The energy industry has its work cut out, especially when it comes to improving customer service. CEO sits down with RWE npower group chief executive Volker Beckers to discuss the challenge of restoring and maintaining customer trust and loyalty.
As record profits are posted at the same time that energy costs are rising dramatically, energy companies have a lot to answer for. Regulator Ofgem is considering putting a cap on fuel bills in order to appease customers who feel they are being fleeced. And when it comes to a customer service clean sheet, npower doesn't immediately come to mind.
Which? carried out its annual energy company satisfaction survey late last year, which showed that the Big 6 companies - in addition to npower, they are EDF, E.on, British Gas, Southern, Scottish Power - were all rated poorly by their customers. Last year, German-owned npower came out worst of the Big 6, with only 41% of customers saying they were satisfied with the company's service or likely to recommend it to others. It was also fined £2 million by Ofgem last October for mishandling customer complaints, following a £1.8 million fine in 2009 for mis-selling by its doorstep sales team. Not massive numbers in the bigger picture, but emblematic of a fundamental problem.
Investment in technology and reassessing KPIs have been fundamental motivators in the company's campaign to turn things around; its largest initiative is a £200 million investment to migrate its 6.5 million customer accounts to a more streamlined billing system. Volker Beckers, RWE npower group chief executive, claims it's probably the industry's largest-ever IT system. He also insists that the benefits are already paying off, with complaints reduced overall by 60% since 2010.
"It was important to understand what is really relevant to the consumer," explains Beckers. "For instance, is it really relevant that you benchmark call centres by comparing what the waiting time is to get to a call agent, or does it matter more that, whatever your issue is, it gets resolved by one call-centre agent. On that basis, we have developed a set of KPIs that we measure our service centre against, and an external stakeholder council to bring together representatives from different associations to debate key issues and see if we're on track and improving.
"We still have more than 50% of our staff in customer service and we haven't outsourced our key interface contacts to our customers, so every person in the UK call centres is a UK resident," he continues. "I think that tells you the story alone. I know there is a lot of suggestion that the service isn't as good as it should be, but it has improved substantially."
Technological innovations, like its innovative billing system, are nothing new to npower. According to Beckers, it was the first firm to use smartphone applications to communicate with its customers, and in 2009 it launched the iPhone app, which effectively meant people no longer needed to text or look on the internet to take a simple meter reading.
"When we have fully migrated our customers onto the new IT system, people will see what that means for their bill, and there will be more interaction as we build on that technology," he continues. "It's just the start to stimulate creativity and innovation within the company, but also to give customers an idea about what will happen when we have smart meters available, which will start in 2014."
Getting the message across
It's part of npower's overall aim to bolster customer satisfaction, while at the same time making end-users more savvy. Transparency throughout the industry is key to achieving this, but for all of npower's investment in the customer experience, it is the negative impact of energy price rises that needs to be mitigated. At the very least, these increases need to be justified with a robust and resilient dedication to customer service in order to establish a sense of value.
With the debate raging about what actually drives energy costs, Beckers appreciates that many, perhaps even a majority, of customers don't understand why prices increase the way they do. So it is up to Beckers - as well as government and stakeholder groups - to act as a conduit between industry and consumer to ensure that the right targeted message gets across.
"We have commodity prices that are going up on the global scale; we need to invest in more transport and distribution so network costs have gone up, and that's for Europe and not just for Britain," explains Beckers. "And yes, we have efficiency measures in people's homes, as well as the cost of the wider green agenda: investing in more renewable technology. All four of these factors add to increasing energy costs. But by far the biggest one is global commodity prices. Do customers understand this? I doubt it. So [getting the message right] is important."
Part of the solution, therefore, is to educate customers. The first priority for an energy company such as npower is to create a platform that allows it to communicate more efficiently with customers and stakeholders. "Second," Beckers continues, "the CEO has to be the most outgoing one who is presentable in the public, and I'm willing to take the difficult questions. Third, we were one of the first to introduce social media so people can communicate with us; even if you send an email or tweet to my chief operating officer, you get a response.
"But there is more to come, which will occur once every last customer is migrated to our new IT system and smart meters are introduced. That will create a platform where customer engagement will dramatically change because then we can measure energy efficiency better. We can then be of much more efficient use to help them save more money where they can."
It won't be easy, or happen overnight. After all, the energy giant has performed worst on its own home turf, the UK, leading some to speculate that the company was in disarray. But Beckers is quick to place these statistics in the context of the past; today, he insists, is a different story.
"When I started [as CEO in 2010], I focused on essentially three areas," he says. "One was to substantially improve customer service, because it drives costs down in call centres and improves churn rates, so you have fewer customers leaving you. Second, to improve overall cost efficiencies.
So we have, as a board, effectively changed the structure of the company from a retail and generation business. We now have the chief commercial officer to look after the commercial area, and the chief operating officer who looks at the efficiencies. That has driven many decisions that don't just reduce costs but also create new opportunities for customers.
"And third is the way we have completely changed how we buy and sell commodities, which gives us the opportunity to be one of the last suppliers to increase prices to insulate our customers a couple of months longer. I know people say this is only two months, but if you look behind the cost data for a typical customer, that's between, depending on your consumption, £30 and £100 saved, and we're able to do that because of a much more flexible approach."
It has all the makings of an impressive turnaround, if all goes according to plan, and the first indicators are promising for Beckers. The UK business in particular, he says, is a vital part of the RWE footprint in Europe, but there's still a lot of hard work to be done. "I think people are happy," he continues. "We're seeing an upward trend, but we're still not where we need to be with all these investments happening."