Craig Naylor-Smith, managing director, Parseq’s finance and administration division Domestic water retail, Non-domestic water retail, Water, Water networks, Water treatment, Opinion

Water utilities must cover all their customer experience bases ahead of WaterworCX if they’re going to measure up to the standards set in competitive markets.

We’ve now passed the first, highly anticipated milestone of PR19. Water companies submitted their business plans to Ofwat at the start of September and all eyes are now on the regulator as it goes through the sector’s plans for the next five years with a fine-tooth comb.

One of Ofwat’s primary focuses will be assessing how the industry intends to improve its customer service through innovation and new ways of working. To support this, it is piloting WaterworCX, an incentive programme to replace the service incentive mechanisms (SIM) score, in tandem with its price review. If the scheme is implemented in March 2020, it will challenge water companies to bring their customer experience credentials in line with industries that operate in a competitive marketplace.

Water providers have routinely been accused of underperforming when it comes to customer service. The lack of competition has been cited by many critics as the root of the issue, and Ofwat has responded by re-asserting that while customers in England and Wales cannot choose their water provider, they still deserve the highest quality of customer service.

In its proposed methodology for WaterworCX, Ofwat explicitly flags that no water companies were included in the bellwether Institute of Customer Service Satisfaction Index’s (UKCSI) top 50 organisations. In the eyes of the regulator, it’s now not just a case of catching up, it’s a case of competing with commercial organisations as equals.

WaterworCX in action

Like SIM, WaterworCX will offer financial rewards to water companies that perform, and penalties to those that do not. The new customer measure of experience (C-Mex) score water utilities will receive under WaterworCX will be determined by an online satisfaction survey, a phone survey aimed at customers who have never dealt with their water provider directly, and an analysis of the volume of each water company’s complaints, including those made on social media.

It is also trialling the use of net promoter scores to assess whether a provider’s customers would recommend it to others and is proposing to benchmark the highest C-Mex scores against the UKSCI’s upper quartile. Water providers that go above this cross-sector bar will receive a more substantial financial reward.

How the C-Mex score is eventually weighted will be established by the findings of the pilot, which is due to conclude in March 2019. But whatever the final methodology looks like, the big difference between this system and SIM will be the standards it holds water companies to.

The views of customers who have never interacted with their water provider before and complaints lodged against providers through social media, for example, will be measured for the first time. It means WaterworCX will more accurately reflect the commercial impact organisations in other sector’s feel when the quality of their customer experience is known to be poor.

A water company’s reputation and the impression its customers have of the service it delivers, both first-hand and by proxy, is going to become more important. In this climate, water utilities are going to have to do more than realise the ambitious promises they’ve made in their PR19 business plans. They’re going to have to rethink how they approach customer experience.

A multichannel mindset

WaterworCX will also require every water utility to offer five customer communication channels, three of which must be online, and include social media. While most are moving towards this already, simply complying with the obligation isn’t enough. In the post-PR19 world, water companies must realise the key to customer satisfaction is delivering fast, accurate responses using the customer’s preferred channels.

While the pace of technology will see the scope of these channels continue to evolve, there is a danger water companies invest too much getting their digital capabilities off the ground and forget about more traditional contact methods many customers still prefer. For instance, we know some water companies can take up to a week to respond to paper and email correspondence. This is not good enough and technology can help companies reduce this time substantially, for instance with character recognition technology, machine learning and automation.

If water companies want the quality of their customer service to truly compete with other sectors they need to ensure every contact channel they maintain is as efficient and effective as it possibly can be. Social media is often used as a vehicle for consumers to vent their frustrations at an unsatisfactory customer service experience, which can cause significant reputational damage – something water utilities cannot afford to incur if they’re to reap the financial rewards WaterworCX could offer from 2020.

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