CUSTOMER SATISFACTION IN THE HUNGARIAN ELECTRICITY DISTRINUTION. G Rekettye T Tersztyánszky
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1 CUSTOMER SATISFACTION IN THE HUNGARIAN ELECTRICITY DISTRINUTION G Rekettye T Tersztyánszky Dr. Gábor Rekettye, Professor of Marketing, Pécs University, Hungary Dr. Tibor Tersztyánszky, Chief Advisor, Hungarian Energy Office, Hungary SUMMARY Major utility companies have been privatized in Hungary mid of the nineties. Government agencies are now faced with the problem of protecting consumers interest in a semi-monopoly environment without directly interfering into company affairs. In 1995 the Hungarian Energy Office ordered the newly privatized electricity supply companies to conduct annually a survey on their business and nonbusiness customers to assess their satisfaction with the electricity supply and related services. The paper describes the methodology of the survey, the importance - satisfaction analyses, and the results of the first five ( ) comprehensive surveys. These results give an up-to-date picture about the differences in the expectations and perceptions of the consumers about the service quality in the field of electricity distribution Key words: Hungary, electricity supply, and customer satisfaction survey.
2 CUSTOMER SATISFACTION IN THE HUNGARIAN ELECTRICITY DISTRIBUTION G Rekettye T Tersztyánszky Professor of Marketing, Pécs University, Hungary Chief Advisor, Hungarian Energy Office INTRODUCTION The public services sector has undergone widespread changes in Central and Eastern Europe (Richter [3], Surrey [2]). Privatization and reorganization of the electricity industry from a traditionally centrally owned and operated system towards a market-based decentralized system has become an important issue in Hungary, too (Tersztyanszky [4]). The recently privatized six electricity distributor companies operate in an assigned region and as a result the consumers cannot choose among the service providers. Thus, in this quasi monopoly environment the level of consumer satisfaction has little impact on their profit or market share as it would in the case of a regular product or service in non-monopolistic markets. Therefore the need has emerged to conduct in regular intervals surveys of consumer satisfaction in order to protect consumer interest as well as to control and supervise the quality of service provided by the distributor companies. measured. The results of the satisfaction - importance analyses would give additional information for the companies themselves for improving their performance. - The methods of assessing the distribution companies according to the customer satisfaction should include the relative ranking of the satisfaction with the electricity supply among other major utility services. - The questionnaire measuring the consumers satisfaction and importance should use the scale of 1 to 5. The results of the 5-scale answers should be converted into point numbers between 0 and 100. The points of the individual indices add up according to the algorithm of the method to a final figure which, within the continuum of 0 and 100, expresses the overall satisfaction of the customers concerning the services of the given utility company. The structure of the satisfaction index is illustrated in Figure 1. The same structure is used for the importance index. FIGURE 1. The Composition of the Satisfaction Index THE METHOD AND OBJECTIVES OF THE SURVEY After a careful review of the international service literature (Ghobadian [5], Taylor and Baker [7], Speller and Ghobadian [10], Cronin and Taylor [6], Moores [9], Parasuraman et al. [8] and others), and the local conditions, the following key issues were agreed upon: - The satisfaction and importance should be measured separately in the household, and business segments. - The customer satisfaction index should be a comprehensive measuring tool, which expresses not only the satisfaction with the core offering of the electricity supplier, i.e. the electric power: but also the satisfaction with the whole performance of the service providers. It meant that the overall satisfaction should be built on the satisfaction of the different components of the service package. - Beside the consumers satisfaction the relative importance of these components should also be I. Satisfaction with the core service package II. Satisfaction with the quality of the clients contacts III. Satisfaction with the communication of the firm IV. Satisfaction with prices V. Satisfaction with the environment protection Overall satisfaction with the company The survey is carried out every year at the same time all over the country. Since the territories of the companies are very similar in size, even the arithmetical average will give a fairly good picture about the present state of art of customer satisfaction with electricity services in the country. The deviation of the individual firm s figures from the average will show the differences in the consumers perceptions about the service of the different regional suppliers.
3 The Sample The Overall Satisfaction with the Electricity Supplier Companies The sample in both segments has been selected by the stratified random sampling method with the reliability requirement of 95 %. The sample was chosen so that consumer living in different type settlements and on the area of the geographic divisions of the supply companies had proportional representation in it. The reliability requirement and the need for proportional representation resulted in a sample size of 1.5 o /oo of the households and 7.1 o /oo of the businesses. Altogether more than 10.5 thousand consumers have been interviewed every year. THE RESULTS OF THE SURVEY OF CONSUMER SATISFACTION Perception of Electricity Service in Comparison with Other Major Public Utilities The first point of interest in the survey was to find out how do consumers perceive the importance of electricity supply among other major public utilities, and what is their satisfaction compared to the other utilities. (Table 1.) TABLE 1. The National Average of Importance and Satisfaction Indices of Public Utility Services (based on the scale of 1 to 5, where 1 = not important/satisfied at all, and 5 = very important/very satisfied) Major public utilities in order of importance in Values of importance Values of satisfaction Electric supply Water supply Postal services Gas supply Telephone services Mass transportation The result of the survey indicates that the importance of electricity supply is on the top in both main segments of consumers. The high satisfaction figures in almost all services (in some cases exceeding their importance) show that the Hungarian infrastructure of utilities is relatively well developed. The only exception is the telephone supply which, in spite of the huge investments made in the mid of the nineties, is lagging behind the expectations of the businesses. The indices of consumer satisfaction of the electricity supplier companies are given in Table 2. TABLE 2. The Indices of Consumer Satisfaction Suppliers Company 1 69,5 67,4 65,4 69,0 72,2 Company 2 67,5 69,8 71,1 69,0 66,2 Company 3 60,5 64,8 67,6 65,4 70,7 Company 4 64,8 68,1 74,1 74,8 70,5 Company 5 66,3 69,3 70,7 70,7 72,9 Company 6 65,1 65,5 66,3 67,6 66,5 COUNTRY TOTAL 65,7 67,5 69,2 69,4 69,8 These figures indicate a relatively high overall level of satisfaction with the electricity supplier companies in Hungary today. The point-values of around 70 - in the evaluation-continuum of 0 (complete dissatisfaction) and 100 (perfect satisfaction) - indicate that the consumers are rather positive about the level of performance of the service-providers. However, further improvement in satisfaction is necessary. Figure 2 illustrates the development of satisfaction in the two measured segments (households and businesses). Figure 2. The Development of Satisfaction within Households and Businesses %XVLHVVHV +RXVHKROGV Satisfaction with Different Aspects of Electric Utility Actions
4 Satisfaction was measured, as indicated earlier, by five main indices. Some of the conclusions of the detailed analyses made according to these components are given bellow: - The level of satisfaction with the quality of electricity supply is relatively high. It is to be seen however that when it comes to the supporting services, like troubleshooting, the satisfaction is much lower especially in the segment of the non-business consumers. - Consumer satisfaction is also high in the different forms of clients contacts. Within this main index, however, there are again some areas with a lower level of satisfaction. - Both households and business consumers are most dissatisfied with the electricity price and discount used by the suppliers. The price perception is very similar in more developed countries, too. A big share of population perceives electrical power as different from other normal products. They evaluate it as something given for granted, as something independent from the market rather than a market category, thus, in contrast to other products or services do not like to pay for the real value of electrical energy. It applies even more to Hungary, where the transition to the market economy has just started recently; and attitudes originating from the communist welfare society are still present among a vast part of the population. - Among the main indexes, the communication has rather low satisfaction index. It is understandable, since this function (which is part of the marketing activity) used to be pretty neglected in the past. The electricity distributors, together with other companies, have to learn now how to communicate with their customers and pay attention to their environment. Comparison of the Satisfaction and Importance Indices The survey started out from the principle that satisfaction with the components of the individual service is to be evaluated most rationally when compared to the importance granted to them by the consumers. The satisfaction values exceeding the importance figures show a kind of over-performance, and visa-versa: importance values exceeding satisfaction values reflect a kind of under-performance. Figure 3 shows this relationship calculated on the averages of the two segments in FIGURE 3. Comparison of the Importance and Satisfaction Values (The lighter column is importance, the darker column is satisfaction) I ÃR LW\ OLW\ D F WULF X OH ÃT H ÃH K H 7 WK I OÃR Y H ÃOH H K 7 WV F OLH F WV WD F R UV WLR H D P LF X V WR X PÃF P R LWK & Z,PSRUWDFH G V ÃD H ULIV WD ULF 3 W H P F WLR Y LUR WH UR S ( 6DWLVIDFWLR The Differentiating Effect of Some Social-Economic Criteria The survey has also made it possible - by revealing the structural differences in averages at both national and enterprise level - to clearly see how electricity suppliers can differentiate their service-offering and more importantly differentiate their consumer communication. The survey has shed light, for example, on two tendencies, which may have importance on the formulation of the nationwide energy policy. Figure 4. shows that as the educational level of respondent rises the importance of power supply also rises while the level of satisfaction declines. FIGURE 4. Importance and Satisfaction in Relation to the Level of Education O WD R 7
5 (OHPHWDU\,GXVWULDOWUDGH VFKRROÃJUDGXDWHV VFKRROÃJUDGXDWHV +LJKÃVFKRRO JUDGXDWH &ROOHJHÃDG XLYHUVLW\ JUDGXDWHV,PSRUWDFH 6DWLVIDFWLR The analyses according to the type-of-settlementstructure indicates that, while the importance is apparently about the same in the households located at different settlements, overall satisfaction, is higher in the small cities, while in larger cities and communities the perceived level of electricity services is lower. FIGURE 5. Importance and Satisfaction in Relation to the Size of Settlement the first time when public utility suppliers turned outward, and asked their customers about their expectations and satisfaction. During the successive surveys electricity got used to the fact that customer satisfaction is an important issue even in a utility company having a monopoly position. The satisfaction survey help them to prepare to the future market opening required by European Union regulations. The results of the surveys are promising in two ways: (1) the customers are basically satisfied with the performance of the service providers, (2) the survey has identified those components of the service package which need further improvements. The service areas, which typically underperform according to the importance-satisfaction analyses are mainly marketingrelated areas, like communication, price, and customer service. Although the surveys were initiated by a government agency (HEO) to monitor the activity of monopolies the companies can benefit from their results, as well. The preparation of the survey addressed a number of important theoretical and methodological questions relating to the components and measurement of service quality, its relation to the overall performance of the service provider, the relation of the perceived service quality and consumer satisfaction. Further research should address the refinement of the methodology of customer satisfaction survey and the comparability of its results. The issue of comparability should include the comparison of the results in time, the comparison of the results measured for different service suppliers, and international comparisons. References: 1. Surrey, John (1992), Energy policy in the European Community, Energy Journal Vol. 13, 1992 p Common, R., Flynn, N., Mellon, E. (1992), Managing Public Services, Buterworth/Heinemann,PSRUWDFH 6DWLVIDFWLR 3. Richter, Joerg-Uwe (1992), Energy Issues in Central and Eastern Europe: Considerations, Energy Journal Vol p 4. Tersztyanszky, Tibor (1996), Restructuring and Market Opening Tendency in the Electric Supply Industry in Hungary, Unipede, 2 nd Conference on the Development of Interconnected Power System, Report LOODJHV 6PDOOÃFLWLHV %LJÃFLWLHV &DSLWDOÃ CONCLUSIONS AND FUTURE RESEARCH The first survey on consumer satisfaction in the electricity supply industry was a major step in the transformation process of Hungarian economy. This was 5. Ghobadian, Abby (1996), Service uality - a review of salient issues, Management Bibliographies & Reviews, Vol. 22, No pp. 6. Cronin Jr., Taylor., S. (1992), Measuring Service uality: A reexamination and extension, Journal of Marketing Vol. 56. Jul pp.
6 7. Taylor, S.A., Baker, T.L. (1994), An assessment of the relationship between service quality and customer satisfaction in the formation of consumers purchase intentions, Journal of Retailing Vol. 70. No pp. 8. Parasuraman, A., Zeithalm, V.A., Berry, L.L. (1985), A conceptual model of service quality and its implications for future research, Journal of Marketing Vol. 49. Autumn pp. 9. Moores, Brian (ed) (1986), Are They Being Served? uality consciousness in service industries, Philip Allan Publishers Limited 10. Speller, S., Ghobadian, A. (1993), Change for the public sector, Managing Service uality, July 1993, pp.
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