Towards Balanced Centricity: Moving Beyond Customer Focus

Moving beyond being client and customer centric towards balanced centricity.

It is an undisputed truism that service providers need to be customer-centric to be successful. This kernel of wisdom is more and more finding its way into the discourse on water utility management. While this statement is indisputable in a competitive environment, its application to public services such as water utilities is not beyond doubt.

Some contemporary marketing scholars, such as Evert Gummesson, are reconsidering the primacy of customer centricity have introduced the concept of Balanced Centricity. Total customer centricity is a limited foundation for service providers because full implementation risks the sustainability of the organisation.

Balanced Centricity

Services are not created in a dyadic (two-way) relationship between customers and service providers, but they are connected through a network of activities involving a range of diverse stakeholders. Each stakeholder within the network is a beneficiary of the actions of another stakeholder. Value is co-created between the service provider and the beneficiary.

Customers are not the end-point, but also maintain their part of the value chain. Water has no intrinsic value in itself, and its value proposition is only realised when consumed. The value chain for water utilities thus extends far beyond the customer tap. Most customer taps are used by multiple people who use the water to achieve the 3Cs: Comfort, Cleanliness and Convenience. It is, however, not the water that creates the value, it is the activities that people undertake with the water. The water utility is only a facilitator is value in a network of relationships.

Example of a value creation network for water utilities.
Example of a value creation network for water utilities.

As public service providers, many aspects of service provision are dominated by professional judgments, such as public health considerations, which cannot be considered the domain of consumer experience. Tap water is an undifferentiated service where natural monopoly provisions prevent utilities from providing individualised services. Customer centricity in public utilities is thus limited to those aspects that consumers are capable of influencing.

Balanced centricity is a situation where all beneficiaries in the value creation network have the right to the satisfaction of what customers need and want. Regulators are a principal beneficiary within the value creation network for utilities. Water utilities service them through information provision. The environment is also a significant beneficiary of water services, which in Australia is managed through environmental water allocations.

This brief discussion shows that being customer-centric is not the sole focus of public service organisations. Public service has inherent limitations on the extent to which consumer judgement can be incorporated in service design. Also, the value creation network perspective shows that the consumer is only one of the many beneficiaries of the value creation process.

If youlike to know more about balanced centricity, then read my dissertation The Invisible Water Utility: Employee Behaviour and Customer Experience in Service-Dominant Logic.

The Customer is Always Right: Service Quality Perception in Tap Water Services

The Customer is Always Right: Service Quality Perception in Tap Water Services

The concept that customer is always right is a controversial topic in service industries, including water utilities. There seems to be a paradox between how water professionals perceive the quality of water service and the way customers see it. Providing safe drinking water is not the same as providing good water. For example, chlorine or fluoride are added to the water ensure to protect public health. In some communities, however, chlorine and fluoride are perceived as unwanted chemicals, leading to a reduction in the perception that customers have of the quality of service.1 The perceptions that customers have of tap water can be investigated by analysing the sentiment of tweets about tap water. This analysis shows that approximately 60% of tweets express a negative sentiment.

Customers of two Australian and three American water utilities were surveyed to investigate possible moderators of service quality in water services. The preliminary conclusion of this pilot study is that service quality perception is not only influenced by the quality of the service, but also by external factors such as financial hardship and service involvement. This research has potential implications to how service quality is reported and interpreted and how utilities relate to customers.

Summary

  • A sample of customers from two Australian water utilities reported their perceptions of tap water
  • Customers with a higher level of financial hardship rated the level of service lower
  • Customers with a higher level of involvement rated the level of service higher
  • External factors influence service quality perception of water utility customers

Methodology

This paper reports on a pilot of a research project investigating the relationship between organisational behaviour and customer perception. A sample of customers from two water utilities in Australia completed a survey about their perceptions of tap water. Customers were asked their views on the following concepts:

  • Involvement with tap water
  • The frequency of contacting their water utility
  • Level of experienced financial hardship
  • Service quality perception
    • The technical quality of the services provided by their water utility
    • The functional quality of the services provided by their water utility

Involvement with tap water was measured using the Personal Inventory Index. This ten-point scale is regularly used in marketing research to measure the level of involvement consumers have with products and services. Consumer involvement is a person’s perceived relevance of something based on their needs, values, and interests.2

The frequency of contacting the utility and the level of perceived hardship were determined with single items on a 1–7 Likert scale.

The level of technical service was assessed using five questions about the physical services, i.e. availability, pressure, taste, safety, visual appeal. The level of functional service was evaluated using a scale consisting of 13 items, such as billing accuracy, friendliness of staff, availability of information and so on.

Service Quality Perception in Tap Water Services

A total of 649 customers from six utilities in Australia and the United States completed the survey, with the standard error of responses at 0.9%. The distribution of replies is indicated along the diagonal of figure 1, correlations between variables are shown above the diagonal and scatter plots below the diagonal.

Figure 1: Service Quality Perception in Tap Water Services
Figure 1: Correlations between customer constructs.

Analysis revealed statistically significant correlations between some of the constructs. Service quality perception is influenced by financial hardship and positively influenced by involvement.

Most salient was a high negative correlation between the level of financial hardship and perceptions of functional quality (r(649)=-0.16, p<0.001) and technical quality (r(649)=-0.19, p<0.001).

The level of involvement revealed a positive correlation with functional quality (r(649)=0.26, p<0.01) and with technical quality (r(649)=0.35, p<0.01).

The data thus show that the more difficulty customers have with paying their bills, the lower their perceptions of the level of service provided by water utilities. The data also shows that customers with a high level of involvement in tap water rate the level of service provision higher than those with a low level of involvement.

The level of technical quality also shows a strong correlation between the degree of functional quality (r(649)=0.35, p<0.01). The reason for this healthy relationship is unknown and is most likely caused by confounding variables.

Discussion

The idea that service quality is moderated by factors outside of the direct control of the service provider is a well-known phenomenon in marketing theory. Research in food marketing shows that the taste of water can be influenced by the firmness of the cup it was consumed from.3 This pilot study indicates that these types of effects may also exist in the provision of urban water services.

Although the physical quality of water services can be manipulated by improving operational effectiveness, the perception that customers hold on the level of service is moderated by many other factors. The level of hardship can be controlled through pricing controls and rebates, but the socio-economic circumstances of customers can only be managed through empathy with their individual circumstances. Customer engagement and communication can influence involvement with tap water. Involvement is important to water utilities as it has been found in other services to also be linked to a consumer’s willingness to pay for services.

This research into service quality perception is currently being extended to include further data from other water utilities to confirm the results of this pilot study.

Conclusion

The axiom that the customer is always right needs to be nuanced. The customer might not be right about the physical facts of water service. However, they are always right about their service quality perception. This research demonstrates that to provide a high level of service to customers, a focus on excellent engineering will not necessarily lead to increased customer satisfaction. A deep understanding of customers is required to influence the moderating that moderate their perceptions.

Water Utility Branding: What is your Utility’s Personality?

Water Utility Branding

In one of my earliest presentations on water utility marketing, I was asked by a spectator how the invisibility principle relates to the issue of branding for water utilities. My initial answer was that branding is not critical as a perfect water utility is invisible to the customers — other than the physical services they provide and the occasional bill. In the past two years, I have revisited this view and developed a more subtle approach to this question.

Water utility advertising

Branding a Water Utility

The biggest problem with branding a water utility is that the average consumer only spends a few minutes in direct contact with utility staff. The number of touch points between the service provider and customer, beyond the bill and the physical server, are minimal.

A few years ago I lectured consumer behaviour for masters students at La Trobe University. After teaching students about brand personality, I asked students to view a website of a water utility and report back on the brand personality of these utilities. One student asked: “Where is the emotion?”. The site was filled with images of excavators laying pipe, treatment plants and even a diver swimming in sewage.

Where is the emotion?

Water utilities can improve brand personality by emphasising the intangible aspects of the value they provide, as illustrated in the first image on this page. Water utilities are not technology companies, but they deliver a substance that mediates emotional experiences, such as bathing your child.

Branding beyond the logo

Wellington sewer manhole - water utility branding
Wellington sewer access chamber.

A brand is so much more than a logo and extends into everything the utility does and communicates. An example of where branding meets core service delivery are the assets that are visible in public space. Engineers design most water utility assets with a utilitarian purpose. The design of these assets, beyond their functional use, influences the image that people have of the local utility. This idea does not mean that we need to slap a logo on assets visible in public space — it requires a bit more thought.

The photograph shows a sewer access chamber in the city of Wellington. The manhole is an excellent example of utility branding as it provides a talking point in the street. There is no logo, but this cover goes beyond the typical dull lids. The artwork is created by a local Maori artist and has symbolic meaning. The design represents the water and sewage that flows above and below the land. The koru, the spiral shape, represents the people who live on the land and who need the water and sewage to flow.

Branding an Invisible Water Utility

The invisibility principle still holds but it needs to be enhanced through using the theory of brand personality. Water utilities work in the background to make sure society runs smooth, without needing to take the credit. They are like the chef or the stagehand that make a performance go smoothly, without being seen by the customers.

The core services of water utilities need to remain invisible. But this invisibility does not imply that water utilities have no brand. There is still a need to engage with the community to develop a relationship with customers. Rather than speaking to customers about core services, which is usually a convsersaion about service failures, utilities can build a positive brand by proactively engaging with communities.

Cultural Differences in Promoting Direct Potable Reuse of Sewage

Cultural Differences in Promoting Direct Potable Reuse

Direct Potable Reuse is a hot topic in areas where alternative sources of water are becoming scarce. There is a lot of fear in the industry because customers are not likely to accept this solution readily, due to our learnt attitude towards faecal matter, also known as the Yuck Factor.

Cultural Differences in Direct Potable Reuse

Water utilities have tried a wide range of strategies to convince communities to encourage drinking recycled water. The general advice is to educate customers about the process. One of the rules of social marketing is, however, that rational appeals to change attitudes are not very useful. Clear examples of this practice are the many anti-smoking or anti-speeding ads that use emotional appeals to modify the viewer’s attitude towards smoking or speeding.

Some commentators recommend using euphemisms for recycled sewerage such as ‘impaired water’ instead of polluted water. Some of these are weasel words and should not be used as people see through the ruse.

Singapore is one country which effectively implemented Direct Potable Reuse (DPR). However, comparisons with Singapore are not straightforward since due to cultural differences between this country and Anglo-Saxon countries. Salient differences in culture can be identified using the system defined by Geert Hofstede.

Cultural differences between Singapore, Australia and the United States.
Cultural differences between Singapore, Australia and the United States.
  • Power Distance: the extent to which the less powerful members of institutions and organisations within a country expect and accept that power is distributed unequally.
  • Individualism: the degree of interdependence a society maintains among its members
  • Masculinity: the level of interdependence a society maintains among its members.
  • Uncertainty Avoidance: The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these.
  • Pragmatism: the extent to which people attach more importance to the future, fostering pragmatic values towards rewards, including saving and capacity for adaptation.
  • Indulgence: the extent to which people try to control their desires and impulses.

The data shows that the cultural profile of Australia and the USA are very similar. There are, however, notable differences between the cultures of Singapore and Australia/USA that need to be taken into consideration when comparing Direct Potable Reuse acceptance in these countries.

The Power Distance level for Singapore is almost double that in the other countries. Power distance influences the acceptance of government initiatives, such as DPR. The higher the level of Power Distance, the more likely a proposal is accepted.

The level of Individualism in Singapore is much lower than in Western countries in general. A small degree of individualism would make acceptance of initiatives such as DPR easier to implement because of the perceived public benefits. In Western countries, the high level of individualism complicates social marketing due to a large number of segments that need to be targeted to obtain coverage over a whole population.

The Masculinity dimension is almost the same in all three countries, which has thus no impact on differences in acceptance.

The low level of Uncertainty Avoidance predicts that people in Singapore feel much less threatened by the novelty of DPR than in countries with a high level.

The high degree of pragmatism in Singaporean society points towards a future-oriented view of water resources that includes thrift and a sense of saving for the future. This dimension is much less in Australia and the USA.

Finally, the Indulgence dimension is not very different between the countries

This comparison shows that firstly, understanding the value system of the consumers in the service area is essential to be able to craft an effective campaign for the acceptance of Direct Potable Reuse. Secondly, it shows that we cannot use an example used in one location and transpose that approach to another location.

Communicating Water’s Value by Melanie Goetz: Book Review

Communicating Water's Value by Melanie Goetz: Book Review

The literature on managing water utilities is dominated by technical tomes on how to implement the latest engineering developments to improve services. Engineers often see marketing as peripheral to their quest to provide a reliable and safe water supply. It is, therefore, a delight to read a book on how to improve services in water utilities using marketing techniques common in other industries.

Communicating Water’s Value: Talking Points, Tips & Strategies by Melanie Goetz is based on a sound basis of years of experience, backed by the latest scientific findings in behavioural economics, neuromarketing and related disciplines. This book is by no means a nerdy academic treatise. The countless vividly written examples from Melanie’s experience in working with utilities will appeal to water utility professionals and place the theory in context.

The book delves into the non-rational (a term I prefer above ‘irrational’) aspects of human psychology and explains how the latest marketing techniques from the competitive commercial world can be applied to enhance the value proposition of water utilities.

Marketing has earned itself a bad name for being deceptive and manipulative, which is one of the reasons it is not often practised in public services. Melanie’s book shows, however, that good marketing can tap into the forces of psychology and be used for good instead of evil.

Melanie recognised in the book that her work is “preaching to the choir”. This book should be read by engineers, economists, accountants and all other professions that are usually at a distance from the customer interface. As pointed out in the latter part of the book, innovation can only arise from positive deviance. Daring to be different and break the shackles of tradition will not be easy in an industry dominated by traditional thinking.

The Value of Water

Reading this book, I latched on to one little phrase: “We do not sell water, we sell status—we sell a solution for thirst”.  When a utility recognises that they do not sell water, but the benefits that water provides, they are on their way to maximise the value perception held by their customers. Thinking of water as merely the product they supply, instead of the benefits it provides is an example of marketing myopia, a form of short-sightedness that can only be fixed by using marketing glasses.

My version of this idea is: “We don’t sell water, we sell experiences“. We sell good ideas (in the shower), we sell initiate moments (having a bath with someone you love), we sell personal fulfilment (gardening) and so on. Status comes into play only with conspicuous purchases, such as a pool.

When looking at a water utility using marketing lenses we see the service as the customers perceive it. Not the way customers might consciously understand water, but subconsciously. In Communicating Water’s Value, Melanie keeps reminding us of the psychological subtleties involved in managing the attitudes and behaviours of customers.

Communicating Water’s Value: Talking Points, Tips & Strategies

This book is a great read for every water utility professional that wants to practice some positive organisational deviance and start to think differently and increase the value proposition of customers. Not by investing millions in new gadgets, but by levering human psychology.

Towards a Service Quality Model for Water Utilities

Towards a Service Quality Model for Water Utilities

Water utilities are natural monopolies and therefore operate in a highly regulated environment. One of the cornerstones of all regulatory frameworks is performance measurement. Most existing systems are, however, merely lists of performance measures. These measures are categorised, but there is no underlying theory on how these relate to each other. These existing systems also focus mainly on performance from the utility’s perspective, with limited focus on the customer’s view of performance.

I am currently working on two different aspects of service quality in water utilities. For my employer, I have developed a Water System Performance Index to communicate performance to boards and senior management better. For my dissertation, I am looking at how customers view service quality of utilities. These two projects started separately from each other until it dawned on me that they form part of the same broader view of service quality in utilities.

Towards a Service Quality Model for Water Utilities

The quality of a service can be viewed from two sides from the utility’s and the customer’s perspective. In marketing terms, this is called intrinsic an extrinsic quality.

These two perspectives apply to the two types of services offered by water utilities: core services and supplementary services. Core service relates to the physical provision of water, and supplementary services are all other activities that enable or enhance the core service, such as information provision and billing. The distinction between intrinsic and extrinsic quality for core services also relates to the difference between safe and good water I wrote about earlier.

Water Utility Service Quality Model
Water Utility Service Quality Model

The model gives us four areas to measure quality: intrinsic and extrinsic technical quality and intrinsic and extrinsic functional quality.

Intrinsic Quality

Intrinsic quality in core services can be measured using the traditional methods in the monitoring of water systems. This distinction gives us a view of how the water system intrinsically operates. Water quality parameters, pressure data and supply continuity are the most common parameters. The intrinsic quality of supplementary services is measured using a range of customer service metrics, such as the percentage of calls answered within a specified period.

Extrinsic Quality

In this service quality model, the perspective of the customer has equal weight to the perspective of the utility manager. The perspective of the customer usually comes to us via two channels, occasional surveys or complaints.

The Service Quality Model

This service quality model combines the views of the utility professional with the perspectives of the customers. Although they often seem incommensurable and even paradoxical, service quality in utilities cannot be adequately described by focusing on only one of these perspectives.

This model is only a sketch of the system under development. I am currently collecting data to test some of the assumptions on which this model is based and aim to publish the completed version next year.

Dissolve the Three Tap Water Paradoxes or Manage Ambiguity?

Three tap water paradoxes

Through my review of tap water marketing, I have stumbled on three paradoxes: statements that apparently contradict themselves and yet might be correct. Most paradoxes can be resolved. Can we also dissolve the tap water paradoxes?

The Water-Diamond Paradox

The oldest known water paradox is the paradox of value. Ancient Greek philosopher Plato wrote more than two millennia ago that water, which is the most essential of things, only commands a low price. This paradox was formalised by Adam Smith, the father of modern economics. Smith compared to water with diamonds and observed that although nothing is more useful than water and nothing more useless than diamonds, however, water is cheap and diamonds are expensive.1

Is this a paradox? Economists will tell you that this is because Plato nor Smith knew about marginal value. The marketing solution is to point out the difference between value and price. The price we are willing to pay is related to the relative value we attach to the purchase. Water comes out of our tap, without effort and without having to think about it—it has a low level of involvement. People are, however, highly involved with diamonds. Owning a diamond provides social status, owning tap water doesn’t. The reason water demand a low price is because as an essential product it does not give us social benefits. But, when water is sparse, this paradox dissolves completely. In the words of Benjamin Franklin—”When the well is dry, we know the worth of water”.

The Involvement Paradox

Consumer involvement is defined as “a person’s perceived relevance of the object based on inherent needs, values, and interests”. 2 The fact that water is essential to life suggests that consumers of tap water have a high level of involvement with the service. Contrary to this sensible intuition, practitioner experience and literature states that tap water is a low-involvement service.3

This paradox can be resolved by looking at involvement from two different angles. Tap water as an essential product will logically attract a very high level of cognitive involvement because life in the developed world without it is unthinkable. However, as a non-branded, undifferentiated, monopolistic service, the level of affective involvement it attracts will be significantly lower.4

The Water Quality Paradox

Although in well-managed systems, the chances that somebody does not receive excellent service through their tap are minimal, consumer perception of these services is often not as good as engineers would hope for. The water quality paradox holds that although water might be safe to drink, customers will not necessarily value it.

The Water Quality Paradox and Perceptions of Service Quality
Your water is perfectly safe to drink.

Operators of drinking water systems are required to comply with regulations. Meeting these legal requirements can, however, lead to a reduction in service quality. For example, adding chlorine is essential to ensure public health in that it destroys micro-organisms. In some communities, however, chlorine is perceived as an unwanted chemical, leading to a reduction in service quality.5

This tension between safe water and good water is only a paradox when we believe that one or the other side view of water quality dominates the other. The sometimes contradictory views are both equally valid and cannot be resolved easily—just like light can be viewed as a wave and a particle at the same time, so are both safe water and good water equally valid views.

Tap Water Paradoxes

How are we to deal with these paradoxes, do we need to resolve them or do we need to learn to live with the ambiguity?

Water Utility Competition: Lessons from the Electricity Sector

Water Utility Competition: Lessons from the Electricity Sector

Water utilities are considered to be natural monopolies. Economic theory holds that in industries where long-run average cost decline as output expands, a single producer will be able more efficient in delivering services than multiple providers. But are water utilities natural monopolies?

In this paper, we sketch a scenario for a competitive landscape in the urban water industry and provide some thoughts on how to respond strategically to the threat of new entrants in the municipal water market.

Water Utility Competition

Marketing guru Theodore Levitt prophetically wrote in 1960 about the problems currently facing electricity utilities: “Who says that the utilities have no competition? They may be natural monopolies now, but tomorrow they may be natural deaths.” Levitt sketches a future where “fuel cells, solar energy, and other power sources” threaten the sustainability of the centralised electricity distribution system. Half a century after these words were written, they are becoming a reality.

Who says that the utilities have no competition?

The electricity grid is being inverted and is moving from a centralised monolith to an active decentralised network driven by consumer demand for green energy self-sufficiency. The ongoing development of electricity generation and storage technology will drive this decentralisation even further.

A similar scenario is unfolding in the water industry. Competition does not originate in large-scale third party access but in fragmentation of service delivery assets over multiple service providers. Developers are interested in decentralised service provision, seeking independence from publicly owned infrastructure.

Reviewing the concept of public utility in more detail reveals it to be an absurd one

The usual response of utilities is to move into defensive mode. Water utilities place themselves in a different category than other service providers. Utilities point out the unique qualities of water as a life-sustaining product considered the most essential of all services. But reviewing the concept of ‘public utility’ in more detail reveals it to be absurd. Every good is useful to the public, the fully commercialised food industry being a case-in-point. Water utilities cannot rely on a preference status within the gamut of service providers to mitigate the risk of competition.

How can water utilities respond to the entry of new service providers to the market? Three scenarios can be sketched. The least productive response is to keep our head in the sand and wait for the hype to blow over. The experiences in electricity show that this is not an acceptable proposition.

Secondly, water utilities could revert to their powers as water authorities and create a regulatory burden on developers that minimise the likelihood of these proposals coming to fruition. The current discourse in this area is focused on the risk of becoming the Provider of Last Resort. In this scenario, an independent, decentralised utility would no longer be able to meet its obligations, forcing publicly-owned utilities to inherit the assets and liabilities. This situation is indeed not theoretical. In Europe and much of the United States, this is precisely the mechanism of how large vertically integrated public utilities came into existence. This blocking of innovation is certainly not conducive to maximising the public good overall.

Don’t fear becoming provider of last resort. Become the provider of first preference.

The most productive way to manage the risk of becoming the Provider of Last Resort is to ensure that we become the Provider of First Preference. Instead of focusing on their perceived special status as a service provider, utilities should focus on understanding why communities are seeking self-sufficiency. Can incumbent water utilities become more entrepreneurial and provide a suite of services that would make developers not see the need for taking risks in becoming a water utility themselves?

The electricity experience may be instructive. The three big power ‘gentailers’ in Australia are players in the renewable energy market but are not big enough to avoid competition, for example from the South-Australian wind. This case suggests water utilities should prepare for such a possible future by further developing contribution arrangements, as well as considering approaches to managing the risk of third party access, including insurance, options and guarantee arrangements.

Acknowledgements

This paper has been written with the help of Jon Anstey and Megan Kreutzer and was presented at the VicWater conference in Melbourne on 12 September 2014.

Weasel Words in Water Utilities: Sanitising Public Language

Weasel Words in Water Utilities: Sanitising Public Language

Weasel words are often used by demagogues, politicians and marketers to disguise what they are saying. A tax becomes a levy, we no longer live, we have a lifestyle and sacking people becomes downsizing. They are weasel words because they suck the meaning out of language, just like a weasel sucks eggs.1 Some weasel words, or buzzwords, are so common that they appear on special bingo cards.

This type of language is, unfortunately also familiar with water utilities. What used to be a sewage treatment plant is now a water reclamation facility, removing any reference to its origins. Sewerage Sludge is magically transformed to a ‘biosolid’, ensuring that the average person has no idea what its provenance is. These new terms suck all meaning from the original words.

Sanitising public language

In a recent article in Water21, the magazine for the International Water Association, John Baten proposed to take ‘evolve’ the language used by water professionals to even deeper levels of befuddlement, as evidenced by the table below.2

Weasel words in the water utility sector
Weasel words in the water utility sector.

Some of these suggestions are even sucking the life out of the existing weasel words. To call a sewage treatment plant a ‘renew enterprise’ is confusing and deceptive. The regeneration—excuse me for using one of these terms—of treated effluent to Star-rated water is a total obfuscation of reality and removes water users even further away from the problems in our water supply chain.

Having said this, a careful choice of words is important. Empirical research demonstrated that framing ‘treated wastewater’ as ‘recycled water’ changed perceptions of the product by consumers and increased their willingness to use and to pay for the service.3

The removal of any reference to poo in the case of treated sewage circumvents the Yuck Factor—the psychological mechanism that prevents people from accepting treated sewage as drinking water. But this is nothing more than a cheap magic trick that will not be able to deceive water users into accepting what they know to be the truth. An example of direct communication about sewerage is the Twitter feed of Daniel Gerling, who is preparing a book on the cultural history of excrement. His language is clear and straightforward, and the impact of his word choice forces people to face the issue.

This type of language will be more harmful than helpful in our industry. Only by calling things by their proper name can we educate consumers about the water cycle and move forward in securing water for the future.

The 7 Ps of the Water Utility Marketing Mix

The 7 Ps of the Water Utility Marketing Mix

My research area is tap water marketing. When I explain my dissertation topic to other professionals and academics, it usually raises some question marks. Tap water is, after all, an undifferentiated essential service provided by monopolists. Water utility professionals don’t understand my drive to research this area because they are focused on the technological aspects of tap water. Marketing scholars struggle with the concept because it is a monopolistic service—there is no need for customer retention. There are distinct differences between the way water professionals—mostly engineers like myself—and marketing scholars and practitioners view water utilities.

In marketing several frameworks exist to analyse organisations, with the marketing mix (the famous 4 Ps) as the most well known.1 To allow for the complexity of services, some scholars have added three more aspects. The Marketing Mix is the marketer’s lens to view at water utilities is: “Product, Place, Price, Promotion, People, Process and Physical Evidence”.2

The engineer’ s version of the seven Ps of water supply are: “Pressure and Purity through Plants, Pumps and Pipes, for People”. Yes, there are only six here, but my inspiration did not reach any further than that.

The 7 Ps of the Water Utility Marketing Mix

The 7 Ps of the Water Utility Marketing Mix are, however, not about pipes and other technological means to provide service. The water utility marketing mix needs to describe the experiences of customers.

Marketers and engineers come from very different thought worlds. In my work, I aim to build a bridge—I am an engineer after all—between the physical sciences that dominate the decision-making processes in water utilities and marketing theories based upon the social sciences.

An example of how this difference is expressed is that water utility professionals often focus on the tangible aspects of the service, while marketers would look more broadly at the intangible aspects and make them tangible. Many water utilities show pumps, pipes and plants on their website. It would be much better, however, to communicate the intangible aspects of the service as it will increase your customers’ perception of the value they receive from their water utility. These four images below were created to demonstrate this point of view.

Defining a Water Quality Index to Communicate System Performance

Water Quality Index: Communicating System Performance

Reporting water quality performance to senior management or customers can be problematic as it requires a myriad of numbers and trying to pronounce parameters—impossible words such as clostridium perfringens, polydiallyldimethylammonium or bromochloroacetonitrile are not part of the vocabulary of most people. These terms appear in the Australian Drinking Water Guidelines (2011). Directors and customers of utilities are generally not water quality specialists and that need to be provided with easy to digest information for them to be able to assess how drinking water supply systems perform. A water quality index is currently in development to achieve this goal.

The index is aimed at reducing complex data matrices to a single number, combining information from various sources. The index provides an overview of water quality performance, without mentioning technical details. The overall index consists of five parameters: treatment effectiveness, network protection, regulatory compliance and customer perception.

Given the broad nature of these parameters—from subjective assessments by customers to objective laboratory data—a certain level of subjectivity is unavoidable. The different aspects of the index will not contribute equally to the overall performance of water supply: How should we view customer complaints about laboratory data?

Methodology

A crowd-sourcing tactic was employed in the form of a survey to seek the collective opinion of water quality experts. A total of 36 responses were received from Australia, New Zealand, the USA and Europe. The survey was closed on 31 January 2014.

Respondents were asked about their involvement in water quality (such as level of education and amount of experience in the field). The primary survey consisted of two question banks regarding the relative importance of each of the proposed index factors and network sub-factors. Data was analysed using the using statistical package R. Responses can be considered reliable as the average standard error is less than 5%. The complete survey results and detailed analysis can be viewed on Rpubs. The raw scores on the main questions are presented in the diagrams below. The levels on the Y-axis are the relative importance (0–100) given to each of the parameters by respondents.

Water Quality Index survey results (n=36). Click on diagram for high resolution image.
Water Quality Index survey results (n=36).

Water Quality Index Analysis

The individual results regarding the relative importance of the different factors and sub-factors are self-explanatory. These survey results will weight the final index scores. Additionally, some meta-analysis has been undertaken to obtain insight into the complexities of assessing water quality performance. Factor analysis with varimax rotation revealed that a one-factor solution is capable of explaining 49% of the variance. This is an indication that questions were answered consistently among respondents and that item scores can be interpreted as originating from one latent variable, i.e. water quality performance.

Ten respondents also provided additional comments regarding the water quality index. Some respondents mentioned that the questions were “simplistic”, “ambiguous“ and “inaccurate”. This problem is, however, inherent to the data reduction and simplicity objectives of the water quality index. The index’s ambiguity and inaccuracy are a reflection of the fact that information is sourced from paradigmatically different sources such as customer feedback and laboratory results.

Due to the reduction in data complexity, the index, its factors and sub-factors cannot be used for quantitative analysis. The index is, in essence, a qualitative expression of water quality performance only suitable for communication and not for analysis.

One respondent also commented on the relationship between physical and biological water quality parameters and customer’s perception of these:

Focus on water safety sometimes gets clouded by issues associated with customer aesthetic opinion.

This statement is an expression of the water quality paradox. Even if the quality of the water meets regulations, customers might still not be satisfied. Providing safe water is a necessary condition, but not a sufficient condition to achieve customer satisfaction.

Conclusion

The survey has been successful and will aid in completing a water quality index that reflects the relative importance of the different aspects of water quality. The comments made by water quality experts are a typical expression of the difference in thought worlds between scientists and customer service professionals and aid in further developing a theoretical model for organisational culture in water utilities.

Business Essentials for Utility Engineers: Marketing and engineering

Business Essentials for Utility Engineers: Marketing and engineering

Surfing the web to find new material for literature review can sometimes reveal surprises. When looking for “tap water marketing” related references I found a book titled Business Essentials for Utility Engineers by Richard Brown. I immediately proceeded to purchase a copy and am impressed with the comprehensive nature of the book, and I highly recommend it to all engineers working in the utility industry.

The author does, however, suffer from the type of marketing myopia seen in utilities and most commonly in engineers. I am not against engineers, after all; I am one myself. In the preface Richard Brown writes (emphasis added):

This book does not address a variety of topics that are typically covered in a business curriculum. Examples include strategy, marketing, organizational design, human resources, and business ethics. These topics are important in a general sense, but tend to be peripheral to most issues facing utility engineers.

With this statement, Brown moves marketing to the periphery of utility engineering, while moving economics and accounting in the spotlight through his book. The content of the book does, however, tell a different story. It contains over five hundred mentions of customers — more than one per page on average. Although Brown believes he excluded marketing from his work, it is in fact a central element of the book.

The issue at hand here is a misunderstanding regarding the scope of marketing. Marketing is not selling or advertising. In essence, marketing is: “customer satisfaction engineering”,1 Marketing cannot be moved to the periphery of utility engineering. It is central to any organisation that seeks to add value to the lives of their customers. To move utility engineering to that space, we need to move from asset performance to customer experience.