Q&A with Steve Holliday, chief executive of National Grid plc
We quiz National Grid chief executive Steve Holliday on the recession, the difficulty of measuring the impact of customer service in the utilities sector and how chief executives are communicating with customers directly.
The National Grid invests over £3 billion every year in the UK's energy infrastructure. It has tens of millions of customers across the UK and the Northeast USA.
What are the biggest changes in customer services you have seen over the last decade?
Without doubt, the most striking change is the rise in expectations across our customer base. The bar has been raised across the whole suite of customer services. We now need to pay huge attention to the diverse range of customer expectations.
Today our customers expect a full range of choices and options in terms of service delivery for their energy needs. These may range from whether they wish to have a total self service, via the website for people who like to manage everything themselves, to others who want to be catered for in a more traditional business model. One size of customer service no longer fits all. We face a huge diversity of customer service delivery levels which we have to cater for.
The second biggest change in the energy industry is the challenge to communicate better on the issues which we are all reading about. From green energy to low carbon, smart meters, interactivity, solar panels — our customers now want to know how it all works so they can make informed and reasonable choices. As an energy infrastructure, we are no longer invisible — people need to know more — and there is a genuine interest and a real commitment to understanding more.
This industry needs its customers to understand more because we need their interaction to help us reduce consumption in line with our climate change objectives.
Do you measure the impact of customer service excellence on your bottom line and on organisational performance generally?
Customer service excellence has a crucial impact on the bottom line and we measure it in several different ways across the company. Our objective is to be in the top quarter of customer satisfaction in the territories in which we operate.
In the US we directly bill our 8 million customers each month through call centres so there are a number of ways in which we measure the impact. We use J.D. Power to benchmark our services for our gas utility businesses and to formulate an annual survey and customer satisfaction rating.
We are implementing initiatives to enhance customer satisfaction in the next three years by focusing on communications and price; corporate citizenship; bill payment and collections; gas and electricity quality and reliability.
In the UK the business is regulated but at the end of the day we do measure it and it does drive financial performance. We monitor our customer experience, with satisfaction levels measurable through industry surveys in the geographic areas within which we operate.
This is a more complex process than, for example, measuring customer service in the retail sector where there is an absolutely clear relationship between the mood of the customers, footfall and customer attitudes.
We measure it more today than we used to. We are aware of the need for constant improvement in this area. We would like a lot more feedback from our customers but it has to be an easy and succinct process for customers. One of our challenges is how to we do this without over-burdening the customer.
Customer service and the economic recession — what changes and issues are you facing?
We understand how recession affects different households in different ways. In the US we are seeing more bad debt and we are trying a range of responses to support people.
In the UK, where our service comes through the customers' individual energy supplier, the response is rather different. However we are aware that many of our customers are impacted by the current economic climate and we need to be sensitive to that.
In my view, energy sustainability is the most important thing and we are investing enormous amounts in clean energy and sustaining our network.
Only four per cent of your electricity bill reflects the cost of transmission with another 15% being distribution costs. Vastly the largest proportion of the bill is the cost of the energy itself. We have a social obligation to get the balance right, but we have to remember that three quarters of the bill relates to the cost of the commodity itself.
What do you see as the biggest customer service challenges for organisations over the next five years?
We are doing business in a 24/7 culture. This means that if people want to pay bills in the middle of the night, we have to make sure that the level of customer service they receive is consistently excellent.
Underpinning it all is the challenge of the new communications agenda: people are quite properly more aware of their rights, and they are able to pursue their rights directly because of the communications revolution. As CEO, I now can receive emails directly from customers. We are probably the first generation of CEO to be exposed directly to the customer which is fundamentally a good thing because it means we have to work even harder to meet their needs.
You have got to make sure your line of interface is 100% functional. From the first person who serves a customer, what we call First Line Resolution, everything has to be right. We want our customers to be satisfied from that very first encounter with our business and there is no need to pass it on up the line.
Our biggest customer service challenge over the next few years is to get that initial interface right for the customer, so their expectations are met.
What keeps you awake at night?
If I am awake, then perhaps my greatest anxiety is about attracting the right quality and quantity of highly skilled young people in to the business.
We need smart, highly qualified people to come through and be excited and challenged about the energy sector and delivering every day for our customers and shareholders.
My fear at night is that we may be at risk of losing the UK's manufacturing heritage if we don't change a generational attitude to engineering.
Where should responsibility for customer service sit within an organisation? Should it be on the Board's agenda?
At National Grid we don't have a director of customer service at Board level though we do have people with that title at one level off the Board.
But the data I look at every month includes all our customer service analysis and it's at the heart of the business. We stress, test and challenge at every level and without doubt this is a Board level response.
Who do you rate as excelling at customer service and why?
My view is that we should look for best practice wherever we can find it and not only within the utility sector.
We can learn and build off other companies' positive reputations for customer excellence and we need to identify those companies and see what we can learn from them. For example, we are impressed with the FEDEX system which allows you to see how your order is progressing at all times.
How do you keep in touch with what the customer wants you to deliver, both now and in the future? Do you see this changing?
Customer expectations are changing in every way — it's probably the most dramatic step-change of all in every business. Just 20 years ago we ‘talked to’ our customers — the nuance today is that we need to ‘listen’ to our customers.
Today the cultural shift at National Grid is that we are dedicated to being in listening mode. Our customers want to know for themselves why we are digging up the street — why we have teams working in their neighbourhood — and they want to know exactly how it may impact on their lives. They want to understand these issues in much more detail. We are making huge investments in our energy services and we are committed to asking people what they want and then listening to their responses.
What is the importance of training and skills development and benefits for employee engagement?
This cultural shift requires a whole new range of training and skills development, from the top to the bottom of the company. We need to make that emotional connection about totally realising and understanding the importance of this shift in communications. This is a journey. We have over 30,000 employees and we have shifted the focus on customer care hugely over the past two to three years to being more open and transparent. It is what people expect.
We cannot ask you if you would like to design your own power system in the same way as Marks & Spencer may be able to ask you if you would like to design your own shirt — but we have to take what you are telling us very seriously and make sure all our customers are as best informed as possible.
Your views on social media and its influence on customer service delivery. Does this new generation of technically savvy consumers create new demands and expectations?
I see these developments as a hugely exciting opportunity. Social media is not something which is ‘being done to us’ — so we don't see our response as being limited to having a Facebook page or Twitter. We embrace these and we do carefully track comments which we value for their insight into how we are performing as a company. The question is how we can best use it to respond to our customers in a way that satisfies their expectations, is clear and not too complicated. That is the challenge we are working with.