Clarity lifts the bottom line

Maximising your efforts to help your customers understand exactly what they are paying for will lead to a reduction in the number and frequency of complaints, says Alex Prentice.

Given customers’ constant need for water and energy and the seasonal variations in their experiences, utilities face significant operational issues throughout the year. These issues can add to business costs and, if not quickly resolved, lead to the potential loss of customer advocacy.

The total number of written complaints received by water companies in 2015/16 was 106,196; of these, 64,425 (61 per cent) were related to billing and charges.

In a similar vein, Ofgem’s consumer engagement survey for 2016 showed that only 16 per cent of customers fully understood the range of tariffs available to them from energy and gas suppliers (dual-fuel only), while 42 per cent said they were unfamiliar with the features of their current tariff.

Both industries have taken great strides in their treatment of customers, but at the heart of these statistics is a lack of customer understanding. If this results in a disproportionate number of queries and complaints, business operations can be affected both in terms of capacity and cost.

Clearer communication can improve customers’ understanding of their bills. It can also give utility companies a competitive edge while lowering the number of queries and complaints they receive.

This is especially true as the performance of energy and water companies alike is becoming more transparent. The service incentive mechanism (SIM) in water and the imminent switch to principles-based regulation in energy are delivering support for consumers when it comes to decisions about the suitability of utilities supply.

There are three areas that utilities can reflect on to understand how effectively they communicate with their customers: senior management and culture, communication design and the frontline.

1. Senior management/culture

Internal corporate culture is pivotal to customer engagement. Ensuring each area of your business is aligned to a common customer strategy and commercial goals can make customers’ experience more cohesive.

Does your business have an appetite for open discussions about how to improve overall customer experience and understanding? Do these messages make their way to the frontline through training and other forms of engagement? To what extent are communications assessed, and are reviews of communications a regular occurrence?

Senior leaders play a vital role in the endorsement of behaviour that drives a customer-centric culture. The “tone from the top” cascades downwards and helps to ensure the organisation works towards its goals, and does so through its values. Communications with customers should therefore be high on the board’s agenda. Companies need to:

• obtain and understand the appropriate information required to maintain a clear view of complaints and communications performance
• recognise the benefits of proactive and proportionate consumer engagement in lowering query and complaints numbers
• ensure a robust approval process for customer communications that considers both regulatory and commercial requirements
• regularly review all communications
• ensure the ownership of, and accountability for, customer satisfaction has been apportioned correctly at board level.

2. Communication design

Utilities must ensure their customer communications enable understanding and do not leave any ambiguity. However, perhaps equally important is the timeliness of your message.

There is an opportunity here for companies to be more communicative ahead of seasonal complaint spikes. Many complaints made around this time relate to billing and can be attributed to customers receiving their first bill of the winter months, which is likely to be higher than in other seasons.

When it comes to communication design and the design of the customer journey, ensure that those involved have the right level of regulatory knowledge and an appropriate level of training. Make sure that issues such as customer vulnerability are front of mind, and that there are channels for staff to escalate any concerns upwards.

3. The frontline

Frontline staff play a major role in reinforcing the messages you wish to convey to customers. Consistency is key here, so ensure staff understand your customer strategy, have the knowledge they need, and receive regular training to enhance their regulatory skills.

SIM scoring in water and the wealth of comparison data coming out of Ofgem in energy are helping utility companies contextualise their performance against their peers. However, the industry-wide nature of this data can mean that insight here is not always sufficiently granular. Internal outcomes testing can offer a much more tailored view.

Performing outcomes testing on communications and continually improving them are key corporate tools. A high-level process for outcomes testing incorporates five steps: agree the desired outcome of individual communications being tested; capture and assess all relevant customer information; classify the effectiveness of communications on a sliding scale; identify the root causes of any issues; and address those root causes by making any necessary changes to processes, policies and procedures.

By addressing the root causes of issues, utilities can make big improvements to the overall satisfaction of their customers. It is clear that in both the water and energy sectors, the root cause of problems is a lack of clarity over what customers are paying for.

Utilities will continue to be susceptible to periodic operational challenges due to the nature of the services they offer. However, focusing on the considerations outlined here can help ensure these challenges are not compounded by high volumes of customer contact relating to billing and charges. Establishing the root cause of issues and achieving a continuous cycle of improvement using internal outcomes testing can help companies eliminate heavy customer contact costs.