Scottish Water proves customer focus reduces cost

Scottish Water is a publicly owned company answerable to the Scottish Parliament and monitored by environmental, quality and economic regulators. Customer service delivery director Peter Farrer explains how joining the Institute and improving service has reduced costs.

Not only has the organisation undertaken to cut £30 million a year from its operational expenditure between 2010 and 2015 (and this follows a 40% overall reduction in costs between 2002 and 2010), it has also committed to some substantial service improvements.

These will see complaints continue to reduce, customer satisfaction increased and its Overall Performance Assessment (OPA) set by the regulator, realising a further 33% improvement.

Set all this within an at best stagnant economy – which has meant an increased risk of customer debt and loss of some business customers – and the challenge for Scottish Water appears even more acute.

Delivering consistently good results

Peter Farrer, customer service delivery director, runs a combined customer and operational team which looks after around 5 million customers in an area, mostly rural, which is a third of the size of Britain – 24 hours a day, every day. He believes that a rigorous, customer-focused approach is enabling the company to deliver consistently good results alongside an ambitious cost-cutting programme.

“We prepared a very clear vision some 18 months ago which put our customers at the heart of everything we do. All our decisions and all the functions and planning to support those decisions, are focused on what customers want. A long-term vision, with a rolling five year plan setting out key objectives, – it’s a golden light for everyone throughout the business, giving them a clear sense of direction and purpose.”

Measuring and monitoring customer reactions

Measuring and monitoring customer reactions is central to keeping the company on course. “The regulatory customer service target (OPA) has a basket of 17 customer measures which assess how well we are servicing our customers. New measures will also look at the quality of the customer experience. In the last regulatory period, 2006-10, we improved our OPA score by 73% and we are aiming for a further 33% improvement in this next period to take us into the Leading Group of water companies in the UK,” said Peter.

“We also ask all those customers who have asked us to do something for them to report back in writing. We get about a 30% return and have set ourselves a target of 86% customer satisfaction by the end of 2015. We’re currently on 80%.”

Involving customers in the company’s investment planning is at the top of Peter’s current agenda.

“Our capital investment is currently £500 million a year. We want to get involved with customers to find out what they want from us, what they expect and how much they are prepared to pay for new or enhanced services. This is taking customer engagement to a different level for us and will involve research, online panel discussions, focus groups, customer forums and special sessions for business. All the information we gather will help us improve our current service as well as understand what customers want in the future.

“Until now, it was the regulators who told us what our customers wanted and how they should be served. The wealth of data and information we are securing will enable us to make the right decisions and deliver the most effective results. We still have to meet European legislative standards but where there is a choice or a set of options, we want to be confident we are providing what customers have chosen.”

Reducing complaints

Another key target for Scottish Water is a reduction of 50% in written complaints by 2015. A 30% reduction has already been attained thanks to the focus of a new highly–trained team who not only deal effectively with customer grievances, they also conduct a root cause analysis to enable the business to change and adapt their processes to eliminate future complaints. Peter admits they might need to raise their original target!

“A big problem in the public sector is that when there is pressure on budgets, the response is usually to cut a service,” says Peter.

“But improving your performance reduces cost. Cost reduction targets and service improvements can and do go hand in hand. We’ve been taking substantial costs out of the business for a sustained period and it continues with an additional £30 million a year in this regulatory period. But every performance measure has improved. When Scottish Water was formed in 2002 we weren’t anywhere in the league table. By 2006 we were mid-table and we fully intend to be at the top by 2015.

“Customers benefit enormously from all our service improvements and not least because our charges have been frozen this financial year – as they were last year.

“Employees benefit because they understand where we are going and how to get there – and we provide the training and support to sustain this. Our regulators work with us and recognise that the changes and improvements we are making are customer driven.”

Membership of the Institute

Scottish Water is a member of the Institute of Customer Service, enabling Peter to call on guidance, expertise and support from an experienced team.

“No matter how well you think you’re delivering service, it’s only when you join the Institute you start to benchmark and see how far off the mark you really are,” says Peter.

“It personally challenges you to open up your mind and realise there’s an awful lot more you can do. They provide a network of high-class businesses which we can learn from, seeing other processes and behaviours first-hand.

“The training and coaching offered by the Institute is superb, particularly for our own training team. We have given a lot of time and resources to this partnership but the return on our investment has been substantial.”