Building a sustainable service culture

Jo Causon, CEO at The Institute of Customer Service, explains how water companies can build a sustainable service culture that delivers greater productivity, employee engagement and trust.

In recent times, the customer experience environment has become both more complex and challenging. In fact, I would argue that customer experience is at the heart of many of the forces shaping profound changes in our economy and society.

We are certainly living in complex times; however our research shows that there is a direct correlation between employee engagement, customer satisfaction and the long term financial performance and ultimately the survival of organisations within the water sector. Within this more challenging customer landscape, we are seeing several key changes.

Disruptive technologies such as artificial intelligence, robotics and sensorisation are influencing the way organisations and indeed customers want to interact. A growing number of organisations are assessing or deploying artificial intelligence in a customer experience context. As we saw in our research piece, The Heart of Artificial Intelligence, automation of routine transactions and processes can enable employees to spend more time on complex issues or value-generating activity. This is a significant opportunity and it means that there will be a growing demand for higher level customer experience capabilities and skills.

Customers increasingly use a mix of channels to interact with organisations. But interactions across channels often feel fragmented, not part of a seamless, coherent experience. Few organisations offer a genuinely seamless, integrated channel experience but many are devoting significant focus and effort to develop it.

Customer data is becoming one of the critical service assets and differentiators for any organisation, whatever sector. However we need to be cautious and curious as there is a marked variation in customers’ attitudes to sharing their data with organisations. Our data & omnichannel research shows some customers are prepared to share their data with organisations in return for personalised rewards and even regard their personal data as a marketable asset. But a significant proportion of customers are uncomfortable sharing any of their personal data, whilst over 20% of customers have deliberately supplied incorrect personal data. This highlights a fundamental need to build trust both a culture of transparency and integrity. The water sector I believe has a huge opportunity here to differentiate and stand-out in this area.

Across the UK economy, employment is at record levels, but growth in GDP, productivity, investment and wages has been weak. In this environment, engaging and motivating employees to deliver consistently excellent standards of service has become even more challenging.

Against this challenging backdrop, customer satisfaction in the UK has stagnated.

Looking back over the past 3 years, average customer satisfaction across the economy is broadly flat, and slightly down in the last two years. Organisations have got better at complaint handling, but more customers are experiencing problems with organisations. In many cases, customers are having to expend more effort in their interactions with organisations.

In the last UK Customer Satisfaction Index published in January 2019, average satisfaction in the water sector was 74.5 (out of 100), 3.2 points below the UK average, 77.7. Between 2016 and 2017 the water sector showed an improving trend. But like most of the other 13 sectors in the UKCSI, customer satisfaction has stalled in the last 2 years. No water company featured in the 100 highest rated organisations for customer satisfaction in the January 2019 UKCSI. There is also a notable gap – 9.7 points – separating the highest and lowest rated water companies recorded. But the UKCSI provides some clear signals about where to focus to reverse the stagnating trend of customer satisfaction. Customers identified making it easier to contact the right person to help, website navigation and billing as the key areas which they water companies should improve.

I believe we need to make an urgent and compelling case that customers and water companies will benefit from a sustained focus on customer satisfaction.

Customer satisfaction can help boost productivity. Our productivity research has found that employees across the UK spend on average over 2 days dealing with the consequences of their supplier getting something wrong and a further 2 days as a result of their organisation getting something wrong for a customer. Through our UKCSI research we’ve also found that complaints typically generate on average 2.8 contacts to an organisation of which 70% are telephone phone. These “hidden costs” can therefore have substantial adverse impact on productivity. Improving service and reducing problems creates significant opportunities to focus more time and effort on innovation and customer engagement.

There is a striking relationship between customer satisfaction and employee engagement. We have found that 1 point of employee engagement (measured on a scale of 1 – 100) is linked to a 0.41 uplift in customer satisfaction. Organisations known for their high levels of customer service are better able to attract and retain engaged, motived employees. And not only do these employees deliver better customer experiences than less engaged people. They are also more curious about improving processes and collaborate better with their colleagues. Focusing on customer satisfaction is one of the most powerful ways of engaging and enthusing employees.

Organisations that consistently exceed their sector average for customer satisfaction tend to achieve better financial results. By comparing customer satisfaction scores and the financial performance over time of companies in the UKCSI, we found that consistently strong performers for customer satisfaction achieved stronger revenue growth and higher levels of ebtida and revenue per employee. If competition becomes a more prominent feature of the water sector, this relationship between customer satisfaction and sustainable financial performance will become increasingly significant.

Perhaps most crucial of all for the water sector is the strong relationship between high levels of customer satisfaction and reputation and trust. It’s noticeable that achieving a 9 or 10 out of 10 for customer satisfaction is much more likely even than 8 out of 10 to lead to the strongest levels of trust and reputation. And in a sector that in the consumer market is a natural monopoly this is surely of huge significance. Why was the water sector privatised if not to promote innovation, raise standards and improve service to customers? Achieving high levels of customer satisfaction is both an obligation and an act of long-term self-interest.

It’s interesting – and perhaps concerning – that water sector is rated lower than the UK average for the measure that an organisation does the right thing in its business practices, for its employees and the wider society. I would argue that the sector could and should be doing better.

There are tremendous opportunities to demonstrate a positive commitment and impact on society. Water companies are uniquely placed to educate customers about water conservation and environmental protection and take a pioneering role in showing how technologies can combat climate change. Water organisations are well-embedded in the regions they serve. There is an opportunity to harness the influence of their employees to communicate positive messages about responsible management of water and the environment in a way that gives relevant information and enhances an organisation’s reputation and impact in the communities it serves. As concerns over climate change intensify, people will be looking to water companies for leadership and action to help generate sustainable solutions. This is both a huge responsibility and opportunity for the sector.

I have suggested that the customer experience environment has become more complex and challenging for organisations. Customer satisfaction in the UK has stagnated in recent times but there are huge opportunities for organisations that genuinely focus on maintaining high levels of satisfaction, to improve productivity, financial performance, and employee engagement and enhance reputation and trust.

So what are the key things organisations should focus on? I believe there are three core ingredients to a service-focused culture.

The first is leadership commitment that sets the tone for the way the organisation conducts relationships with customers, partners, suppliers and stakeholders and within the organisation. Second is a genuine recognition that employee engagement and development are core business assets that build service excellence. Thirdly organisations need to define a customer experience vision and deliver it to a consistently high standard across all products, services and channels. At The Institute, our purpose is to support organisations on this journey, highlight excellent practice and provide practical tools and insight. I welcome our ongoing engagement with Ofwat and water companies and I urge you to grasp the opportunities that will deliver long-term benefits to your customers, employees and your business results.

If the sector, and organisations within it, focus on their purpose and ensure they are clear about what makes them specifically relevant and measure impact, I strongly believe they will be a real force for good. They will also deliver higher performance in terms of customer satisfaction and – crucially – long-term returns to consumers and shareholders alike.

Jo Causon is CEO at The Institute of Customer Service, the membership body dedicated to helping organisations improve their customer experience.

You can find out more about the Institute on their website, YouTube, Twitter and LinkedIn – including case studies from individual members.

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