless of whose providing it.

So why have more than one company, to provide competition, for what, I only need you to do a four things… make sure I’ve got gas and electricity , make it as cheap as possible and if there is a problem with the infrastructure, get it fixed.

Maybe I’m missing the point, the energy companies want to sell us more stuff, so they value us as customers and presumably either subsidise their customer service from other operations to compete on price or cut the customer service to the bone and compete that way…

I just realised I had never even been on a comparison web site for energy, so just went through the process and found I can save £250 a year by switching to some company I’ve never heard of.. but where does that saving come from. Switching has to cost my current provider money, they need to get a final reading, send me a bill work out any money I owe them or they owe me, then hand the meter over to the new provider. It must cost the new provider money, they have to set me up as a customer setup a direct debit, send me a welcome pack. How is me switching creating any additional wealth for the UK economy?

Having gone through the switch site, there were a lot of choices of company and tarrif, some fixed for a period, some with exit fees, but how am I supposed to make a choice. At the end of the day, my only requirement is that it costs me as little money as possible – how am i supposed to know what energy prices are going to do over the next 12 months and therefore is a fixed rate or variable rate better – if i knew that I would be an energy speculator and rich enough not to care about my gas bill.

I would therefore argue that actually there is NO choice in the energy market, because if I can’t link the options presented to me to which best fits my one and only requirement then it is no better than having only one option.

Now, what I really want you to do, is tell me how to use energy better, automatically sense when I’ve left the house, because you know where I am via geo-location, you know when I’m coming home, detect when a tile has come off my roof and is blowing a draft in because you can see the change in energy usage that doesn’t fit into the overall pattern.

I’ll switch to the company that can offer me useful advice to help improve the way I use energy, regardless of whether there are QR codes on the bill

… Now I’ll go and write the blog I was supposed to write in the first place.