Communicating Water’s Value: Book Review

The literature on managing water utilities is dominated by technical tomes on how to implement the latest engineering developments to improve services. Engineers often see marketing as peripheral to their quest to provide a reliable and safe water supply. It is, therefore, a delight to read a book on how to improve services in water utilities using marketing techniques common in other industries.

Communicating Water’s Value: Talking Points, Tips & Strategies by Melanie Goetz is based on a sound basis of years of experience, backed by the latest scientific findings in behavioural economics, neuromarketing and related disciplines. This book is by no means a nerdy academic treatise. The countless vividly written examples from Melanie’s experience in working with utilities will appeal to water utility professionals and place the theory in context.

The book delves into the non-rational (a term I prefer above ‘irrational’) aspects of human psychology and explains how the latest marketing techniques from the competitive commercial world can be applied to enhance the value proposition of water utilities.

Marketing has earned itself a bad name for being deceptive and manipulative, which is one of the reasons it is not often practised in public services. Melanie’s book shows, however, that good marketing can tap into the forces of psychology and be used for good instead of evil.

Melanie recognised in the book that her work is “preaching to the choir”. This book should be read by engineers, economists, accountants and all other professions that are usually at a distance from the customer interface. As pointed out in the latter part of the book, innovation can only arise from positive deviance. Daring to be different and break the shackles of tradition will not be easy in an industry dominated by traditional thinking.

The Value of Water

Reading this book, I latched on to one little phrase: “We do not sell water, we sell status—we sell a solution for thirst”.  When a utility recognises that they do not sell water, but the benefits that water provides, they are on their way to maximise the value perception held by their customers. Thinking of water as simply the product they supply, instead of the benefits it provides is an example of marketing myopia, a form of short-sightedness that can only be fixed by using marketing glasses.

My version of this is: “We don’t sell water, we sell experiences“. We sell good ideas (in the shower), we sell initiate moments (having a bath with someone you love), we sell personal fulfilment (gardening) and so on. Status comes into play only with conspicuous purchases, such as a pool.

When looking at a water utility using marketing lenses we see the service as the customers perceive it. Not the way customers might consciously understand water, but subconsciously. In Communicating Water’s Value Melanie keeps reminding us of the psychological subtleties involved in managing the attitudes and behaviours of customers.

Communicating Water’s Value: Talking Points, Tips & Strategies

This book is a great read for every water utility professional that wants to practice some positive organisational deviance and start to think differently and increase the value proposition of customers. Not by investing millions in new gadgets, but by simply levering human psychology.

The Value Proposition of Tap Water

Deliberations about the value water seem at first instance to be a foregone conclusion. Water is of infinite value because we need water just like we need air and food to stay alive. This is, however, a simplistic view as we only need a relatively small amount to sustain life, anything beyond that is discretionary. In this article I will describe the complexities of the the value of water as a construct and propose an alternative perspective to define it. From this layered definition of value we can start defining the value proposition of water to improve customer engagement in tap water.

The Value of Water

The Value Proposition of water: Bling H2O, $40 per 750 ml bottle combines 'diamonds' and water.

Bling H2O, $40 per 750 ml bottle combines ‘diamonds’ and water.

The value of water is not the same as the price of water because price is an absolute concept, whereas value is inherently subjective construct that can only be defined from the customer’s perspective. It is often said that the customer is always right. Although customers might be wrong about facts, they are always right about how they feel about something. In order to use the concept of value in marketing we need to view it from the perspective of the customer, which relates to how they feel about the service.

Following this line of reasoning, value can be defined as the difference between the perceived benefits and perceived cost. We should, however, not view benefits and cost only from a monetary perspective. The value of water is a multi-dimensional construct.

Consumer Benefits

Maslow's Hierarchy of Needs

Maslow’s Hierarchy of Needs illustrated.

In 1776 Adam Smith identified the so called diamond-water paradox.1 This paradox is based on the idea that some useless commodities, such as diamonds, demand a high price and vice versa, water is very useful, but demands a low price.2 Not all water use is, however, a matter of life and death. Water is used for many purposes and in the case of reticulated water supply, the same water is used for drinking, hygiene, gardens, swimming and other recreational activities and as a transport medium for waste.

Maslow’s Hierarchy of Needs can be evoked to illustrate the multidimensional nature of the value of water.3 At the physiological level, water is needed for hygiene and hydration. Water does, however, also fulfil social and psychological needs. A mundane activity such as gardening, which requires a lot of water, serves to meet the full spectrum of human needs, e.g. physical exercise, expressing creativity and creating a space to socialise.4

Many publications on tap water make a distinction is made between the water we need and the water we want, the so called discretionary use. This distinction is based on a common-sense distinction between needs and wants, whereby needs are considered of a higher order than wants. The common sense understanding of the difference between needs and wants is, however, incorrect as it denies the importance of higher order needs. Maslow, as a humanist psychologist, believed that all human beings have a need for self-actualisation as much as they need food and water—the so called hierarchy of needs is not really a hierarchy. Physiological needs are just as important as the need for a sense of safety, a sense of belonging, self-esteem and self-actualization. Therefore, the need for water includes uses other that hygiene and consumption. Recognising that sociological and psychological needs are just as important as physiological needs is paramount to be able to define the value proposition of water.

Consumer Cost

Complaints are a time cost to the consumer

Complaints are a time cost to the consumer.

On the cost side of the value equation, dimensions other than financial cost, such as time cost should be taken into consideration.5 Additional to the money a customer pays for service, they also pay with their time. Using time to enjoy a service is an opportunity cost to the customer—any time expenditure reduces their available discretionary time. A service provider can increase the value perceived by the customer by minimising the amount of time required to enjoy the service.6 This concept can be used to measure quality of service delivery. The worst level of service occurs in countries women walk for hours to obtain their family’s daily amount of water. In developed reticulated water systems, the time investment by consumers is marginal and only becomes noticeable in the case of service failures or with inefficient facilitating services such as billing.7 The value perceived by customers can be maximised by minimising their perceived cost, minimising the amount of time they need to invest in enjoying a water service.

The Value Proposition of Tap Water

Wrong customer behaviour?

Water use has many intangible benefits.

With this multi-layered concept of the value of water we can define a meaningful value proposition—a promise to the customer regarding the value of the provided service. The value proposition is not limited to a slogan or a branding exercise. A meaningful value proposition is communicated in everything a service provider writes says and more importantly, does—within the tap water context, customer service stretches from catchment to tap and to the water bill.

There are only two ways to maximise the value perceived by the customer: increase the perceived benefits or decrease the perceived cost.

To maximise the perceived benefits of the service offering, water companies should focus their communication on the higher order needs water use satisfies. Many water utilities highlight the technological aspects of service provision, instead of the higher order benefits it provides.

The other side of the value equation involves lowering perceived cost. To lower the perceived cost of water services it is important to provide a high level of service in order to minimise the time price paid by customers. Water companies can focus on finding the root cause of customer communications and seeking to eradicate these causes so that there is no more need for consumers to contact the organisation. The perfect water utility is invisible to the customer.

The slide show below provides some examples on how the intangible value of water can be communicated, beyond relying on pipe, pumps and plants.

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Notes


  1. Smith, A. [1776] (2010). The Wealth of Nations. Capstone. 

  2. Levy, D. (1982). Diamonds, water, and Z goods: an account of the paradox of value. History of Political Economy, 14(3), 312–322; Robertson, H. M., & Taylor, W. L. (1957). Adam Smith’s approach to the theory of value. The Economic Journal, 67(266), 181–198. 

  3. Maslow, A. H. (1943). A theory of human motivation. Psychological Review, 50(4), 370–396. 

  4. Solomon, M. R., Russell-Bennett, R., & Previte, J. (2010). Consumer Behaviour: Buying, Having, Selling. Frenchs Forest, N.S.W.: Pearson. 

  5. Sweeney, J. C., & Soutar, G. N. (2001). Consumer perceived value: The development of a multiple item scale. Journal of Retailing, 77(2), 203–220. 

  6. Davies, G., & Omer, O. (1996). Time allocation and marketing. Time & Society, 5(2), 253–268. doi:10.1177/0961463X96005002007

  7. Williams, R. F. G., & Mountjoy, N. (2012). Seeing water in a spatial and temporal perspective: the residential demand for water in regional Victoria. Presented at the 41th Conference of Economists, Melbourne, Australia: School of Economics, La Trobe University, Bendigo, Australia.