‘Customer first’ operations

In their business plans for 2020-25, water companies have favoured a ‘customer first’ model that places households at the heart of operations. Alex Prentice says four themes have shaped their plans.

As with any regulated industry, there is ongoing pressure on water companies to deliver good service and value for money, and it seems the sector is ­responding. All 17 regional companies submitted their five-year (2020-25) business plans to Ofwat at the beginning of September demonstrating how they will take positive action to improve performance, reduce bills, invest in networks and become more engaged with and responsive to customers.

This is an opportunity to build customer trust. Some companies have pledged to invest record amounts in infrastructure, while many have committed to keep average bills flat or even reduce them. Despite the nuances, looking across the PR19 plans submitted, there is a clear trend among water companies to prioritise a “customer first” model that places households at the heart of operations. In particular, there are four themes that have shaped the plans:

• Customer service – raising standards and staying responsive to customer needs;

• Affordability – keeping bills as low as possible;

• Long-term resilience – investing in the upkeep and improvement of infrastructure;

• Innovation – finding new ways to improve services.

Customer service

Customer service is critically important. Water may be an industry where the degree and frequency of interaction with customers is relatively low, but this makes it more important for providers to get it right when interaction does occur. Water is also an essential service without which homes and businesses cannot function, so when a customer gets in touch there is a duty on companies to be quick and effective in their response.

Putting customers at the heart of service delivery, increasing levels of communication and engagement, and responding rapidly in the event of a service issue have all become critical benchmarks for water companies to meet. Across industries, customer expectations around service and responsiveness have risen, meaning high-quality ­interactions have never been more important.

Companies must also find new ways to build customer relationships and engagement. Recently, for example, Severn Trent announced the launch of a video calling service that allows customers to report leaks using their smartphones and interact directly with a virtual field team of engineers by video. This is a good example of a water company embracing innovation and making it easier for customers to interact with it.

Affordability

Affordability will always be a key issue. Providing value for money is part of any water company’s licence to operate. At a time when many households still feel squeezed, this becomes even more significant.

The cost of utility bills is also a key concern in connection with vulnerable customers. Across industries, regulators are pushing to ensure companies address vulnerability as a core consideration. Moreover, vulnerability is not only a financial matter, but permeates a host of socio-economic and personal circumstances – for example, age, ill-health and life events such as bereavement or divorce.

With this in mind, water providers need properly embedded systems and policies in place to identify vulnerable customers in order to manage and support them appropriately. A clear policy should be developed and published, led by a senior member of the team. This policy needs to be disseminated and discussed across multiple areas of the business, from customer service teams to collections, complaints and other customer-facing areas, ensuring there is a unified approach.

Long-term resilience

Long-term resilience is a critical issue that has been thrown into focus recently through the increasing number of extreme weather events in the UK. For example, in February/
March the “Beast from the East” hit the country and led to a freeze-thaw that drove a spike in service issues. This was followed just a few months later by one of the hottest summers seen for many years. The unpredictability of the weather will continue to test water companies and never before has the need to invest in networks, upgrade and maintain infrastructure been of greater importance.

It is when there are disruptions to ­service that the responsive customer-first model really proves its value. The Consumer ­Council for Water (CCWater) found that during the freeze-thaw, companies that used all their communication channels and showed a presence on the ground received lower levels of complaints.

Innovation

Finally, innovation is needed to ensure the industry is moving forwards and pushing to find new ways to address ongoing challenges such as leakage and maintenance. However, innovation of a different kind is evident in South West Water’s announcement of a £20 million share scheme giving households the opportunity to take up a free dividend-paying share. This gives them a direct stake in the business and thereby potentially increases their sense of engagement.

All in all, water companies’ PR19 plans appear to demonstrate that they are serious about building customer connections. With Ofwat due to publish its initial assessment of the business plans in January, it’s not yet clear if the regulator feels they have done enough.

As we enter the winter period, it will be critical for providers to demonstrate how exactly they are becoming more responsive and customer-centric. The old saying “actions speak louder than words” has never been more true.