Posted: 6th March 2017

First published in Utility Week on the 24th February 2017

Given the universal need for water and energy and the seasonal nature of some of the issues consumers experience, utilities firms can be faced with significant operational issues throughout the year.

These issues can amount to greater business costs and, if not quickly resolved, potential loss of customer advocacy.

We can look at publicly available industry data to identify the root cause of some of these issues. For example; the total number of written complaints received by water companies in 2015 / 16 was 106,196, and of these, 64,425 (61%) were related to billing and charges.

In a similar vein, Ofgem’s Consumer Engagement Survey 2016 showed that 16% of customers fully understood the range of tariffs available to them from energy and gas suppliers generally (duel fuel only), and 42% said they were unfamiliar with the features of their current tariff.

Both industries have taken great strides in their treatment of customers, but at the heart of these statistics is a lack of customer understanding. If this lack of understanding results in a disproportionate number of queries and complaints (both sectors appear to be experiencing this), business operations can be impacted both in terms of capacity and cost.

There is an opportunity here to assess how your firm communicates with its customers with a view to improving customer understanding and delivering consistently good outcomes. 

Continuously improving communications

Clearer communication can improve customers’ understanding of their charges and give utility firms the competitive edge while lowering the number of queries and complaints they receive.

This is especially true given both energy and water firms’ performance is becoming more transparent. The Service Incentive Mechanism in water (adjusted in 2014 to place greater weight on billing and charges) and the imminent switch to principles-based regulation in energy are delivering support for consumers when it comes to decisions over the suitability of utilities supply.

There are three areas which utilities firms can reflect on in order to understand how effectively they communicate with their customers:

1. Senior management and culture

Internal culture is pivotal to successful customer engagement – ensuring each area of your business is aligned to a common customer strategy and commercial goals can make customers’ experience more cohesive. Specifically in the area of customer engagement; does your business have an appetite for open discussions about how to improve overall customer experience and / or understanding? Do these messages make their way to the frontline through training and other forms of engagement? To what extent are communications assessed, and are reviews of communications a regular occurrence?

Senior leaders play a vital role in the endorsement of behaviours which drive a customer-centric culture. The ‘tone from the top’ of a business proliferates downwards and helps to ensure that the organisation works towards its goals, and does so by its values. Communications with customers should therefore be high on the board’s agenda. They must:

  • Obtain (and understand) the appropriate management information (MI) needed to maintain a clear view of complaints and communications performance
  • Recognise the benefits of proactive and proportionate consumer engagement in lowering query and complaints numbers
  • Ensure a robust approval process for new and existing customer communications that takes into account both regulatory and commercial requirements
  • Endorse regular reviews of all communications and the MI pertaining to communications and complaints
  • Has ownership of and accountability for customer satisfaction been apportioned correctly at board level?

2. Communication design

Firms must ensure their customer communications enable understanding and do not leave any ambiguity with regards to charges. However, perhaps equally important is the timeliness of your message to a customer – the right message at the right time can serve to enhance understanding and set expectations.

There may be an opportunity here for firms to be more communicative ahead of seasonally affected complaints spikes in order to set expectations. Many complaints made around this time relate to billing and can be attributed to customers’ receiving their first bill of the winter months, which is likely to be higher than in other seasons.

When it comes to communication design and the design of the customer journey:

  • Do the people designing communications have the appropriate level of regulatory knowledge as well as awareness of the firm’s commercial goals?
  • Is an appropriate level of training provided to those designing and overseeing the customer experience? Again, a balance between regulatory awareness and awareness of the firm’s commercial goals is required to ensure a proportionate approach
  • Are issues like customer vulnerability front-of-mind in your business, and do you tailor your communications appropriately to those suspected of being vulnerable?
  • Are there channels for staff to escalate any concerns upwards and is there an agreed, proportionate approach for examining them?

3. The frontline

Frontline staff also have a significant role to play in reinforcing the messages you wish to convey to customers. Consistency is key here; so do those on the front line:

  • Understand your customer strategy and the communications customers can expect to receive / have received?
  • Have the knowledge they need to be clear about charges and billing and confidence that this is backed up by effective written communications?
  • Receive regular training to enhance their regulatory awareness and / or keep their skills honed?
  • Strive to recognise vulnerability while being given the flexibility to tailor their approach to the individual circumstances of all customers?

The role of outcomes testing

SIM scoring in water and the wealth of comparison data coming out of Ofgem in energy are helping utility companies contextualise their performance against their peers. However, the industry-wide nature of this data can mean that insight here is not always sufficiently granular. Internal outcomes testing can offer a much more tailored view of the experience a firm is offering to its customers.

Performing outcomes testing on communications and continually improving them is a key tool in a firm’s armoury. A high-level process for outcomes testing includes five steps:

Step one: agree the desired outcome of individual communications being tested (could include pre or post-sale delivery).

Step two: capture and assess all relevant customer information. For communications, this could mean engaging in focus groups to discuss customer perceptions of specific communications.

Step three: classify the effectiveness of communications – i.e. whether they achieve the desired outcome – on a sliding scale

Step four: identify the root causes of any issues

Step five: address the root causes by making any necessary changes to processes, policies and procedures (focusing on the most impactful issues first)

To perform their testing effectively, firms must also consider:

  • The appropriate frequency of communications reviews
  • The most effective MI arising from the findings to illustrate current performance to the board
  • The accountability for customer communications / overall customer experience at executive level

Going further to benefit your business and customers

By addressing the root causes of issues, utilities firms can make significant improvements to the overall satisfaction of their customers. It’s clear that in both the water and energy sectors, the root cause of current issues is customers’ lack of clarity over what they are paying for.

As we are probably all aware, utilities firms will continue to be susceptible to periodic operational challenges due to the nature of the services they offer; however, focusing on the considerations above can help ensure that these challenges are not compounded by customer high volumes of customer contact relating to billing and charges.

Establishing the root cause of issues and achieving a continuous cycle of improvement using internal outcomes testing can help firms achieve this. 

Alex prentice

Alex Prentice

Account Director