Good Customer Service for Profitable Service Provision in Low-Income Communities
Summary
Águas da Região de Maputo (AdeM), Maputo's primary water utility, partnered with Water and Sanitation for the Urban Poor (WSUP) to enhance customer service and develop a business model that is, at once, more profitable and more responsive to the needs of the hardest-to-reach customers.
Like many water utilities, Águas da Região de Maputo (AdeM), Maputo's primary water utility, struggled with maintaining consistent, reliable, and financially sustainable engagement with the city's hardest-to-reach and most vulnerable customers (Madeira, 2020). These customer service issues proved to be bad for business and resulted in several unwanted outcomes for AdeM, in particular, a lack of trust between the utility and low-income communities. There was a widely-held perception among low-income customers that the utility did not prioritize water services in their communities (due to less network coverage and comparatively less water consumption). This negative perception was exacerbated by the utility's poor bill collection efficiency in the city's poorest areas. Secondly, there was a belief among low-income consumers that their communities received substandard service compared to that of wealthier neighborhoods, and that, in the event of shortage, their supply would be cut first. Although these perceptions were not necessarily accurate, AdeM recognized the need to change them and build trust between the utility and low-income communities (Madeira, 2020).
Intervention
In 2015, AdeM joined forces with Water and Sanitation for the Urban Poor (WSUP), an international NGO, to develop a good customer service model that would allow the utility to be more present in low-income communities. Not only did the utility want to combat the stigma associated with its service in low-income communities, but it also realized that good customer service is more profitable than bad customer service, even in the public utilities sector. Namely, good customer service leads to greater customer satisfaction, which can yield numerous benefits for the utility including bill payment and customer referrals. Alternatively, poor customer service leads to dissatisfied customers, an increased volume of complaints, which are resource-intensive to handle, and can even result in vandalism (Madeira, 2020). As such, AdeM recognized the need to enhance its customer service model for assisting low-income customers to ensure a more wholly sustainable and financially viable business model.
To enhance customer service in hard-to-reach, low-income areas of Maputo, AdeM contracted several community-based organizations (CBOs) across the city. These CBOs are contracted and paid based on their performance, and are responsible for local monitoring of water services, including bill payment, meter reading, invoice delivery, and leakage reporting, while maintaining daily communication with the utility (Madeira, 2020). AdeM chose the CBO model because CBO staff would work in their communities, thereby making them more sensitive to and understanding of local needs, while incentivizing them to work as effectively and efficiently as possible (Madeira, 2020). As such, the CBOs are a sort of working intermediary between the utility and the consumers, who thereby facilitate the trust-building process.
Upon their recruitment, CBO staff are trained by WSUP and AdeM on both technical skills (e.g., billing systems) and soft skills (e.g., community interaction techniques) (Madeira, 2020). This model has proven to be effective since local CBO staff have more time to dedicate to building relationships with customers on behalf of the utility, and, given that these staff are working in their own communities, are more likely to build authentic bonds with the communities (Madeira, 2020).
The CBO model is jointly funded by AdeM and WSUP (Madeira, 2020). The policy is still active in Maputo today, as AdeM continues to contract numerous CBOs across the city to assist in its customer service model. Presently, the CBO model is active in 10 areas throughout Maputo, although it is being scaled up [five additional areas were supposed to be included as of September 2020].
Challenges
Unfortunately, in 2018, an increase in water tariffs coincided with a review of AdeM's billing cycle, resulting in the unintended outcome of consumers receiving unexpected invoices and multiple water bills in rapid succession, thereby impacting the poorest consumers most significantly (Madeira, 2020). Although there was a clear need for better planning in that scenario, the CBO staff were still able to mitigate the issue by assisting with customer queries, explaining changes in the billing process, and garnering a sympathetic and understanding attitude towards customers' frustrations, thereby mitigating the overall level of customer dissatisfaction. The CBO model has been scaled up and, ultimately, AdeM hopes to achieve a level of fully-delegated management of low-income service areas, which will grant CBOs complete responsibility for service delivery (e.g., revenue collection, billings, leakage management, and customer liaison) (Madeira, 2020). These new contracts with the CBOs will also be performance-based, and CBOs will receive a commission from overall revenue collection; this pilot is expected to be rolled out within the fiscal year and scaled up to include several neighborhoods in Maputo in 2021/2022 (Madeira, 2020). AdeM and WSUP hope that such a strategic approach will continue to improve overall service delivery, increase commercial returns, and reduce non-revenue water, ultimately helping the utility meet future demand.
Outcomes
CBO management of water services in low-income areas has resulted in increased debt recovery, as well as increased meter-reading and billing rates, ultimately resulting in more income for the water utility (Madeira, 2020). Furthermore, AdeM has been better equipped to track errors and anomalies since the deployment of the CBO model, as CBO staff encounter and record problems on the ground in real time. These improvements have resulted in an extremely up-to-date customer database for AdeM, as well as a better system for prioritizing action to improve the quality of service provision (Madeira, 2020). The CBOs have also been essential in managing customer dissatisfaction in times of crisis and shortage. Bill collection efficiency has increased from a rate of 50% in 2009 to approximately 80% in 2016 in low-income areas?just one year after the CBO model was implemented (Madeira, 2020).
References
Good Customer Service for Profitable Service Provision in Low-Income Communities
Summary
Águas da Região de Maputo (AdeM), Maputo's primary water utility, partnered with Water and Sanitation for the Urban Poor (WSUP) to enhance customer service and develop a business model that is, at once, more profitable and more responsive to the needs of the hardest-to-reach customers.
Like many water utilities, Águas da Região de Maputo (AdeM), Maputo's primary water utility, struggled with maintaining consistent, reliable, and financially sustainable engagement with the city's hardest-to-reach and most vulnerable customers (Madeira, 2020). These customer service issues proved to be bad for business and resulted in several unwanted outcomes for AdeM, in particular, a lack of trust between the utility and low-income communities. There was a widely-held perception among low-income customers that the utility did not prioritize water services in their communities (due to less network coverage and comparatively less water consumption). This negative perception was exacerbated by the utility's poor bill collection efficiency in the city's poorest areas. Secondly, there was a belief among low-income consumers that their communities received substandard service compared to that of wealthier neighborhoods, and that, in the event of shortage, their supply would be cut first. Although these perceptions were not necessarily accurate, AdeM recognized the need to change them and build trust between the utility and low-income communities (Madeira, 2020).
Issue
Intervention
In 2015, AdeM joined forces with Water and Sanitation for the Urban Poor (WSUP), an international NGO, to develop a good customer service model that would allow the utility to be more present in low-income communities. Not only did the utility want to combat the stigma associated with its service in low-income communities, but it also realized that good customer service is more profitable than bad customer service, even in the public utilities sector. Namely, good customer service leads to greater customer satisfaction, which can yield numerous benefits for the utility including bill payment and customer referrals. Alternatively, poor customer service leads to dissatisfied customers, an increased volume of complaints, which are resource-intensive to handle, and can even result in vandalism (Madeira, 2020). As such, AdeM recognized the need to enhance its customer service model for assisting low-income customers to ensure a more wholly sustainable and financially viable business model.
To enhance customer service in hard-to-reach, low-income areas of Maputo, AdeM contracted several community-based organizations (CBOs) across the city. These CBOs are contracted and paid based on their performance, and are responsible for local monitoring of water services, including bill payment, meter reading, invoice delivery, and leakage reporting, while maintaining daily communication with the utility (Madeira, 2020). AdeM chose the CBO model because CBO staff would work in their communities, thereby making them more sensitive to and understanding of local needs, while incentivizing them to work as effectively and efficiently as possible (Madeira, 2020). As such, the CBOs are a sort of working intermediary between the utility and the consumers, who thereby facilitate the trust-building process.
Upon their recruitment, CBO staff are trained by WSUP and AdeM on both technical skills (e.g., billing systems) and soft skills (e.g., community interaction techniques) (Madeira, 2020). This model has proven to be effective since local CBO staff have more time to dedicate to building relationships with customers on behalf of the utility, and, given that these staff are working in their own communities, are more likely to build authentic bonds with the communities (Madeira, 2020).
The CBO model is jointly funded by AdeM and WSUP (Madeira, 2020). The policy is still active in Maputo today, as AdeM continues to contract numerous CBOs across the city to assist in its customer service model. Presently, the CBO model is active in 10 areas throughout Maputo, although it is being scaled up [five additional areas were supposed to be included as of September 2020].
Challenges
Unfortunately, in 2018, an increase in water tariffs coincided with a review of AdeM's billing cycle, resulting in the unintended outcome of consumers receiving unexpected invoices and multiple water bills in rapid succession, thereby impacting the poorest consumers most significantly (Madeira, 2020). Although there was a clear need for better planning in that scenario, the CBO staff were still able to mitigate the issue by assisting with customer queries, explaining changes in the billing process, and garnering a sympathetic and understanding attitude towards customers' frustrations, thereby mitigating the overall level of customer dissatisfaction. The CBO model has been scaled up and, ultimately, AdeM hopes to achieve a level of fully-delegated management of low-income service areas, which will grant CBOs complete responsibility for service delivery (e.g., revenue collection, billings, leakage management, and customer liaison) (Madeira, 2020). These new contracts with the CBOs will also be performance-based, and CBOs will receive a commission from overall revenue collection; this pilot is expected to be rolled out within the fiscal year and scaled up to include several neighborhoods in Maputo in 2021/2022 (Madeira, 2020). AdeM and WSUP hope that such a strategic approach will continue to improve overall service delivery, increase commercial returns, and reduce non-revenue water, ultimately helping the utility meet future demand.
Outcomes
CBO management of water services in low-income areas has resulted in increased debt recovery, as well as increased meter-reading and billing rates, ultimately resulting in more income for the water utility (Madeira, 2020). Furthermore, AdeM has been better equipped to track errors and anomalies since the deployment of the CBO model, as CBO staff encounter and record problems on the ground in real time. These improvements have resulted in an extremely up-to-date customer database for AdeM, as well as a better system for prioritizing action to improve the quality of service provision (Madeira, 2020). The CBOs have also been essential in managing customer dissatisfaction in times of crisis and shortage. Bill collection efficiency has increased from a rate of 50% in 2009 to approximately 80% in 2016 in low-income areas?just one year after the CBO model was implemented (Madeira, 2020).
Issues |
|---|
Water Governance and Policy |
Solutions |
|---|
Community Engagement & Education |
References
Madeira, A. (2020, August 6). The virtuous circle of good customer service: Experience from Mozambique. Water and Sanitation for the Urban Poor (WSUP). Retrieved December 01, 2020, from https://www.wsup.com/blog/the-virtuous-circle-of-good-customer-service-experience-from-mozambique/