News and Comment

A listening brief

Wednesday 25 September 2013

This article was published on the Utility Week website.

The customer engagement lessons water companies have learned through PR14 will be applied to business-as-usual and future price reviews.

A listening brief image

The current price review (PR14) has challenged water companies to deliver formal, targeted, large-scale engagement with customers and stakeholders. This has placed many water companies on a steep learning curve, not least because few possess any track record of running activities beyond their regular customer contact programmes. A period of trial, error and experimentation followed, which as PR14 draws to a close, offers some important lessons for those preparing to lead future price reviews.

Affinity Water’s experience shows it is vital, first, to invest time and effort in building a coherent plan for customer engagement. Developing a robust business plan is a highly technical process. It requires planners to consider and balance a vast range of technical information over a period of nearly four years. Plans for customer engagement need to closely dovetail with this process so that customer research directly feeds into key decisions, especially about the willingness to pay for different levels of service. Demonstrating there is a strong interplay between what customers are telling the company and how decisions are made is vital, as is providing a clear “audit trail” that connects customer research to decisions about investments and bills.

As an example, let us look at Discover, Discuss, Decide, an Anglian Water consultation.

To inform the development of its business plan for PR14, Anglian Water developed its widest ever consultation with customers and stakeholders, which aimed to take into account and balance the wide range of different and sometimes competing priorities shaping the future of its water services for years to come.

The Discover, Discuss, Decide consultation was delivered by Dialogue by Design (part of the OPM Group) from design stage through to reporting. This involved the set-up, maintenance and hosting of a consultation website, using bespoke software which allowed respondents to review and edit their submissions until the closing date. Responses were submitted online, on paper, via email and were collected by the Anglian Water team, at roadshow events or by their customer service representatives. The consultation closed on 24 March 2013, with a total of 4,871 responses received – a rate which greatly exceeded the estimated number of 1,200 responses

Second, water companies need to demonstrate that customer engagement has been genuine and real. It is tempting to write off customers as uninterested in water companies, and thus unwilling and unable to engage with the technical detail. But Ofwat’s expectation is for forms of engagement that take customers beyond being passive recipients of water services. Thus, innovative approaches to engagement are required that actually show people influenced choices and real decisions, rather than simply rubber stamping decisions that had already been taken.

A plethora of interesting and innovative practice has emerged as a result of this challenge, from “serious gaming” – whereby customers play with real choices in online games – through to deliberative events and deliberative surveys (surveys that provide information and learning as part of the process of completing the survey). Deliberative events in particular – which OPM Group has run for several companies – can be a useful device for eliciting customer insight into emerging business priorities and investment strategies. Carried out early enough, they can help companies think through a range of alternative plans, gaining insight from a customer perspective about the pros and cons of different investment options.
Another example is provided by the deliberative forums run for Affinity Water.

In July 2013, OPM and Dialogue by Design hosted four deliberative forums for approximately 200 Affinity Water customers to discuss their views on the company’s draft business plan.

The events comprised facilitated discussions and subsequent presentation of the points raised between small groups, and four interactive voting sessions in which participants discussed and voted on presentations given by senior Affinity Water staff.
Participants were asked to discuss how they felt about Affinity Water’s investment plans in four areas: making sure our customers have enough water; supplying high quality water you can trust; minimising disruption to you and your community; providing a value for money service – considering potential improvements against the potential increase in bills that would pay for them.

Third, it is important that water companies end up with a clear understanding of what customers are telling them. Some price review processes involve water companies – particularly larger ones – conducting numerous separate research studies which range in size, quality and methodology. Faced with incessant internal demands (from planners and shareholders) and external demands (from Customer Challenge Groups and regulators), companies can fixate on one piece of research over and above another, or forget about some studies entirely.

Periodically, it is important to take a step back, review the research and engagement results in their entirety, and interpret what they are showing. It is helpful in this regard to conduct a meta-analysis or synthesis of all of the research data, applying weightings to different forms of evidence, and pulling out key messages that are strongly supported by different evidence sources. This synthesis can then be used to inform specific aspects of the business plan, while reassuring the Customer Challenge Group that all research has been taken into account and nothing has been missed.

Finally, customer research should be an ongoing activity for all water companies, not something that happens solely as part of a five-yearly price review cycle. Good research practice can improve decision-making and enhance customer satisfaction. Leading water companies recognise this and are already considering how they will conduct customer engagement in the future and not just for the next price review. The lessons learned from this review – to undertake detailed planning, to use innovative research techniques, and to produce clear audit trails on the key messages customers are conveying – will already be being applied even as water companies begin to think about what to do next.