Utility Week

28 | 20TH - 26TH APRIL 2018 | UTILITY WEEK Customers Analysis N ational media headlines and politi- cal rhetoric spin a tale of widespread and deep-seated public mistrust in the companies that supply essential services. And evidence in satisfaction league tables and industry research certainly suggests the picture is not rosy. The Institute of Customer Service's UK Customer Satisfaction Index (UKCSI) – where trust is a key determining factor – ranks utilities 11th out of 13 UK sectors for over- all customer satisfaction, just ahead of tel- ecommunications and transport. Focusing on trust specifically, utilities lag 0.5 points behind the cross-sector average of 7.7 out of 10, achieving a score of 7.2. Meanwhile, exclusive Utility Week research, undertaken in partnership with market research firm Harris Interactive, shows consumer trust levels that are mid- dling at best. A survey of around 1,000 UK adults found just over half of respondents trust their water companies and energy net- work companies (57 per cent and 52 per cent respectively) while 49 per cent agreed that they trust their energy supplier. Why does this mistrust of utilities exist and why does it matter? These are ques- tions Utility Week will ask in a new industry research project, conducted in partnership with global consultancy WNS. The final report will be presented at Utility Week Live. Unpacking the problem Utilities' uncomfortable relationship with consumer trust is not new. Despite some contradictory evidence from companies' own customer satisfaction tracking measures, trust in utilities is widely acknowledged to have been low for years, notably lagging sec- tors such as retail, tourism and financial ser- vices, which tend to top the UKCSI. Experts agree that trust in organisations and sectors can be created or eroded by a range of factors, including service quality, corporate transparency and the perceived fairness of executive remuneration. Universally, a key factor in determining trust is agreed to be pricing. This has been a topic of growing contention for utility providers over the past five years and will form the focus of Utility Week's research, which will explore factors linking approaches to pricing and industry trust levels. Most prominently, the price versus trust debate for utilities has centred on the energy retail sector and a perception that suppliers are reaping unfairly inflated profits or being deliberately opaque about why prices rise and fall. More recently, however, suspicion about why consumers pay what they pay for essen- tial services has extended to the world of monopoly utilities, creating some fundamen- tal challenges to the legitimacy of privatised utility infrastructure owners. Resolving consumer anxiety about how utility prices are set and whether they are receiving value for money is a complex challenge. In part, this is because consum- ers are not always rational or consistent in what they say about the influence of pricing on their trust in companies. For example, in Utility Week's recent consumer research, respondents were generally positive about the value for money they receive from utilities, but more than half said they would trust their utilities more if they could pay less – far more than said their trust would be boosted by better customer service. This con- tradicts the logic that improved reliability or a focus on excellent service and innovation will resolve industry trust issues. And the conundrums for utilities don't stop there. Further complexity is added thanks to utilities' dual role as commercial enterprises and extensions of the welfare state. This makes building or rebuilding trust more dif- ficult than for most commercial enterprises. Utilities are expected to be self-sustaining businesses that can attract investors, com- pete (or outperform competitive simulators set by the regulator) and innovate, but they are also increasingly expected to look out for the most vulnerable in society, protect- ing continuity of supply at all costs, even if affected customers cease to pay. However right this may be, given the essential nature of power, heat and water, there's no doubt that utilities' dual identity muddies the waters for consumer trust – and will increasingly do so as the sector experi- ences an unprecedented technological trans- formation, which is raising new types of consumer exclusion and inequality. Then there's political and regulatory intervention on pricing, currently manifest in monopoly price reviews and retail price reg- ulation, which claims the goal of restoring customer trust in utility markets, but whose real impact is doubtful and runs the risk of significant unintended consequences, both for long-term pricing and trust. With such perplexing dynamics front of mind, Utility Week and WNS will pull together a comprehensive qualitative sum- mary of industry opinion on the relationship between pricing and trust, combining this with observations on consumer responses to recent industry pricing developments and likely future pricing dynamics for the sector. We hope the final report will become a touchstone for industry leaders trying to tackle trust challenges and justify their legit- imacy. We look forward to discussing its find- ings at Utility Week Live. A complicated relationship Research by Utility Week and WNS into the reasons for consumers' widespread mistrust of utilities is aiming to help industry leaders build better relationships with their customers. Jane Gray reports. The Utility Week-WNS Trust Council In 2017 Utility Week and WNS joined forces to create the Trust Council, a group of senior industry leaders with responsibility for customer service and satisfaction in organisa- tions spanning the energy and water sectors. The council meets regularly to debate consumer trust, consider new evidence on the factors that can influence this and share ideas about what to do about it. The council will also provide a key source of input for Utility Week and WNS's forthcom- ing research on the pricing-trust conundrum for utilities. For more information about the council's activities, please contact Elaine Munn: elainemunn@fav-house.com

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