Managers of tap water systems often struggle with the question of how you measure the level of service provided to customers. Most existing performance reporting systems are defined from an internal technical perspective, instead of a customer perspective. These methodologies view the water company from the perspective of the engineer and the accountant, instead of the perspective of the customer. For example, the IWA performance indicator system for water supply identifies 162 parameters to assess the performance of water supply, of which only about ten are defined from the customer’s point of view.1 Developing a meaningful performance measurement system is a complicated exercise. As Cabrera et al. (2011) point out: “performance assessment could be described as the art of simplification: the more condensed the data is, the better; but an excessive simplification of the picture may not provide sufficient information to make sound decisions.”
I am currently developing a customer-focused model to service quality in tap water as part of a PhD research project on customer service in reticulated water services. This model is based on the hypothesis that customers have a low level of involvement and low willingness to pay for tap water. From this model it follows that the best possible service a utility can deliver is to make sure that customers can use water without ever having to think about it. In other words, the ideal water company is invisible to the customer.
The purpose of customer service is about providing value to the customer, as perceived by the customer. In the simplest terms: the perceived value of a service is the difference between perceived benefits and perceived costs of that service. From this relationship, it follows that the lower the cost of the service, the higher the value perceived by the customer.
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 when things go wrong, a sociological cost when no water is available and the time it takes to acquire and use water.
Focusing on 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 millions of hours every day in the pursuit of their daily water. The best possible level of water 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 tenet 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 suggests 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. This can be illustrated by looking at the bottled water industry. They are able to charge insanely high prices for plain water. They can do this, among other reasons, because the marginal utility of bottled water is maximised as their product is only used for drinking.
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.
Invisible Water Corporation
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. The Invisible Water Corporation is a counterintuitive perspective on the value proposition of a water utility, but one that brings tap water service providers closer to their origainl purpose – provide a seamless service.
The Invisible Water Corporation was originally published on the IWA Blog on 31 January 2013.