When launching the iPad last year, Steve Jobs was asked what consumer research Apple had done. “None,” was the answer. “It isn’t the consumers’ job to know what they want.” [1]
In contrast, there are clear advantages to utilities in understanding customers’ priorities when setting their investment strategies. Come price review time, the regulators reward customer support for a company’s investment proposals. In addition, assuming that the company is therefore addressing customers’ concerns, the cost of dealing with complaints should reduce. This sounds good in theory: Ofwat has rated potential annual savings in the water sector of “between £10 million and £50 million, by reducing the amount of avoidable operational contacts from 45% of all contacts to 35% of all contacts.” [2]
The challenge is that, except when things go wrong (burst pipe, power cut), regulated utilities face a challenge in getting their customers’ opinion.
With a huge cross-section of customers, a wide range of consultation channels are required. While online portals, Facebook pages and Twitter accounts provide for direct contact, they are unlikely on their own to change the pattern that communication happens only when there’s a problem.
More active engagement is needed. But, let’s be honest, there are few of us who, as utility customers, would choose to comment on these companies’ future plans (except perhaps where local issues prompt us to do so). Connecting the customer to the company and its issues is important. Are companies capitalising enough on the opportunity for face-to-face customer engagement available via their staff: either carrying out routine maintenance on the streets, or doing ‘hero’ roles in taking ownership of fixing problems?
Simple techniques such as opening up the company’s facilities for visitors can pique interest, but might not affect customers who do not believe their opinions have the power to affect future plans. Whilst UK electricity and gas retail customers have the ability to vote with their feet, those decisions will be mostly based on price or customer service issues. Water customers don’t have that choice, and few people might class themselves of customers of the network operators (despite a proportion of their bills paying for the service).
Regulators are placing increased focus on more formal engagement channels. Ofwat’s introduction of Customer Challenge Groups is aimed at providing a degree of independent challenge of how companies are engaging their customers. These are early days, but there seems to be a place for an enduring forum to represent customer interests, particularly against a potential backdrop of scaled-back regulation. What will be interesting is how best to expand these groups from established relationships with key stakeholders (Environment Agency, DWI, CC Water), to adequately represent the full range of customer groups.
However it is carried out, customer engagement beyond day-to-day issue resolution looks set to grow in importance. Forward-looking utility companies will be ensuring they have plans in place to build their capabilities in this area.
[1] The New York Times, http://www.nytimes.com/2011/01/19/technology/companies/19innovate.html
[2] “Putting water consumers first ?the service incentive mechanism”, Ofwat, March 2010
