By Peter Prevos
Managers of tap water systems around the world struggle with the same important question: how do you measure the level of service provided to customers? Most existing benchmarking systems are defined from an internal technical perspective and forget about the view of the customer. As part of my marketing PhD research project I am currently developing a customer focused model to measure customer service in tap water: The Invisible Water Corporation. This model is based on the idea that customers don’t really care about tap water and the best possible service a utility can deliver is to make sure that customers can use water without ever having to think about it.
Customer service is about providing value as perceived by the customer. In the simplest possible terms, the perceived value of a service is the difference between perceived benefits and perceived costs of that service. The lower the cost of the service, the higher the value perceived by the customer. Leaving the benefits aside, lets focus this discussion on the cost of water.
Discussions about the cost of water are usually focused on money, but the cost of water, just like any other service, is multidimensional. Besides the financial cost, the customer also pays a psychological cost, a sociological cost and a time cost. The worst possible water service exists in undeveloped countries, where women spend hours every day to get their daily ration of water. Women around the world—you rarely see men carrying water—collectively spend about two hundred million hours every day in the pursuit of their daily water. The best possible level of service is a well managed tap water service where the amount of time needed to obtain water is limited to the amount of time the tap is open.
The core hypothesis of The Invisible Water Corporation is that the better the service that is provided by the Water Corporation, the less time and energy people have to spend purchasing and enjoying the service. When you open a tap, water comes out; when you flush the toilet, the bowl is empty; bills are easy to understand and so on.
There are two reasons people don’t want to spend time and energy on water. The first is the concept of marginal utility, this is the idea that the perceived value of a service is determined by the least important use to the customer. Tap water suffers from a value paradox. On the one hand tap water is a life-sustaining liquid, while on the other hand it is flushed down the toilet. Economic theory suggest that the willingness to pay is related to the marginal utility of a service. In other words, what people are willing to pay for in tap water is a waste transport medium and not drinking water. I can illustrate this by looking at the bottled water industry. They are able to charge insanely high prices for water. They can do this because the marginal utility of bottled water is maximised as their product is only used for drinking. They are also better marketers, but that is another discussion.
Second reason willingness to pay for water is low is consumer involvement. Preliminary research among tap water users shows that although everybody agrees that water is important, they don’t really care about water. This has been confirmed by many customer surveys conducted by water companies. It is not uncommon for people to not even realise which company provides their tap water!
The concept of the Invisible Water Corporation is best illustrated by describing what happens when a tap water service fails. You open a tap and no water comes out, or a bill arrives and the amount is wrong or the information provided is incomprehensible. The consumer pays in time and psychological energy for failures in the level of service provision of the water provider. Time is a quantifiable measure that can be used to develop a benchmarking model for the level of excellence of a tap water service provider.
While companies selling products are said to sell ‘widgets’, organisations that market services are in the business of selling ‘moments of truth.’ Each moment of truth is an opportunity that can lead to satisfaction, dissatisfaction or something in between. The average water company in an urbanised environment sells millions of moments of truth every day. Every single time a tap is opened, somebody calls the utility, opens a bill and so on is a moment of truth.
A water utility becomes invisible when every single moment of truth occurs without the consumer having to use more time than is required to enjoy the service, i.e. the amount of time it takes to use the water.
Publisher’s Note: Many thanks to Peter for sharing his vision of how a water corporation should view customer service. Even though he is specifically speaking about water companies in Australia, his comments are applicable to the U.S. and many other countries.