Market view: Points of comparison

Water companies need to benchmark their customer service not just against their peers but against companies in other sectors - because this is what their customers do. By Simon Thorpe.

Most consumers have limited experience of dealing with water companies. They do not get to choose which company to do business with and are subject to the customer experience on offer, be it good, bad or indifferent. Neither do customers have the opportunity to compare this service with that from another water business. This means that consumer opinions are formed through comparison with the service they receive from other businesses, such as banks, high street retailers, and mobile phone providers.

With the benefit of a guaranteed customer base, the customer experience has not traditionally been at the top of the board’s agenda. But customers are set to be offered the choice of which water company they do business with – and the customer service they expect to receive will definitely play a part in the decision-making process. How customers compare service, not only with other water companies but also with companies outside the sector, suddenly becomes extremely important.

When Ofwat introduced the service incentive mechanism (SIM) in 2010, it aimed to shake up the water sector, and this certainly goes some way to helping individual companies understand the customer perception of their service within the sector. However, this is only a partial view, thanks to limited data sampling, infrequent measurement and limited scope.

All this means there is a strong argument for water companies to examine the customer experience in much more detail, and in the wider context of cross-sector customer service. Not only will this help them understand their brand and service perception in the eyes of a consumer but it will also present valuable opportunities to learn from companies that have already had to develop their service proposition as a vital customer differentiator.

The value of benchmarking

SIM provides the sector comparison, so how can water companies fill in the blanks and find comparable insight into other sectors?

A benchmarking exercise is a great way to assess your company’s customer experience while balancing cost and highlighting priority areas of improvement. Naturally, the comparison against companies in your own sector is of biggest initial interest – they have the same challenges as you do and failure to act will warrant hefty regulatory penalties. But it is the comparison with other best-in-class operations that will present the most valuable business intelligence.

It provides a shortcut to understanding the areas that have the greatest impact on customer perception, allowing you to focus your budget and resources where they will make the biggest difference. Through benchmarking, it is possible to isolate specific processes to improve, and understand how these improvements can affect other parts of the business.

What is more, benchmarking can also give you a greater understanding of the success of your outsourced relationships and how to get more bang for your buck when dealing with suppliers.

Choosing the right benchmarking process

Benchmarking has historically had a bad name in the UK because of sometimes lax approaches, resulting in unreliable data and non-comparable results. However, choosing the right method and the right partner can result in valuable insight that will have a direct impact on the bottom line. There are a number of benchmarking options available: 

• Off-the-shelf reports can be a great low cost starting point, but they may not give you bespoke recommendations and you are unlikely to be able to choose your peer group.
• Management consultancy firms will give you great models and structured recommendations. However, they can be extremely expensive and their intelligence is often based on only a handful of companies’ data.
• Mystery shopping is a great tool for monitoring how your frontline sound and behave, but may not tell you why you are getting certain results. Companies also often carry a small sample of reviews. For example, if a contact centre handles one million calls a year, then 500 mystery calls (0.05 per cent of the calls) will neither be statistically secure nor allow you to break it down in order to drive change.
• True benchmarking is another option, where your company will be assessed under set criteria, which can then be compared with companies across a number of sectors. Wherever possible try and find a bespoke benchmarking service, which allows you to help select your peer group, one which defines metrics in the same way for easy comparison, and – most importantly – one that offers expert advice on the actions to take to narrow the gap to best in class.

As customer service quality begins to impact customer numbers and therefore the bottom line, it becomes vitally important to understand how your performance compares to other service providers, as well as to your direct competitors. Benchmarking can be an effective and valuable way of achieving this while offering insight into new ways of working that your sector has not started to consider. For those willing to take the leap, cross-sector benchmarking could be the competitive edge you were looking for.