The Paradoxes of Water Utility Marketing

It’s been a year since I created this blog and it’s a pleasure to share these pages with people interested in anything to do with water. I am delighted to introduce Dr Peter Prevos a highly philosophical manager of the Data Science team in Coliban Water- a regional urban water authority in Australia. He is also a sessional lecturer in La Trobe university in Melbourne who has his own blog featuring water marketing and analytics.  Today, Dr Peter will be guest-posting, sharing with us his findings about the paradoxes of water management. When he accepted my invitation to share his knowledge of this subject on my blog, I was thrilled as his writing will highlight the challenges of contemporary water management from a practice worldview of the water utility. I hope you find good food for thought in his piece below; and please share this piece with your circle of friends and colleagues – Fatima A.

Guest post by Dr Peter Prevos

Customers, regulators and community groups are urging water utilities around the world to become more customer-focused. Many exciting initiatives have been developed by water professionals to achieve this goal. These activities show that in many countries, the industry is transitioning from focusing on asset performance to managing the customer’s experience.

Water utilities are generally managed by professionals qualified in engineering, biology or chemistry who decide on complex technical issues based on physics, chemistry and biology. When water utilities decide on customer issues, they base their decisions on marketing theory. Most of the existing marketing theories are, however, not suitable for water services.

My recently-completed PhD thesis discusses how marketing theory can be practically applied to the characteristics of the tap water industry. While researching how to apply marketing theory to water utilities, I found the following four emerged paradoxes that water managers need to be aware of:

1. The Paradox of Value

Water is a life-sustaining liquid yet the willingness to pay for it is very low. This first paradox was already recognised by the ancient Greeks. Although economists have resolved this paradox when they developed the theory of marginal utility, for water managers this issue still plays very strongly. The problem of willingness to pay was discussed in the Australian show The Gruen Transfer in which Marketer Russell Howcroft claims that water utilities are “lazy marketers”

The price we are willing to pay is related to the relative value we attach to a purchase which is evident in people’s high involvement with diamonds for example. Owning a diamond provides social status, while access to tap water on the other hand is normalised and not a status symbol because water flows out of our tap, without the water user’s effort or any real involvement in the process. The marketing remedy for the paradox of the worth and cost of water is therefore to emphasise the difference between its value and its price.

2. The Water Quality Paradox

Potable water hides a complexity that is one of the leading causes of customer dissatisfaction. As service providers, water utilities aim to deliver water that minimises risk to public health. Water utility professionals assess the quality of water using scientific measurements and express it in esoteric units such as death and Disability Adjusted Life Years (DALY) attributed to water, sanitation and hygiene. The vast majority of customers are, however, not able to appreciate the public health quality of water. Customers assess the quality of water through its aesthetic properties. When water does not taste refreshing, exudes an odour or is coloured customers may lose trust in the product, even though it may be perfectly safe to drink.

3. The Involvement Paradox

The general wisdom in water utility and business literature is that the level of consumer involvement with potable water is low. The fact that water is essential to life suggests that consumers of tap water have a high degree of involvement with the service. This situation seems paradoxical because both assertions cannot be true at the same time. This paradox can be resolved by examining involvement from two different perspectives. Potable 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 emotional involvement that potable water attracts will be significantly lower.

4. The Invisibility Paradox

Potable water is so reliable that global giant Uber wants to provide “Transportation that is as reliable as running water”. The paradox of highly reliable water utilities is that the water security that they help provide has created problems in terms of their visibility to customers. Traditional marketing wisdom suggests that invisibility is not beneficial because it prevents developing a strong brand. The invisibility paradox implies that this idea cannot apply to water utilities. A perfect level of service means that the customer almost never contacts their water utility. If there are no outages and water is refreshing and clear, then customer contact will only be in relation to the payment of water bills.

Embracing the Paradoxes

We are trained to believe that paradoxes need to be resolved. In a recent article, Professor Sydney Finkelstein writes that: “The best managers are comfortable holding two opposing views because they know the world is complex.” I therefore believe that managing a customer-centric water utility requires you to embrace these paradoxes and finding ways to remediate the challenges that they pose:

  • Water is valuable but we sell it for a low price
  • Water is safe to drink but is sometimes not accepted by customers
  • Water is essential but some customers may not care much about it
  • Water is invisible to customers but perfect service may imply invisibility

If you like to know more about how to do so, then you should think about purchasing my forthcoming book Customer Experience Management for Water Utilities: Marketing urban water supply by IWA Publishing.

Feel free to connect with me on linkedin and also visit my blog blog.

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