C-MEX/ODI’s

MORE THAN A MEASURE

C-Mex gives a more rounded measure of services that companies deliver to all residential customers

Customers in England and Wales will benefit from a new incentive on water companies to deliver improved services to them during 2020-25 – the Customer Measure of Experience (C-Mex). But how will it work? Rebekah Eden, Director, and Ian Bannon, Principal, from Ofwat explain more.

When Ofwat carried out the 2019 Price Review (PR19), great customer service was one of our four key themes for services for 2020-25. This wasn’t just a theme we plucked out of thin air.

As we said in our strategy, Time to act, together, water is vital for life – not just for people but for the environment and ecosystem on which we depend. This means that customers in England and Wales feel differently about water to other services: they need to trust that water and wastewater companies are serving the public benefit. But, at the same time, customers expect great service, at least comparable to the service they get elsewhere.

By introducing C-MeX, we aim to drive companies harder to continually improve the level of service they deliver to their customers at all stages of service delivery. We want them to not just strive to deliver the best service in the sector, but among the very best in other sectors. Because being a monopoly isn’t an excuse for poor service; it’s an opportunity for great service.

C-Mex to see more

C-MeX should drive the 17 largest water companies in England and Wales to provide an excellent customer experience for the 2020-25 period. It is a relative service target (‘performance commitment’) that is common to all of the companies and comparing them against each other. It is also one of a number of financial and nonfinancial rewards and penalties (‘Outcome Delivery Incentives’ (ODIs)) we introduced to encourage companies to deliver all round better services to customers, the environment and society.

What is an Outcome delivery incentive (ODI)?

ODI’s are the financial or reputational (non-financial) incentives for companies to outperform and avoid underperformance against each of their performance commitments.

Most performance commitments have ODIs that will be assessed and settled on an annual basis during the price control period (an ‘in-period’ adjustment).

C-MeX is one of those that is measured and assessed annually, so it directly encourages companies to do better year after year.

C-MeX replaces its predecessor the Service Incentive Mechanism (SIM) judging companies’ performance against each other and driving innovation and competition in a new way. While SIM was effective in driving service improvements in the sector, we wanted C-Mex to go further and: ■ Draw direct comparisons with others to incentivise companies to reach the higher levels of customer service that we see in other sectors. ■ Encourage leading companies to improve customer service standards. ■ Encourage companies to contact their customers and drive innovation, service improvement and customer engagement. ■ Reflect changing communications technology and how customers interact with retailers in the wider economy;

Surveying satisfaction

C-MeX is comprised of two surveys 1. The customer service survey of residential customers who have recently contacted their company in relation to their recent contact 2. The customer experience survey of random members of the public in relation to their experience of their water company.

In both cases customers are asked how: ■ satisfied they are with the service provided; and ■ how likely it is they would recommend the water company to family or friends. (This net promoter score result is measured and reported separately to the C-MeX score which is used to calculate financial incentives).

It also draws on wider information sources and other external factors such as companies’ performance: ■ in dealing with complaints; and ■ in the Institute of Customer Services

UK Customer Service Index (UKCSI).

This gives a more rounded and holistic view of performance.

Companies receive a score based on the satisfaction ratings given by customers in the monthly surveys and we will publish annual league tables for C-MeX.

Each company can receive outperformance payments or incur underperformance payments based on how it scores compared to other companies. C-Mex reflects changing ways that customers interact with retailers in the wider economy

FEATURE: C-MEX/ODI’S

Better services, better regulation

When we designed the C-MeX incentive mechanism during PR19 we set a number of aims and principles that drew on the lessons learned from SIM that would enable us to get the best outcomes for customers.

These were that the incentive: ■ effectively drives and encourages companies to improve customer experiences and innovate; ■ is simple and meaningful for both companies and customers; ■ is proportionate; ■ is practical to implement; ■ measures performance across companies consistently, reliably and fairly; and ■ reflects customer behaviour changes and market changes.

We think that C-MeX helps us achieve all of those aims. It will continue to put pressure on companies to deliver excellent customer service and do this through innovation.

What next?

We undertook a trial of C-Mex which we called the shadow year (and its counterpart – the Developer Measure of Experience (D-Mex)) in 2019-20. Congratulations went to Dŵr Cymru – who not only topped our first C-Mex league table, but also became the first water company to break into the UK customer service index (UKCSI) top 50 companies.

From 2020-21, as well as publishing a league table of company performance the financial underperformance and outperformance payments apply.

We’ll be publishing our league table in September. But C-MeX is now in full effect, so companies stand to incur significant underperformance payments or outperformance payments based on how they score relative to each other during the year. Proving that for customers and companies, C-Mex is more than a measure.

Find out more information on the development of C-Mex at www.ofwat. gov.uk/regulated-companies/companyobligations/customer-experience/