Customer engagement is not something which is a “nice to do” at the end of every five years. Done in the right way, it allows you to capture a holistic view, not just a snapshot, of the wants and needs of your communities. With that, you can create really effective, long life assets that meet changing requirements at affordable cost to our customers and stakeholders.
It also allows us to effectively deal with the diversity of need in our communities and – if you can stretch the depth and reach of your engagement with customers and stakeholders – you can start to talk about the value of water to society, rather than just the cost of water.
Finally, long-term customer engagement makes us more accountable and more meaningful as a company to our bill paying customers.
Why do these things matter? They matter because there is a significant challenge, and for us it is a particularly acute challenge, around growing population. Affinity Water operates in one of the most populated areas of the country and in the next 25 years we expect to see a near 20 per cent increase in the population that we need to serve.
We also have a higher than average per person consumption of up to 20 litres per day – the national average is around 150l per person per day and segments of our customer base are using up to 170l each a day and we need to understand why. Then take into account that we are losing around 6 per cent of our resource base through more sustainable abstraction – it is absolutely the right thing to do, but these things combine to challenge us from both ends of the equation.
Finally, there are changing weather patterns, changing lifestyles and changing patterns of business usage which are impacting our operations and our business.
All of this challenge is around a product and service that costs less than 60p a day – but which touches everybody in such in essential way. Whilst we have some customers who genuinely struggle to pay their bills, in general terms, It is really, really hard to get engagement for something that comes at a cost which for most us is not a meaningful purchase in a day, or at least not one which we think too hard over compared to other things we buy.
So how do you reach out and start influencing customers? For us it starts with our water saving programme. We have a metering programme and over the course of the next five years we will be putting meters into about 300,000 homes. When we consulted with our customers through PR14 and the water resource management plan process, almost 70 per cent agreed that metering is the fairest way to pay, rather than via a socialised tariff. Around 75 per cent supported the universal metering programme to help improve focus in what is a very water-stressed area.
But this is about much more than just installing a meter. This is about taking a customer on a behavioural change journey over the course of 27 months. It’s about educating customers on water efficiency and building an understanding of what actions they can start taking to reduce their bill.
Quite rightly, though, our customers have said that if they are expected to save water, we need to be playing our part too. With this in mind we have set an industry-leading target for a reduction in leakage over the next five years of 14 per cent. This is a real challenge, especially against a backdrop where leaks are becoming harder to find. Given the challenges we face, we are having to innovate more than ever and we can’t do this without our suppliers. They are integral and most of our new generation contracts now reflect that. More generally, what I have observed throughout my career is that when you are faced with particularly difficult challenges, you are best served to bring your suppliers closer to your business. That is how you get outstanding business performance, that’s how you share ideas, minimise risk and drive the right behaviours, both client and supplier.
In recent years we have seen our sector move massively and rapidly from an asset-centric approach towards one based on community and customer focus. I believe that will only continue and the ability to quickly adapt will be the key to success. The problems we face cannot be tackled alone. They require collaboration. Through collaboration you will always achieve better and more efficient solutions. But if you remember nothing else from this presentation, remember that customer engagement is for life, not just for regulatory reviews.
Simon Cocks, chief executive, Affinity Water