HomeServe plc ("HomeServe"), the international home repairs and improvements business, has signed an agreement with Mitsubishi Corporation ("MC") to establish a joint venture ("JV") in Japan.
To be called HomeServe Japan Corporation, the joint venture will be 50:50 owned by HomeServe and Mitsubishi Corporation. HomeServe Japan Corporation will build a business to provide home emergency and repair services in electrics, plumbing, gas, heating, ventilation and air conditioning. The business will be based on a membership model and will also offer on-demand services to residential customers.
Japan is the world's third largest economy with 53 million residential households. Recent liberalisation of the gas and electricity markets, together with access to the water market for private concessions, has created a positive environment for HomeServe's utility branded home assistance model.
The move is part of HomeServe's global partnership approach to provide successful strategies for utility companies to improve their connection with customers and strengthen and lengthen their relationships.
Utility companies are facing unprecedented challenges. Regulatory change, new innovative players, higher consumer expectations and rapidly evolving technology are putting pressure on revenue and encouraging customer churn.
According to Stephen Phillips, HomeServe's Global CEO of International Business Development: "Utilities need to move beyond providing basic services and re-evaluate their business models to embrace the opportunities which are opening up in this new landscape. Customers have become used to effortless online experiences in areas such as retailing and smart tech, and now want the same convenience from their utility providers.
"Customers want providers to help them monitor, manage and maintain their homes. By offering their customers targeted, value added products that can be integrated into larger smart home systems, utilities have the opportunity to become more relevant in their customers' lives."
Home services propositions and technologies can support a utility's positioning as a one stop shop for home and energy management solutions. Research shows that customers view their utility as the logical provider of such services, and that such offerings have a positive impact on customer relationships.
In HomeServe USA's white paper, 'Natural Gas Utilities: Securing the Future, June 2017', analysis of utility customers who bought a home assistance plan showed an increase in customer satisfaction of more than 60% amongst electricity customers after enrolling. Enrolled gas customers were more than 75% happier with their provider than those who were not signed up.
The paper also links customer satisfaction to a better return on equity (ROE) and increased profitability. On average top quartile utilities earned 10.7% ROE, whereas bottom quartile utilities earned 10.1%. Similarly, electric utilities in the top quartile of customer satisfaction typically report profits 3-4% higher than utilities in the three lower quartiles.
Other research (Eneco btg.org 2015 and Centrica Capital Markets Day 2017) shows 60% less churn when customers have committed to additional products such as smart home offerings and that customers in the highest value segment have a high propensity to hold multiple products and are 20% less likely to switch to another provider.
Stephen Phillips comments: "Partnering is an effective way for energy providers to keep up with the frenetic pace of change, to transform their customer facing services and to extend their reach into customers' homes. But utilities need to pick their partners carefully. Thanks to our extensive experience, HomeServe understands the key elements of successful partnerships. Most important are alignment of culture, sharing the same values, and common vision and goals. HomeServe works with over 600 utility partners who understand and can deliver customer centric offerings, valuable benefits, ease of access, exceptional levels of service at the points of interaction and effective communications."
HomeServe is an international home repairs and improvements business which provides people with access to tradespeople and technology to run their homes more easily. HomeServe is listed on the London Stock Exchange, with a market capitalisation of c. £3.2 billion. More information about HomeServe's international partnership strategy can be found at www.homeserveglobal.com.
About Mitsubishi Corporation
Mitsubishi Corporation is a global integrated business enterprise that develops and operates businesses across virtually every industry, including industrial finance, energy, metals, machinery, chemicals and daily living essentials, having wide-ranging relationships with public and private utilities in Japan.
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