Utility Week

Utility Week 29th August 2014

Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government

Issue link: https://fhpublishing.uberflip.com/i/370624

Contents of this Issue

Navigation

Page 26 of 31

utILItY WeeK | 29th August - 4th september 2014 | 27 Customers Market view T he recent Power of Service Research report by the Institute of Customer Service (ICS) makes for uncomfort- able reading, with utilities once again sitting at the bottom of the table. It is yet another study confirming that customers love banks more than utilities. The report also shows the customer satisfaction curve falling more steeply for utilities than for other sectors, the decline levelling off in the first half of 2014. What is going wrong? Over the past few years the UK Customer Service Index (UKCSI) has shown utilities at the bottom of the pile almost all the time. It is time utilities took a long hard look in the mirror and saw what customers see – a sector that falls woefully short of what they expect. In a world where one of the key current trends in customer experience is a demand for "effortless service", the ICS research again confirms that customers see utilities as difficult to do business with. Utilities must respond and make it significantly easier to interact with them. Fundamental customer experience trans- formation is essential. The general pace of change in utilities is too slow and the out- comes fall too far behind what customers expect. If utilities do not speed up dramati- cally, the sector will not fall even further behind other sectors. Bigger, bolder experience changes are needed that are delivered faster and are tightly attuned to customer expectations. The time for change programmes has passed – customer-driven change should be a busi- ness-as-usual activity. It is never finished and needs constant injections of energy and innovation. The approach to change needs to move on. Now is the time for game changers. Chief executive Cathryn Ross and her team at Ofwat are to be applauded for their new focus on rewarding water firms who run their businesses for the benefit of customers. This regulatory approach should mean that investors benefit from better returns when the water company better serves its customers. However, as Ross candidly pointed out in a presentation to ICS mem- bers, not all water companies have fully embraced this shi in emphasis. It requires real strength in leadership and a boardroom of people that understand customer experi- ence in its widest sense. It requires a cultural shi across the whole organisation and that is hard, not because water companies are titanic organisations, indeed some are not, but most are old with stale cultures that are firmly embedded. Ross rightly highlighted the fact that, as a sub-sector of the utilities industry, water companies are generally the better utility performers. But it is marginal, and even if the whole utility sector raised its game to the level of the water companies, it would still languish at the bottom of the UKCSI. Even the most progressive of our utility companies appear to value and respect engi- neering skills over customer-facing capabil- ity, which is seen as "the easy bit". But times have changed, customer experience today requires a sophisticated set of capabilities and unprecedented ability to understand and predict customer behaviour. Customers now have immense power and are wielding it to influence other customers, not one-to-one but one-to-thousands and in a matter of seconds. This new world, where social media plays an increasingly influential role, makes per- fecting the customer experience essential and equally as important as the engineering considerations. Ofgem and the government are attempt- ing to focus energy companies on customers. For example, the introduction of the RIIO incentive/penalty mechanism for electricity distributors in April 2015 sets a fixed perfor- mance level above which incentive payments are earned and below which penalty pay- ments are incurred. This should remove some of the barriers to collaboration between distribution com- panies that the legacy league table approach perpetuates. One would hope RIIO opens the door to sharing best practice and a resultant step change in performance for the distribu- tion sub-sector. Ofgem, however, has set the performance bar at 82 per cent which, in our opinion, is disappointingly low and too easily achieva- ble for most. It will do almost nothing to sig- nificantly improve standards in the industry and could leave us with a hey incentive bill. It is time for genuine transformation, a step change in performance that customers recognise and is reflected in research such as UKCSI. It is perfectly possible. Step change in utilities has been achieved before. All credit to NI Electricity (now the only utility in the UKCSI top 50) and Dwr Cymru, which have made significant strides over the past six months. If the sector as a whole could raise their level of performance to that of NI Elec- tricity, utilities would rank 3rd as a sector. There's food for thought. Nicola Eaton Sawford, managing director & customer experience architect, Customer Whisperers The must-win service game Yet another survey has been released ranking utilities bottom of the table when it comes to customer service. Nicola Eaton Sawford calls for a step change in utilities' treatment of customers. 85 80 75 70 65 Jan 10 Customer satisfaCtion sCores by seCtor, 2010-14 Services Retail – food Retail – non-food Insurance Banking Public service (local) Telecoms Transport Public service (national) Utilities Jul 10 Jan 11 Jul 11 Jan 12 Jul 12 Jan 13 Jul 13 Jan 14

Articles in this issue

Archives of this issue

view archives of Utility Week - Utility Week 29th August 2014