Trust: the energy industry at a crossroads…
The decline of public trust in corporations has accelerated since the economic downturn of 2008, as executive and shareholder reward has been contrasted with customers’ constrained finances and poor service experiences. This has especially been the case with corporations offering a fundamental service, such as banking or utility services.
The result is a growing antipathy among customers and their communities, but also increasing levels of uncertainty among investors. As businesses find themselves accountable to more than their shareholders alone, gaining and retaining the trust of the wider stakeholder community is essential.
But how can we define trust? In our everyday lives, trust simply means to have confidence that someone will do what they promise to do in a way that has our interests at heart. For businesses this means demonstrating that they have the integrity, motivation and drive to deliver positive outcomes, not only for their shareholders or themselves, but also for their customers and communities.
These broader objectives must be reflected internally in the companies’ core values and decision-making, but critically must also be conveyed externally to customers and communities through the evidence of performance and behaviour in every interaction.
The ability to gain and sustain trust is a function of two key elements: positive intent and excellent execution
While this sounds straightforward, ensuring that an organisation’s ability to deliver matches these promises is not an easy task. It means having the right people with the right motivation and skills, using the right technology in the right way, and delivering seamless service repeatedly over time to develop a credible track record.
Simply, the ability to gain and sustain trust is a function of two key elements: positive intent and excellent execution. Looking specifically at the UK’s energy industry, it now scores poorly in trust surveys, falling behind industries with an historically bad image, such as fast-food chains (Which? November 2012). There has been a steady decline in the public’s trust in the energy market with suppliers being perceived as prioritising shareholder return over the quality and value of their services.
Clearly, not all businesses are the same. But no single supplier has yet been able to avoid being tarred by the broader brush or step out from the pack. If the industry in its entirety needs to rebuild trust with its key stakeholders – customers, communities and investors – what are the challenges it needs to address?
Post-recession realism has increased customer expectations from their energy providers. They seek not just narrow value, but accuracy, efficiency, transparency and control.
The industry’s intent and execution have come into question by a combination of public headlines and personal experience. With the industry hitting the headlines regularly because of increases in prices, large profits and mis-selling, you can understand why customers could lose trust in their providers.
When many customers experience poor execution at a personal level, it makes sense that they are left asking “Why should I trust you?” Think of real-life examples – inaccurate bills, competitive tariffs being offered to new customers only or those threatening to leave, complex and confusing processes when moving home, long waiting times when trying to contact a supplier, and poorly devised online services.
Winning consumer trust is a hard battle, but one that can be won. The beginning of a shift in the mindset of utilities is already evident. More boards are recognising the need to demonstrate positive intentions, by taking steps that emphasise the wider economic good over short-term results, and demonstrate greater accountability. This alone, however, will be for nothing if it is not backed up by a change in execution. And that’s the difficult part. Utilities are big, multinational businesses and any sustained change in the way they operate will require hard graft, diligence, and constant effort and focus from the top.
For the industry to deliver the right service and win back customer trust, it needs to reassess its operating models and capabilities critically; for example, by reassuring customers that their bills are always accurate and they are not paying more than they need. Then focusing on offering helpful and straightforward support; from moving home to switching accounts, energy providers need to deliver predictable outcomes that best serve their customers’ interests. The industry needs to take the lead and consistently surprise its customers with service quality at or above their cross-sector expectations.
From a community perspective, there is a story full of positive surprises to be told that the industry should be bolder in telling.
Investment in the sector exceeded £43 billion in the last four years and the industry now supports 645,000 (Powering the UK 2012) jobs nationwide. Demonstrating good intentions by investing in UK skills and jobs at that scale can only have a positive impact on the way the industry is perceived.
And what about that part of our bills spent on societal and environmental benefits? Vulnerable communities across the UK benefit from policies, such as ECO (Energy Companies Obligation), that require energy companies to spend billions to improve insulation and heating in low-income households. Isn’t that worth shouting about?
To meet current energy and climate change objectives, the UK utilities sector needs to invest up to £200 billion on critical infrastructure over the next 15 years. To attract these funds, investors need to be able to trust that they will see returns on their investment.
Setting the right policy framework has a big role to play by providing the necessary certainty and stability. The industry itself also has a role in reinforcing investor trust by delivering these projects on time and to budget.
According to our research, however, 50 per cent of projects overrun, 58 per cent are delivered with a delay and 42 per cent experience defects post-completion. With new energy generation projects being inherently riskier, due to innovation in technology, the industry has to demonstrate that it can identify and manage these delivery risks, and as a result be relied upon for their excellent execution. Customers associate large capital projects, especially where they overrun, with their bills, whether they are linked or not.
At a time when this essential industry is at a crossroads, gaining and maintaining trust in the eyes of customers, communities and investors is imperative to its future.