Water companies are coming under increasing pressure to deliver great service to customers – the kind of service customers have come to expect from the likes of Amazon and John Lewis.
No longer is it acceptable for water companies to seek inspiration simply by looking at what their sector peers are doing. Generally, complaints about the vital product itself are few and far between, but companies’ overall customer service will be under scrutiny more than ever – especially with this being a key theme in Ofwat’s framework for the next price review, PR19.
The regulator has had plenty of reading material of late now all the water companies have submitted their full business plans for the next asset management plan period, covering 2020-25.
But as important as companies’ proposals are for the coming years, their current performance is also something the regulator continues to monitor.
Ofwat will have read with interest, then, the recent report from the Consumer Council for Water (CCWater) detailing household complaints to water companies in England and Wales between April 2017 and March 2018.
The water watchdog has turned up the pressure on Southern Water, Bristol Water and SES Water for their relatively poor performance. All three will need to show what action they are taking to reduce complaints and have been asked to provide quarterly reports to CCWater.
The 12th annual complaints report (published on 20 September) reveals households made more than 2.1 million calls about problems last year. It shows that nine out of 21 water companies in England and Wales reported an increase in calls from customers wanting to resolve problems – known as “unwanted” contacts.
The companies in question are: Southern, Dwr Cymru Welsh Water, Wessex, Severn Trent, SES Water, Bristol, Cambridge, Portsmouth and South Staffs.
Meanwhile four companies – Wessex, Bristol, South East, and Dee Valley – reported an increase in written complaints from their customers, although the number for the whole industry fell by nearly 17 per cent.
Alex Prentice, senior client partner at consultancy Huntswood, says: “How companies handle customer complaints will be a key consideration for Ofwat when reviewing the PR19 business plans submitted over the past few weeks.
“It will be difficult for firms to justify price increases if effective measures are not put in place to improve customer service levels, particularly as inadequate progress appears to have been made over the past three years. Water companies are delivering a public service and therefore must focus on delivering better outcomes and services for customers that build trust in the industry.”
Under scrutiny
Southern Water is under scrutiny after it failed to improve on its position as the industry’s worst performer against the two measures for a third successive year. CCWater says that was despite the water company reducing written complaints by one-fifth.
Overall the industry’s three-year trend (2015/16 to 2017/18) for written complaints has shown a “strong improvement” but the industry’s performance on unwanted contacts is “not so good”. “There has been no progress over the past three years, with the number of calls above where it was in 2015/16,” CCWater highlights in the report.
One of the things it attributes the increase in unwanted contacts to is Southern Water’s internal review of how it recorded these calls in 2016/17, which led to a “significant increase” in its number compared to the previous year.
The 12-month period to March 2018 was the first full year Southern Water’s changes took effect, which brought about an additional 13 per cent increase from the previous period.
Simon Oates, Southern Water’s chief customer officer, pledges to “continue increasing responsiveness and focus on customers’ needs”. Southern Water says its written complaints for 2017/18 fell by more than 20 per cent, following a 48 per cent reduction in 2016/17.
Taking out Southern Water, CCWater reveals it would have seen a 3.5 per cent decrease in unwanted contacts since 2015/16, instead of a 1.8 per cent increase.
However, the watchdog points out that despite it putting pressure on poor performers and the possible financial penalties for poor service in Ofwat’s Service Incentive Mechanism (SIM) “some companies are still letting down their customers and causing them to complain or have to call them because of an inconvenience”.
Southern Water remained the industry’s worst performer for complaints and unwanted contacts, but two water-only companies (WOCs) are also in hot water.
SES Water’s 20.8 per cent increase in unwanted telephone contacts helped make it the worst performing WOC for this measure. Meanwhile, Bristol Water reported a significant increase in unwanted contacts (37 per cent) and written complaints (52 per cent), making it the worst performing WOC for written complaints.
Because these three companies’ unwanted contacts and written complaints are greater than 25 per cent above the industry average, CCWater has asked them to provide – or in Southern’s case continue to provide – quarterly updates on what they are doing to bring their numbers “quickly back into line” with the rest of the industry.
Despite seeing a reduction of 0.4 per cent in unwanted telephone contacts and a reduction of 4.3 per cent in written complaints, Thames Water reported more than 25 per cent above the industry average for both types of complaints. Its performance this year will be “closely” monitored by CCWater.
Giving credit where credit is due, CCWater praised Anglian Water for its low number of unwanted contacts (103,798 or 360 per 10,000 connected properties), which placed it in the best position across the industry. Bournemouth also performed well, especially as only two years ago it was required to provide quarterly updates on written complaints. It saw a 39.8 per cent reduction in the measure compared with 2016/17.
CCWater says Dee Valley did well to reduce unwanted contacts by a third but its written complaints increased by a similar amount. And despite South Staffs Water and Portsmouth Water seeing an increase in unwanted contacts of more than 10 per cent, the watchdog said they still “compared comparatively well”.
The Beast from the East
Although overall industry complaints fell during the year, there was a 10 per cent rise in the number relating to water supply, as some water companies struggled with the disruption caused by the sudden thaw following March’s Beast from the East.
More than 200,000 customers were left without running water, with many households criticising the poor communication and support they received from their supplier.
Tony Smith, chief executive of CCWater, says: “The frustration felt by thousands of customers after March’s cold weather disruption to supplies should have reminded the industry that it cannot afford to be complacent.
“Some water companies still have a lot to learn when it comes to communicating effectively and ensuring that when something goes wrong they put it right quickly and with the minimum of fuss. The poor performers highlighted in our report can expect to come under considerable pressure from us to improve this year.”
A spokesperson for Ofwat adds: “Our review into water companies’ handling of the Beast from the East revealed some hard lessons, particularly around planning, customer communication, and support for those in vulnerable circumstances.
“On the back of our review, we required four water companies (Thames Water, Severn Trent, Southern Water and South East Water) to submit by the end of September a detailed, externally audited action plan setting out how they are addressing the issues identified. If we are not satisfied, we’ll consider further action.”
Meanwhile, industry trade body Water UK welcomes the overall fall in complaints. Michael Roberts, chief executive of Water UK, says: “It’s pleasing to see a fall in complaints this year despite the impact of the Beast from the East and the dry summer. The figures published continue a downward trend in both metrics, with complaints and unwanted calls falling by almost 70 per cent over the past decade.
“Despite customer satisfaction levels of around 90 per cent, we know there is more to do.”
Prentice from Huntswood adds: “It’s clear CCWater is maintaining a sharp focus on the need for firms to make significant improvements in how they deal with complaints. With the likelihood of ongoing extremes in weather – be it freeze-thaws or heatwaves – it’s critical providers perform a robust assessment of their operational models so they are better equipped to deal with spikes in complaints.”
Causes of complaint
Disputes about billing and charges accounted for more than half (53 per cent) of the written complaints received by the industry, despite a 22 per cent reduction compared to the previous year.
Written complaints about sewerage service (23.8 per cent), metering (33.4 per cent) and the “other” category (10.8 per cent) also fell.
Customer complaints about water supply increased during the year, mainly because of the disruption experienced during and after the Beast from the East. Some companies reported a spike in complaints for the fourth quarter of the year, leading to an increase of 10.4 per cent compared with 2016/17.
Companies resolved 95.7 per cent of written complaints at the first stage of their procedure, an improvement of 0.5 per cent on the previous year. In 2017/18, CCWater received 6,815 complaints from household customers, a reduction of 13 per cent.
What the poor performing companies have to say
Simon Oates, chief customer officer, Southern Water
“Overall, we have reduced complaints by 58 per cent and while we are rapidly closing the gap between ourselves and the rest of the industry, we know that genuine, lasting change takes time… the changes we’ve introduced this year are driving down complaints, and we are more proactively managing customers’ accounts and resolving more problems for customers the first time they call us.”
Ben Newby, customer services director, Bristol Water
“I am very disappointed that so many customers felt the need to contact us in the past year and that we have moved from being among the better performers in the industry. The past year has been one of the most difficult in the company’s history, and we are pleased that CCWater has recognised that four major incidents, including the largest burst in the company’s history, led to an increase in unwanted calls and written complaints.
“We are committed to improving our customer satisfaction and we will continue working closely with CCWater. While this report shines a light on areas in which we should focus, we are already making great strides in improving customer service which has been seen by a drop in complaints already this year.”
SES Water, spokesperson
“We are aware of our increase in unwanted telephone contacts and are working hard to focus on delivering the best service possible to every single customer every time. While we have seen our complaints reduce by around 5 per cent from 2016/17 to 2017/18, we are currently in the midst of a two-year programme specifically aimed at improving the experience our customers will receive and are fundamentally changing a lot of what we do.
“We’ve seen significant changes from the hard work put into this programme so far, with our complaints falling by 52 per cent from Q1 of this year compared to Q1 last year. We’re also at a three-year low of 9.8 complaints per 1,000 properties.”