Customer service in regulated industries: SIMples

Day two of Utility Week Live in Birmingham saw a cross section of utilities gather and discuss the role of the Service Incentive Mechanism (SIM) as a driver for improvement in customer service.

The introduction of SIM in 2010 has coincided with an improvement in the level of customer satisfaction with the water companies.

The Utility Week Intelligence report, secrets of SIM, shows that the previous customer service model, the Overall Performance Assessment had “plateaued in terms of the level of improvement” in 2009. Since then, SIM has recorded a 0.39 point improvement in customer satisfaction, up to 4.49 out of five.

The round table discussion examined whether SIM , or what else, was responsible for this upturn in customer service, and the two key points were:

• SIM was not the game changer
• Leadership is key to change
• Competition will have positive knock on effects

SIM was not the game changer

The general consensus of the group, which featured representatives from Ofwat, a number of the water companies, an energy company, and consultants, was that SIM was not the game changer for the sector as a whole.

Southern Water customer engagement manger Juliette Hughes clearly set out the table’s view: “SIM was the catalyst for change, but things have moved on since then.”

SIM was seen as a nudge to the companies, rather than something more significant. That was by everyone other than Ofwat’s Stephen Beddoes, who stated that SIM “was a game changer for a small number of companies that didn’t get customer service”.

He said this gave them the focus that they needed to improve their customer service.

However, other factors were seen as just as, if not more, important for the improving customer service. Chief among which was cash. The group echoed the comment from Wessex Water chief executive in the earlier keynote speech, that “delivering crap services costs money”. Investors will see a company with better customer service as less of a risk.

Not only this, but the need to get customers to save water – which requires them to trust the company, which can only be built on top of a good relationship and good customer service.

Leadership is key to change

Moving on from the SIM outputs stems from good leadership.

The discussion found that having the top brass of a water company listening to feedback – from customes and staff – and then acting on it, leads to a culture chnge and improved customer service.

“This empowers staff to deal with issues,” said Hannah Scott, business development manager from Lockheed Martin IS&GS. The group agreed this will help the staff become brand ambassadors, much like the view portrayed by Andrew McMillan, the former head of customer service at John Lewis earlier in the day.

This is because the frontline staff, those in the call centres, are most likely to be the first point of contact for disgruntled customers in the event of a problem. Dealing with them effectively, politely helps to build trust in the brand, and improves the customer satisfaction – even if the problem cannot be immediately dealt with.

The leadership of the water companies have also led a more “pro-active” approach to customer service “sometimes letting them know of a problem before they can tell us”.

Competition has positive knock on effects

The final point, and one that was accepted to be having a growing impact on customer service, is the looming introduction of non-domestic retail competition – set to start in 2017.

The monopoly status of water companies was acknowledged for removing the competitive element for the companies. With only one supplier, households cannot switch. While regulation is meant to ape the competitive element and keep the companies on their toes, the impact of competition in a different section of the market is seen as positive for customer service as a whole.

The debate stated that, with customer service set to be the main differential for business customers, the ethos of good customer service will “filter through£ to the domestic retail arm as well.