The relationship status between utilities and their customers? – It’s complicated.
National media headlines and political rhetoric spin a tale of widespread and deep-seated public mistrust in the companies that supply essential services. And evidence in satisfaction league tables and industry research certainly suggests the picture is not rosy.
The Institute of Customer Service’s UK Customer Satisfaction Index (UKCSI) – where trust is a key determining factor – ranks utilities eleventh out of thirteen UK sectors for overall customer satisfaction, coming in just ahead of telecommunications and transport. Focussing on trust specifically, utilities lag 0.5 points behind the cross-sector average of 7.7 out of ten, achieving a score of just 7.2.
Meanwhile, exclusive Utility Week research, conducted in partnership with market research firm Harris Interactive, shows consumer trust levels which are middling at best.
A survey of around 1,000 UK adults found just over half of respondents trust their water companies and energy network companies (57 per cent and 52 per cent respectively) while just 49 per cent agreed that they trust their energy supplier.
But why does this mistrust of utilities exist and why does it matter? These are questions Utility Week will ask in a new industry research project, conducted in partnership with global consultancy, WNS. The final report will be presented at Utility Week Live, providing a springboard for industry debate and action.
Unpacking the problem
Utilities’ uncomfortable relationship with consumer trust is not new. Despite some contradictory evidence from companies’ own customer satisfaction tracking measures, trust in utilities is widely acknowledged to have been low for years, notably lagging sectors like retail, tourism and financial services, which tend to top the UKCSI.
Experts agree that trust in organisations and sectors can be created or eroded by a wide range of factors, including service quality, corporate transparency and the perceived fairness of executive remuneration, for example.
Universally however, a key factor in determining trust is agreed to be pricing. There’s no doubt this has been a topic of growing contention for utility providers over the five years, and it will form the focus of Utility Week’s upcoming research, which will explore a number of factors linking approaches to pricing and industry trust levels.
Most prominently, the price versus trust debate for utilities has centred around the energy retail sector and a perception that suppliers are reaping unfairly inflated profits or being deliberately opaque about why prices rise and fall as they do.
More recently however, suspicion about why consumers pay what they pay for essential services has extended to the world of monopoly utilities, creating some fundamental challenges to the legitimacy of privatised utility infrastructure owners.
Resolving consumer anxiety about how utility prices are set and whether they are receiving value for money from them is a complex challenge. In part, this is because consumers are not always rational or consistent in what they say about the influence of pricing on their trust in companies.
For example, in Utility Week’s recent consumer research, survey respondents were generally positive about the value for money they receive from utilities, but over half said that they would trust their utilities more if they could pay less – far more than said their trust levels would be boosted by better customer service.
This contradicts the logic that improved reliability or focus on excellent service and innovation will resolve industry trust issues. And the conundrums for utilities don’t stop there.
Further complexity is added thanks to utilities’ dual role as commercial enterprises and extensions of the welfare state. This makes building or rebuilding trust more difficult than it already is for most commercial enterprises. Utilities are expected to be self-sustaining businesses which can attract investors, compete (or outperform competitive simulators set by the regulator) and innovate, but they are also increasingly expected to look out for the most vulnerable in society, protecting continuity of supply at all costs, even if affected customers cease to pay.
However right this may be – given the essential nature of power, heat and water – there’s no doubt that utilities’ dual identity muddies the waters for consumer trust – and will increasingly do so as the sector experiences an unprecedented technological transformation which is raising new types of consumer exclusion and inequality.
And then there’s political and regulatory intervention on pricing, currently manifest both in monopoly price reviews and retail price regulation, which claims the goal of restoring customer trust in utility markets, but whose real impact is doubtful and runs the risk of significant unintended consequences, both for long term pricing and trust.
With such perplexing dynamics front of mind, Utility Week and WNS will pull together a comprehensive qualitative summary of industry opinion on the relationship between pricing and trust, combining this with observations on consumer responses to recent industry pricing developments and likely future pricing dynamics for the sector.
We hope the final report will become a touchstone for industry leaders trying to tackle trust challenges and justify their legitimacy. We look forward to discussing its findings at Utility Week Live.
The Utility Week-WNS Trust Council
In 2017 Utility Week and WNS joined forced to create the Trust Council, a group of senior industry leaders with responsibility for customer service and satisfaction in organisations spanning the energy and water sectors.
The Council meets regularly each year to share debate developments in the levels of consumer trust in the industry, consider new evidence on the factors which can influence this and share ideas about what action can be taken, individually and collectively.
The Council will also provide a key source of input for Utility Week and WNS’s forthcoming research on the pricing-trust conundrum for utilities.
For more information about the Council’s activities, please contact Elaine Munn: elainemunn@fav-house.com