LONDON, Jan. 4, 2002 — Frost & Sullivan, the international marketing consulting company, today released survey results indicating a general disillusionment among large industrial water customers in the UK with several aspects of their service suppliers' performance.
Uncertainty over the future structure of the market landscape and a lack of understanding of the likely impact of competition on the market are the hallmarks of the water industry in England and Wales coming to a crucial crossroads. However, with the majority of suppliers adopting a 'wait and see' attitude towards the future direction of the market, customers are crying out for the more proactive players to take the initiative and embrace competition by offering innovative solutions to meet their needs.
The company questioned a sample of industrial customers across England and Wales. John Raspin, Research Manager at Frost & Sullivan, reports: "The disillusionment customers expressed with the level of supplier performance serves as a stark reminder for water companies that, despite their virtual monopoly in the water and sewerage industry, customers increasingly exercise the power to switch suppliers or seek out alternative ways of obtaining a suitable water supply or wastewater treatment solution."
More than ever, water companies need to establish strategic priority areas requiring improvement in order to gain competitive advantage in the market and to reduce the customer discontent highlighted in Frost & Sullivan's study.
With the water industry in England and Wales slowly showing signs of restructuring amid growing competitive forces, clear gaps are beginning to appear between the more proactive market leaders and the more reactive market followers.
"Those suppliers performing poorly have been cited by their customers as failing to initiate effective account management strategies, failing to make customers feel included in the tailoring of their supply package, and failing to maintain contact with customers outside of billing," Raspin reports.
Raspin notes: "Those companies geared towards the successful exploitation of their strengths and innovation will seize the opportunities, while those that fail to address the emerging priorities of the market will face the very real problem of retaining their large industrial customers."
Customer satisfaction is based on a blend of the core elements of the water service (water quality and security of supply) and the more value-added elements, such as customer service and added services. However, the performance of individual companies varies dramatically across each factor. While some companies are developing a competitive advantage, other incumbent suppliers need to rapidly address critical issues to build customer loyalty.
While there is a generally high level of satisfaction with the water quality and security of supply, Frost & Sullivan's most poignant observation underlines the low level of satisfaction with prices, customer service and added services.
"This suggests that, with a few exceptions, suppliers are perceived to be performing adequately in their core activities (provision of a secure and high quality water supply), but poorly in the added value activities. It is these areas of cost and service that customers have stated would stimulate a change of supplier," Raspin says.
Suppliers' ability to match customers' requirements is poor, which suggests that on the whole, customers are dissatisfied with the current offerings. However, what is more revealing is the large disparity between leaders and followers on this particular issue. With customers looking for added value from their suppliers, this is an area where innovative and proactive suppliers can make inroads by providing creative solutions to improve the customer service levels.
With added services, Anglian Water scored top marks, while at the other end of the spectrum, Severn Trent was awarded with a rather meagre rating. An astonishingly high proportion of customers state that their suppliers' added service offerings were either pitiful or non-existent at present.
Frost & Sullivan's analysis of the water only companies' performance shows that — considering the importance attached by customers to the issue of customer service — the overall supply base needs to prioritize customer service as a key area to improve. Customer service is a very important driver or restraint of customer satisfaction and will subsequently be a strong determinant of suppliers' success rates in a competitive market.
As well as offering insight into the requirements of the customer base and the performance of the supply base, Frost & Sullivan's study analyzes the performance of each supplier (in terms of the satisfaction of its customers) and presents profiles to examine strengths and weaknesses and strategic priorities for each company, as well as extensive quotes to show how each company is rated through the eyes of its customers.
Frost & Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of high-tech markets, including the water sector, for market trends, market measurements and strategies. This ongoing research is utilized to complement a series of research publications to support industry participants with customized consulting needs. Free executive summaries of all Frost & Sullivan reports are available to the press.
(Report Code: B060, Publication Date: December 2001)
For further press information, please contact:
Kristina Menzefricke
Frost & Sullivan's Public Relations Department - Europe
Tel. +44 (0) 20 7343 8376 or Fax. +44 (0) 20 7343 8380
([email protected]) or
Frost & Sullivan's Public Relations Department- N. America
Cynthia Cabral
Tel. 210-247-2440 or Fax. 210-348-1003
([email protected])
