Customer Experience

The true cost of customer service in utilities

March 2019

Water companies have been given various incentives to improve their customer service, but none has been as impactful as customers utilising their right to switch.

Nothing is truer than the phrase the ‘customer is king’.

The industry regulator has set various targets to encourage water companies to improve their customer service, but none have been as impactful as customers utilising their right to switch.

Last year was a record year for customers switching energy suppliers, with 4.8m people in the UK choosing to switch tariffs. In a recent study, 68% of people gave poor customer service as their reason for switching.

Many mature organisations have invested in better technology and optimised processes, but surprisingly this has always been based on trying to reduce OPEX than providing or improving service. Given the recent Accenture report, it’s time the mind-set changed.

In the water industry deregulation is starting to happen for business consumers. The government has gone quiet on when this deregulation will effect ‘ordinary’ consumers, but it insists that it is still on the agenda. Water companies have been focusing on SIM scores and SIM tables, but given the sample size many have questioned whether it is a true measure of customer service.

Further deregulation is likely to put customer service back at the top of the agenda, but customer service is something that should always be on the agenda, not just when companies believe it will have an impact. There is a very strong financial case for delivering great customer service. It is true people switch to cheaper suppliers, but in reality the saving must be greater than 20% for consumers to actively switch based on price. However, a failure in a supplier’s customer service will drive the consumer to switch immediately, and with the power of social media persuade others to do the same.

In a HBR report it states that a 5% increase in customer retention impacted profits by between 25% and 95%. If this is not reason alone to deliver acceptable service, consider Southern Water Service’s fine of £480,000 for the supply of water ‘unfit for human consumption’.

In today’s world, I firmly believe that all organisations, but in particular utilities companies, should focus on customer service rather than OPEX reduction and meeting regulatory targets.

Delivering excellent customer service will achieve both and increase revenue.

Once utility companies begins to realise that the customer is king, they’ll soon see an increase customer loyalty and drive business profitability at the same time.

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