The Customer is Always Right: Service Quality Perception in Tap Water Services

The Customer is Always Right: Service Quality Perception in Tap Water Services

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The concept that customer is always right is a controversial topic in service industries, including water utilities. There seems to be a paradox between how water professionals perceive the quality of a water service and the way customers see it. Providing safe drinking water is not the same as providing good water. For example, chlorine or fluoride are added to the water ensure to protect public health. In some communities, however, chlorine and fluoride are perceived as unwanted chemicals, leading to a reduction in the perception that customers have of the quality of service1.

Customers of two Australian and three American water utilities were surveyed to investigate possible moderators of service quality in water services. The preliminary conclusion of this pilot study is that service quality perception is not only influenced by the quality of the service, but also by external factors such as financial hardship and service involvement. This research has potential implications to how service quality is reported and interpreted and how utilities relate to customers.


  • A sample of customers from two Australian water utilities reported their perceptions of tap water
  • Customers with a higher level of financial hardship rated the level of service lower
  • Customers with a higher level of involvement rated the level of service higher
  • External factors influence service quality perception of water utility customers


This paper reports on a pilot of a research project investigating the relationship between organisational behaviour and customer perception. A sample of customers from two water utilities in Australia completed a survey about their perceptions of tap water. Customers were asked their views on the following concepts:

  • Involvement with tap water
  • Frequency of contacting their water utility
  • Level of experienced financial hardship
  • Service quality perception
    • Technical quality of the services provided by their water utility
    • Functional quality of the services provided by their water utility

Involvement with tap water was measured using the Personal Inventory Index. This ten-point scale is regularly used in marketing research to measure the level of involvement consumers have with products and services. Consumer involvement is a person’s perceived relevance of something based on their needs, values, and interests.2

The frequency of contacting the utility and the level of perceived hardship were determined with single items on a 1–7 Likert scale.

The level of technical service was assessed using five questions about the physical services, i.e. availability, pressure, taste, safety, visual appeal. The level of functional service was evaluated using a scale consisting of 13 items, such as billing accuracy, friendliness of staff, availability of information and so on.

Service Quality Perception in Tap Water Services

A total of 649 customers from six utilities in Australia and the United States completed the survey, with the standard error of responses at 0.9%. The distribution of replies is indicated along the diagonal of figure 1, correlations between variables are shown above the diagonal and scatter plots below the diagonal.

Figure 1: Service Quality Perception in Tap Water Services

Figure 1: Correlations between customer constructs.

Analysis revealed statistically significant correlations between some of the constructs. Service quality perception is influenced by financial hardship and positively influenced by involvement.

Most salient was a high negative correlation between the level of financial hardship and perceptions of functional quality (r(649)=-0.16, p<0.001) and technical quality (r(649)=-0.19, p<0.001).

The level of involvement revealed a positive correlation with functional quality (r(649)=0.26, p<0.01) and with technical quality (r(649)=0.35, p<0.01).

The data thus shows that the more difficulty customers have with paying their bills, the lower their perceptions of the level of service provided by water utilities. The data also shows that customers with a high level of involvement in tap water rate the level of service provision higher than those with a low level of involvement.

The level of technical quality also shows a strong correlation with the degree of functional quality (r(649)=0.35, p<0.01). The reason for this healthy relationship is unknown and is most likely caused by confounding variables.


The idea that service quality is moderated by factors outside of the direct control of the service provider is a well known phenomenon in marketing theory. Research in food marketing shows that the taste of water can be influenced by the firmness of the cup it was consumed from.3 This pilot study indicates that these types of effects may also exist in the provision of urban water services.

Although the physical quality of water services can be manipulated by improving operational effectiveness, the perception that customers hold on the level of service is moderated by many other factors. The level of hardship can be controlled through pricing controls and rebates, but the socio-economic circumstances of customers can only be managed through empathy with their individual circumstances. Involvement with tap water can be influenced through customer engagement and communication. Involvement is important to water utilities as it has been found in other services to also be linked to a consumer’s willingness to pay for services.

This research into service quality perception is currently being extended to include further data from other water utilities to confirm the results of this pilot study.


The axiom that the customer is always right needs to be nuanced. The customer might not be right about the physical facts of a water service, however, they are always right about their own service quality perception. This demonstrates that in order to provide a high level of service to customers, a focus on excellent engineering will not necessarily lead to increased customer satisfaction. A deep understanding of customers is required to influence the moderating that moderate their perceptions.

  1. Kot, M., Castleden, H., & Gagnon, G. A. (2011). Unintended consequences of regulating drinking water in rural Canadian communities: Examples from Atlantic Canada. Health & Place, 17(5), 1030–1037. doi:Health & Place

  2. Zaichkowsky, J. L. (1994). The personal involvement inventory: Reduction, revision, and application to advertising. Journal of Advertising, 23(4), 59. 

  3. Krishna, A., & Morrin, M. (2008). Does touch affect taste? The perceptual transfer of product container haptic cues. Journal of Consumer Research, 34(6), 807–818. 

Towards a Service Quality Model for Water Utilities

Water utilities are natural monopolies and therefore operate in a highly regulated environment. One of the cornerstones of all regulatory frameworks is performance measurement. Most existing systems are, however, merely lists of performance measures. These measures are categorised, but there is no underlying theory on how these relate to each other. These existing systems also focus mainly on performance from the utility’s perspective, with limited focus on the customer’s view of performance.

I am currently working on two different aspects of service quality in water utilities. For my employer I have developed a Water System Performance Index to better communicate performance to boards and senior management. For my dissertation I am looking at how customers view service quality of utilities. These two projects started separately from each other, until it dawned to me that they form part of the same broader view of service quality in utilities.

Towards a Service Quality Model for Water Utilities

The quality of a service can be viewed from two sides from the utility’s and the customer’s perspective. In marketing terms, this is called intrinsic an extrinsic quality.

These two perspectives apply to the two types of services offered by water utilities: core services and supplementary services. Core service relates to the physical provision of water and supplementary services are all other activities that enable or enhance the core service, such as information provision and billing. The distinction between intrinsic and extrinsic quality for core services also relates to the distinction between safe and good water I wrote about earlier.

Water Utility Service Quality Model

The model gives us four areas to measure quality: intrinsic and extrinsic technical quality and intrinsic and extrinsic functional quality.

Intrinsic Quality

Intrinsic quality in core services can be measured using the traditional methods in the monitoring of water systems. This gives us a view of how the water system intrinsically operates. Water quality parameters, pressure data and supply continuity are the most common parameters. The intrinsic quality of supplementary services is measured using a range of customer service metrics, such as the percentage of call answered within a certain time period.

Extrinsic Quality

In this service quality model, the perspective of the customer has equal weight to the perspective of the utility manager. The perspective of the customer usually comes to us via two channels, occasional surveys or complaints.

The Service Quality Model

This service quality model combines the views of the utility professional with the perspectives of the customers. Although they often seem incommensurable and even paradoxical, service quality in utilities cannot be adequately described by focusing on only one of these perspectives.

This is only a sketch of the system under development. I am currently collecting data to test some of the assumptions on which this model is based and aim to publish the completed version next year.

Using Marketing to Manage the Acceptance of Recycled Water

Marketing recycled water by colouring the pipes purpleRecent droughts across the globe have motivated a lot of technological innovation in water services. One common strategy to manage water, commonly used by Australian water utilities, is to add a third pipe system. In these areas, customers have access to drinking water, sewerage and recycled water. The reasoning for this development is that access to non-potable recycled water will offset the need to use drinking water for toilet flushing, gardening and similar applications.

While this is an interesting development that seems like a great solution to water shortages, from a marketing perspective, there are some issues with the introduction of dual water supply into houses.

Firstly, following the principles of the Invisible Water Utility, the quality of service can be measured by the amount of time a customer needs enjoying the service. Having two separate taps for two different purposes reduces service quality because of the effort required in owning a dual supply. However, it can be argued that sustainability trumps convenience and that recycled water is necessary. If that is the case, how can we use marketing principles to maximise service quality in recycled water?

Marketing Recycled Water

The introduction of non-potable water to houses goes against the grain of what water utilities have achieved over the past 150 years. Recycled water poses a health risk to through accidental consumption caused by faulty plumbing. To mitigate this risk, water utilities and regulators have developed very strict regulations with regards to the installation of the purple pipe.

In marketing, the use of perception is a standard method to influence consumer attitudes and behaviours. What can water utilities learn from this?

Recycled water is inspected more than gas and electricity

In the state of Victoria, all recycled water installations are inspected three to four times before being used by customers. Even after people have moved into their house, they will receive visits from recycled water inspector on a regular basis. This regime of inspections sends decreases service quality because of the inconvenience, but more importantly sends a wrong message to users of recycled water by emphasising risk rather than the opportunity.

Third Pipe System

Third Pipe System (Source: Victorian Building Authority).

Why does recycled water need to be inspected so often when the potentially deadly electricity and gas supplies are regulated using a far less strict regime? The health risk to a faulty electricity or gas connection is exponentially higher than the danger of consuming recycled water. The rigorous inspection regime communicates to customers that they are dealing with a potentially lethal substance, which is of course not the case. This strategy also has the risk of lowering the acceptance of potential future potable re-use of sewerage.

A more subtle way used to manage the risk of recycled water is the distinctive lilac colour used for all recycled water plumbing. This colour signal is a very clear branding of the service, which is easy to communicate, without exaggerating the risks.

Can we extend this principle and add a non-toxic, environmentally friendly colour to the water? Can we create lilac recycled water? Unfortunately, this is not an option because it would reduce the acceptability for recycled water used in toilets and washing machines. The advertising language surrounding toilets is about sparkling white bowls, without any trace of colour.

Perhaps another strategy to manage the risk of recycled water being consumed by people is to add a pungent taste to the water. Adding offensive smell is the approach used in natural gas supply, where an odorant is added to enable users to detect leaks. A bad taste can be readily associated with health risk. Adding a strong flavour to recycled water would prevent any user from drinking the water and enables detecting cross connections.

Using this simple technique reduces the need for extensive inspection regimes and increases the detection likelihood of plumbing issues because every customer automatically becomes a continuous monitoring device, rather than relying on regular formal inspections.

Perception is Reality: Water Quality is more than chemical analysis

perception of water quality is not only a scientific question - it has a strong psychological dimensionManaging water quality is dominated by chemistry. Customers’ perception of water quality is, however, mostly a psychological dimension.

Water utilities spend a considerable amount of energy in ensuring that drinking water is safe to drink. Armies of scientists and engineers undertake sophisticated analysis to ensure that customers can safely enjoy their water.

In my research, I am collecting data from customers of water utilities in Australia and hopefully also from other countries. The question is related to customers’ perception of the quality of the supply, including aesthetics and taste. The questionnaire also contains an item associated with the difficulty people have paying their regular water bills as an indicator of the level of financial hardship experienced by customers.

The research is not yet complete, but the data is showing an interesting trend. All quality variables strongly negatively correlate with the level of financial hardship experienced by customers. In other words, the higher the level of hardship, the lower the customer will evaluate the quality of the supply of the water. It might be argued that this is caused by people with lower incomes mainly living in areas with a lower level of quality. The correlation does, however, also hold for quality perceptions that are not location-specific, such as promptness of service requests.

Financial hardship was found to be a significant predictor of grades. It appears that the level of financial hardship experienced by customers is related to their perception of the physical parameters of the water. Further research is required to confirm this relationship.

Relationship between financial hardship and perceived technical service quality (F(1, 107) = 8.948, p<.005).

The relationship between financial hardship and perceived technical service quality (F(1, 107) = 8.948, p<.005).

Taste experience has been researched in depth in perception psychology. One of my favourite pieces of work is a study that shows that the taste of water is influenced by the material of the cup it is consumed from.1 This research emphasises a thought I expressed in a previous idea: safe water is a necessary condition, but not a sufficient condition for good water.

Delivering water that meets every known technical specification and health regulation will not guarantee customer satisfaction. Supplying tap water can be viewed from a perspective of experiential marketing. This philosophy of marketing heavily relies on perception psychology to inform how a service is provided.

Follow this blog or my Twitter feed if you like to find out more about the results of my research as it unfolds.

  1. Krishna, A., & Morrin, M. (2008). Does touch affect the taste? The perceptual transfer of product container haptic cues. Journal of Consumer Research, 34(6), 807–818. 

Safe Water versus Good Water

Safe water in South Africa (Source: WRC).

Safe water in South Africa (Source: WRC).

Providing safe water is the most important task of engineers in a water utility. Operators of drinking water systems comply with local regulations to meet this objective. Meeting these requirements can, however, lead to a reduction in the perception of quality by the consumer. For example, adding chlorine is essential to ensure public health in that it destroys micro-organisms, but in some communities chlorine is perceived as an unwanted chemical.1 Providing safe water is a necessary condition. but not a sufficient condition to achieve customer satisfaction.

Service quality is the overall assessment of quality by the customer. In reticulated water, it can be defined from two perspectives: that of the customer and that of the service provider. The customer extrinsically assesses the experienced quality attributes concerning what is capable of being perceived. From the service provider’s perspective, quality resides intrinsically within the service itself. The service provider is interested in providing safe water by meeting the relevant regulations—the customer is interested in good water through a positive consumption experience.2

Service quality in tap water: the difference between safe water and good water.

Service quality in tap water: the difference between safe water and good water.

The intrinsic perspective of the water engineer is predictable and rational. Water safety can be expressed in e-Coli counts, electrical conductivity and other scientific parameters. However, the extrinsic perspective of the consumer’s individual perception is non-rational. This non-rationality does not imply that consumers are irrational. A non-rational perspective is one that includes emotional assessments that cannot be described in numbers. How users of water systems view their service (good water) only partially overlaps with how engineers and scientists see the service (safe water). Customers are interested in good water and take safe water for granted. This aspect of water quality is for marketers to assess.

In marketing jargon, good water is determined by experience qualities while safe water is determined by the credence qualities of water. Experience qualities are attributes such as taste, that can only be discerned after purchase or during consumption, and credence qualities are attributes which consumers find impossible to evaluate because they do not have the knowledge or skill to do so and because many aspects of safe water are not immediately perceivable.3 This idea implies that as customers cannot experience the safety aspects of water directly, trust is one of the most important parameters in the provision of water services.

To provide a complete picture of service quality in water, it is important not to focus only on the intrinsic scientific aspects of service provision. A complete measurement system will include the non-rational dimensions of human perception. Scientists and engineers responsible for water safety need to work together with marketers to provide a complete understanding of water quality.

The concept of intrinsic and extrinsic service quality in reticulated water has been described in detail in my recent paper on the topic, which was presented at the 2013 World Marketing Congress in Melbourne.

  1. Kot, M., Castleden, H., & Gagnon, G. A. (2011). Unintended consequences of regulating drinking water in rural Canadian communities: Examples from Atlantic Canada. Health & Place, 17(5), 1030–1037. doi:10.1016/j.healthplace.2011.06.012

  2. The concept of the distinction between safe and good water is from Dr Dharma Dharmabalan. 

  3. Rushton, A. M., & Carson, D. J. (1985). The marketing of services: Managing the intangibles. European Journal of Marketing, 19(3), 19–40. doi:10.1108/EUM0000000004748

The Water Quality Paradox

Providing a high level of water qualityEvery day, thousands of engineers around the world work hard every day to provide potable water quality to their customers thereby keeping cities liveable and preventing disease. They do this work invisible to most people as customers have very simple, but very high expectations of service.

Although in well-managed systems, the chances that somebody does not receive an excellent service through their tap are extremely low, consumer perception of these services is often not as good as engineers would hope for. The reason for this is because there is a paradox in the provision of water services. Operators of drinking water systems are required to comply with local regulatory requirements. Meeting these requirements can, however, lead to a reduction in service quality. For example, adding chlorine is essential to ensure public health in that it destroys micro-organisms. In some communities, however, chlorine is perceived as an unwanted chemical, leading to a reduction in service quality.1

One of the main ways people form their perceptions of tap water is through taste. A simple search on “tap water” in Twitter shows that taste is the main concern. The taste of water is, however, influenced not only by the chemical and biological quality of the water itself but also by other circumstances, such as the cup people drink it from.2 It was found that the firmness of a cup in which water is served might affect consumers’ judgments of the water itself.

This finding implies that we can not influence the total experience of the service enjoyed by customers as there are always aspects outside the control of the service provider. What at first seems like a paradox is, however, not paradoxical. Water services are like internet services, as they are provided at the customer’s premises and they use their equipment to consume the service. The paradox in water quality is caused by the fact that we cannot control all variables that make-up the customer experience. To the customer, however, this is not important, and any service failure will reflect negatively on the service provider.

This problem is one of the issues I am currently researching for my PhD thesis and will soon start collecting data to dig deeper into this issue.

  1. Kot, M., Castleden, H., & Gagnon, G. A. (2011). Unintended consequences of regulating drinking water in rural Canadian communities: Examples from Atlantic Canada. Health & Place, 17(5), 1030–1037. doi:10.1016/j.healthplace.2011.06.012. 

  2. Krishna, A., & Morrin, M. (2008). Does touch affect the taste? The perceptual transfer of product container haptic cues. Journal of Consumer Research, 34(6), 807–818.