Excerpt - American Water Works Association

Shape the Perception
of Water’s Worth!
g
n
i
t
a
c
i
n
u
m
m
o
C
Excerpt
from the book
included.
s
r
e
t
a
W
Value
tegies
, Tips & Stra
ts
in
o
P
g
in
Talk
rks
Ideal crop ma
oetz
Melanie K. G
™
rtant Resource
’s Most Impo
the World
Dedicated to
Buy Now!
Available at the AWWA Store
© 2014 American Water Works Association
Open
Channel
DAVID LAFRANCE, CHIEF EXECUTIVE OFFICER
Framing Water’s Value and the Public’s Perception
F
inally! Guidance, a framework, on how to communicate the value of water in a way that its true
value can be appreciated and the general public
can understand. Melanie Goetz is a marketer
who is vested in the water industry; in her breakthrough
book, Communicating Water’s Value: Talking Points,
Tips & Strategies, she provides game-changing insights
about how water professionals can communicate water’s
value to its ultimate stakeholder—the customers.
Every water professional needs to read this book. If
you are reading this column, I know you have a level of
interest in the value of water, and you know how complicated it is to communicate its value. This book will help
you think about how to achieve that goal in ways you
have never thought about before.
Every student interested in water needs to read this book.
If you are a professor, this is a must-read for your students;
it will help them understand the context of the water profession and how successful water professionals need to be
both technical experts and great communicators—which
requires a whole set of different technical skills.
Perhaps you are asking yourself, what does a marketer
know about water? Or maybe you think marketing is
just hype and spin, and it has no place in the technical
aspects of providing water. Well, rest assured, Goetz is no
water novice. She has a solid background on water from
serving as a board member of a water utility, being a
water consultant, owning her own well, and moving her
family to make sure they lived in an area with a reliable
water supply. She readily
admits that being a marketer in an “engineering
Communicating
world” is complicated at
times, but she counters that
her expertise in marketing
enhances and magnifies the
value provided by water
experts—it’s an important
and necessary balance.
In her book, Goetz says
Melanie K. Goetz
that “the value of any product, water included, is
established subjectively by
consumers’ perceptions or
To order Communicating
its
importance.” And that is
Water’s Value, go to AWWA’s
where
her expertise lies—
online store: www.awwa.
framing
and shaping perorg/store/productdetail.
ceptions.
While water proaspx?productid=38137308.
Water s
Value
Talking Points, Tips & Strategies
Dedicated to the World’s Most Important Resource™
10
N O V E M B E R 2 0 1 4 | J O U R N A L AW WA
fessionals focus on important and critical development of
safe water supplies, people like Goetz focus on how to
frame the value of safe water in simple terms—in short,
she helps frame the complicated technical issues so that
customers understand and perceive water’s importance.
A couple of key things to note about the book—first,
Goetz covers a vast amount of territory, including rate setting, pricing, social and marketing norms, perception of
value, irrationality of numbers, discounts versus rebates
versus coupons, ethics, working with the press, and more.
Second, she realizes that framing value is not a one-sizefits-all proposition, but she definitely provides new ways
for water professionals to think about how they communicate water’s value and why doing so is important. And
third, she draws on real examples of how several water
utilities have already taken steps to think outside the box
when marketing the value of their services.
When I asked Melanie why her book was important,
her response was to the point. She said, “The people in the
water profession need a bigger voice; they need to stop flying under the radar and need to start taking credit for the
impactful work they do.” She further said that “while
some marketing may be ‘spin,’ that is not the case with
water—in this case, marketing simply ensures that the
value of the technical work does not go unappreciated.”
Goetz strongly believes that a critical piece of marketing
water’s value is in how the discussion is framed. And the
framing, when done properly, will have a positive effect on
the perception of water’s value—and perception is the
name of the game. In her book, she follows this framing
rule. Each chapter is written in a very conversational tone
and begins with a non-water example that helps frame the
point of the chapter. Then, once the point is framed, Goetz
applies the example’s principles to water to make her
point. It is an excellent example of walking the talk.
No matter how important, everything we know about
water is not always interesting to non-water experts. And
the complexities we understand can be turnoffs, as Goetz
says: “If we have to wonder and ponder over what someone is trying to say . . . it just ticks us off.” And that is
why understanding the value of marketing—differently
from what we do today—is important. The last thing we
want to do is tick off our customers.
If you think this book is not for you, well, I would recommend you think again. When asked who her target
audience was when she wrote the book, Goetz answered
simply: “I wrote it so my husband would read it; he is a
water engineer.” I’d say Goetz knows her audience.
Chapter 8
The Paradox of Value:
Water Rates and the Law of
Diminishing Marginal Utility
“How wonderful that we have met with
a paradox. Now we have some hope of
— niels bohR
making progress.”
W
hy is it that diamonds, shiny and nice as a fashion statement, are
valued more highly than water, which quenches our thirst and is
an absolute prerequisite for sustaining life? Could it be that the water we
use on the other end of the “sexiness” scale—filling a scrub bucket, hosing down the driveway, or flushing the toilet—has a dampening effect on
water’s value?
Rarely do we think about the disparity of price among the myriad
products that surround us. Apples-to-apples, it’s obvious that a Kia Sorento
doesn’t hold a candle to the Rolls-Royce Phantom. But apples-to-oranges,
why such a chasm between cool blue water and hot blue diamonds? (Ironically, diamonds are often referred to as ice.)
Economists tell us that the law of diminishing marginal utility dictates that consumers place a greater value on diamonds than on life-giving
water. It’s just the way consumers prioritize price—by a product’s leastvalue usage. You may crave life-giving water if you’re lost in the desert,
but even the humblest industrial diamond carries a certain sexiness that
satisfies us in a way that the redoubtable H2O never can.
53
© 2014 American Water Works Association
Communicating Water’s Value: Talking Points, Tips & Strategies
Ah, the allure of a precision-cut marquise diamond! Well, let’s just
concede that the value of water pales in comparison, as it courses down the
storm drain, in most people’s eyes. Few would ever capriciously discard a
diamond, yet water flows down our gutters every hour of every day. And
if gutter runoff is the worst face of water—that is, its least-value usage—
this explains its low prestige among economists and, by extension, average
consumers.
Yet that devilish voice whispers in our ear: “Isn’t there something you
can do to spiff up that image, and put cool clear water on a par with those
exquisite diamonds over there in the jeweler’s window?” Or, as the Marketing Department might view things: Can you find a way to reposition the
product and boost its perceived value in the eyes of the consumer, even if
it sells for only a penny a gallon?
Objective Versus Subjective Value
Two schools of economic thought drive the discussion about the value of
a product: the intrinsic and the subjective. The first holds that the price or
value of anything is objective. The second school says price and value are
strongly linked to our subjective perception of the worth of goods or services. Most of us—economists, retailers, and consumers alike—function
in this subjective mode; thus, we give little or no value to an object unless
it’s perceived by a consumer to satisfy a human need or want. What does
it cost to bring a product to market? Irrelevant. What are the variable costs
for larger quantities? Meaningless.
If the consumer doesn’t covet your Pet Rock or Beanie Baby, you may
as well try selling snowballs to the Inuit in Alaska. Objectively speaking,
delivering snowballs intact to the shores of the Bering Strait surely involves
massive cost (labor, packaging, transportation, and the like). What price
could you possibly hope to expect from the Inuit in return for your investment and efforts? Subjectively speaking, zero. But offer that same product
in liquid form and voila! The lowly H2O is viewed in a new light. Think
pipeline. Think bottled water.
In either case, objective value is irrelevant to the consumer. Economists would point to the economic value—simply put, what a product is
worth to the person who wants to buy it rather than how much the seller
will give it up for.
© 2014
54American Water Works Association
The Paradox of Value: Water Rates and the Law of Diminishing Marginal Utility
Diamond–Water Paradox and Diminishing
Marginal Utility
Adam Smith defined the contemporary Western notion of economic value.
More than two centuries ago, the Wealth of Nations author mulled the
conundrum that even though life cannot exist without water and we can
easily subsist without diamonds, diamonds are, pound-for-pound, vastly
more “valuable” than water. This paradox endures today.
Figure 8-1 illustrates the law of diminishing marginal utility in the
“diamond–water paradox,” showing the marginal utility of diamonds and
water as a function of the amount consumed. As a person buys or consumes more diamonds or water, each additional unit of diamonds or water
results in a lower marginal utility. At low levels of consumption, water has
a higher marginal utility than diamonds and thus is more valuable. People
usually consume water at much higher levels than they buy diamonds;
thus the marginal utility and price of water are lower than the marginal
utility and price of diamonds.
Let’s return to our Far North water marketplace. Suppose we deliver
five pallets of bottled water to the small town of Barrows, Alaska. That
shipment might last the entire winter as a supplement to the residents’
600
Water
Diamonds
Marginal Utility (utils)
500
400
300
200
100
0
0
10
20
30
40
50
60
Quantity Consumed
70
80
90
100
Figure 8-1 Marginal utility of water and diamonds as a function of amount
consumed
© 2014 American Water Works Association
55
Communicating Water’s Value: Talking Points, Tips & Strategies
existing water source. Beyond that, however, their willingness to purchase
more pallets of water almost certainly decreases. The law of diminishing
marginal utility kicks in and the law of diminishing returns looms over
any subsequent transaction you might propose.
Basically, as you buy more, you are less inclined to shell out your
hard-earned dollars for each incremental unit you might purchase. As your
need approaches saturation, your wallet starts to go back in your pocket.
And when you don’t need any more of something, your wallet is zipped
tight, and it disappears into your pocket’s deepest recesses.
Ironically, you save your marginal purchasing power for—yes—a
rainy day. And although an Inuit’s definition of a rainy day might be the offchance that a day will come when his sled dogs get thirsty and he’s run out
of pallets as the spring thaw nears, it’s far more likely his wallet would next
be opened to buy more money-making sled dogs. (FYI, it might surprise
you to know that Alaska is overall a rainy state—though all that precipitation has a way of turning white in higher elevations and way up north.)
Similarly, once a family is quenched from the gallons of water it
needs for personal consumption, additional outside water becomes less
valuable. Put another way, water has a diminishing marginal utility once
personal-use needs are met.
Throw in one more paradox: In the world of water transmission, as
we discussed earlier, the price of water goes up with usage (increasing-tier
rates). This system is ingeniously engineered to encourage water conservation. Yet at the core, the price of water is geysering upward exactly at the
time consumer demand is flowing down the sidewalk.
In The Wealth of Nations, Adam Smith insightfully noted, “Nothing
is more useful than water, but it will purchase scarce anything.”15 In analyzing Smith’s seminal work, P.J. O’Rourke tried to clear up any confusion
with a humorous illustration: “With an additional eight ounces of water, all
we get is a trip to the bathroom in the middle of the night. With an additional eight ounces of gold, we get the upfront payment to lease a Lexus.
Marginal utility explains why gold, vital to the life of no one except hiphop performers and fiancés, is so high-priced.”16
Establishing the Value of Tap Water
Here’s the point: The value of any product, water included, is established
subjectively by the consumer’s perception of its importance. Families
© 2014
56 American Water Works Association
The Paradox of Value: Water Rates and the Law of Diminishing Marginal Utility
moving into a new housing development need water, true enough. But these
families want to buy a new house, and the land developer’s creation of
a water-delivery infrastructure slakes that demand. But nothing happens
until that family/consumer perceives the value of water in reaching their
status-driven goal of buying their dream castle.
Thus, to establish the value of tap water, we must also include its
diminishing marginal utility—that is, how it is being used, how much is
being used, and for how long it will be needed or demanded. A wise man
once said that it’s far easier to sell a man a sandwich once you’ve established
that he wants lunch. And that is equally true in the water industry: We do
not sell water, we sell status—we sell a solution for thirst, but we handcuff
ourselves if we only think of thirst as a need of someone with a dry throat.
A new homeowner buys a water tap the same way a hungry man seeks out
lunch—not focusing, perhaps, on the sandwich or water per se, but on the
anticipation of a need to be filled.
In the dual-pipe system, outside (nonpotable) and inside (potable)
water usages are separated, so the rates are different. This system has the
luxury of fitting within the two very different perceptions of value. A utility
in a new development may carry potable water in one line and nonpotable
water in another. Rates for untreated water are less than those for tap water,
and the billing statement carries two line items to objectify the very subjective way most consumers value water. It also works well for separating out
increasing-tier rates. In this case, consumers can align the quality of water
with its usage—there is, after all, no need to irrigate with treated water.
Alas, a dual-pipe system is rare, and most utilities cannot segregate
indoor from outdoor water usage. So what happens? As the average consumer’s personal needs for water are met, the marginal utility of water
decreases. At the same time, water rates are unchanged—or even go up
with usage if increasing tier rates are employed. This principle flies in the
face of the very natural question that many consumers have: Why is the
first, most valuable gallon of water the cheapest, but the last and least valuable gallon the most expensive?
Ah, have you forgotten already? Water is not a commodity; it’s an idea,
a means to an end.
People value water less the more they use, so perhaps visual clues are
in order to emphasize the differences on the billing statement. By parsing
the billing statement in this way—indicating the first tier of water would
represent the average indoor usage for a household—utilities could begin
leveraging a huge educational tool.
© 2014 American Water Works Association
57
Communicating Water’s Value: Talking Points, Tips & Strategies
Generally, people don’t like paying more when they use more, especially because many of those last 1,000 gallons are the very gallons that
flow down the driveway and into the gutter. Perhaps the value of water
could become more of a straight line rather than a plunging roller coaster
that largely ignores the relationship between consumption and marginal
utility. Current industry best practices emphasize environmentally friendly
pricing, but increasing evidence indicates skepticism among consumers
about pricing strategies that conflict with their own values.
One must ask: Is it time to rethink pricing strategies that in real life
may or may not encourage water conservation and instead frame those same
rates in a way that recognizes how most people value water—by its usage?
© 2014
58 American Water Works Association
Chapter 11
Perception and the Value of
Water: It’s All Relative
“Price is what you pay. Value is what
you get.”
— WARRen buFFet
T
he glassware we pulled from our energy-efficient dishwasher was
cloudy, and the plates had a vaguely milky coating—as though they
had too much detergent left on them, I thought—and that, in fact, turned
out to be the case. In our zeal to get the dishes super-clean, we had been
filling the detergent to the brim, slamming the door shut, and dialing the
dishwasher up to the longest timeframe available. That seemed logical, but
apparently (from the looks of our glasses at least) that’s not what we were
supposed to be doing. Sure enough, we looked closer and discovered a
thin line a little less than halfway up the soap dispenser that marks the
appropriate level for a full load of dishware.
With a feeling that more must be better, we had been pouring detergent
up to the top and overflowing—more than twice what was recommended.
Relativity of Human Perception
Psychophysics experts call actions like ours the relativity of human perception. I was compulsively filling the tiny box to capacity and beyond because
it was, well, tiny. Consumer Reports aficionados recognize this as one of
many “sneaky consumer product tricks”24 designed to encourage product
overuse—tricks that manufacturers quite tidily rack up as profits.
The makers of things like laundry detergent long ago learned that
we humans will use more of a cleaning product or supplement when the
75
© 2014 American Water Works Association
20757 text.indd 75
8/25/2014 9:46:21 AM
Communicating Water’s Value: Talking Points, Tips & Strategies
laundry detergent cap or the fill line of a measuring cup is some small
fraction of the total volume available. We use just a bit more than needed
(usually recommended in the fine print at the bottom of the label). Bottom
line: The manufacturer sells more soap—but my glasses come out cloudy.
Back in the 1800s, German physicist Ernst Weber,25 in many ways
the father of experimental psychology, discovered that all things are relative when it comes to perception. And perception, he quickly learned, is
integrally related with behavior.
In an early experiment, he blindfolded people and put a weight in
one of their hands. He asked his subjects to signal when they noticed any
change in its weight as he incrementally added metal filings. What Weber
concluded was that the subjects perceived a change in weight when 13 percent was added to the original weight. Thus, if the participant was handed
a 10-pound weight, he noticed no difference until it weighed 11.3 pounds.
Invariably, the same held true regardless of the original weight: Starting
with 1 pound required Weber to stack on a scant additional 2 ounces;
30 pounds, almost 4 pounds more.
Think of standing in a dark room and someone lights a match; it’s
almost blinding. Yet, strike that same match in broad daylight and you
hardly notice it.
Dieting? Using a smaller plate makes the amount of food appear
larger, a good rationale for why people eat less using smaller rather than
larger plates. If my dishwasher’s detergent box were half the size it is, surely
I wouldn’t pour in an amount that I could easily perceive would be quadruple its capacity.
In short, we perceive just about everything in relation to its surroundings. Take, for example, the two lines in Figure 11-1.
If you glanced at the two lines quickly you probably perceived line A
to be longer than line B. Bring out the ruler, however, and you will find that
the two lines are exactly the same length. The illusion of different lengths is
created by the relationship of the boxes on each end of the two lines.
Perception and Reality
The tie between perception and reality jumps out at us in retail price
discounting. We jump at the chance to buy a $1,000 television for $699,
but turn our noses up at the exact same TV, undiscounted and offered
for the same $699. We consumers just don’t get the same feeling of
© 2014
76 American Water Works Association
Perception and the Value of Water: It’s All Relative
Figure 11-1 Are the two lines the same length?
accomplishment if it isn’t discounted; we judge many, if not most, of our
purchases relative to the “manufacturer’s suggested retail price” (MSRP).
The MSRP being the gold standard reference point a manufacturer uses to
convince consumers they are getting a “good deal.” And as we all know, the
MSRP is often irrelevant and, in some cases, wholly fabricated.
In fact, once we realize an MSRP is bogus, we fall back on our innate
sense of what we believe a product is worth in order to find a comfortable
place in the marketplace again. If you think about it, the economist Adam
Smith told us that prices invariably fall to the price that thousands or even
millions of prospective buyers determine is how much they will or will not
pay for something. Our collective consciousness steers our sense of “what
should be” in the market, not only in terms of price but also quality, availability, service, warranty, variety, convenience, and more. The successful
entrepreneur, the successful manufacturer, even the successful water utility is one that communicates some combination of perceived costs to create
value in what they are selling.
Consider the lowly infomercial. How do these not-ready-for-primetime mini-dramas manage to reach out and massage the collective mass
psyche and cultivate amazingly lucrative subsocieties of consumers that
seemingly will buy almost anything? Well, infomercials use price reference
points to sell billions of dollars’ worth of products annually. One has only
to turn on the television on a Saturday morning to see the score of channels
with paid advertising. It goes something like this:
© 2014 American Water Works Association
77
Communicating Water’s Value: Talking Points, Tips & Strategies
This amazing Miracle
Multipurpose Vacuum can
suck up a gallon of water in less
than 3 seconds! Watch as I quickly
vacuum up a spilled soda pop. You
might expect to pay $100 or $300 for
a vacuum like this, but call right now
and you can get this incredible vacuum
for the special price of only $39.99.
And that’s not all….
The effectiveness of the mentioning a higher price sets a reference
point, which is designed to make the final price of the $39.99 seem like a
really good deal.
Consider two scenarios. What would you do?
scenARio A: You go to buy a vacuum at your local appliance store. You
find the Phantom P170. It’s perfect for what you want. You also are happy
to discover that it’s on sale. Originally priced at $350, you can take it home
for just $250.
Like most people facing Scenario A, you thank your good fortune, lay
your $250 on the counter, and walk out of there quite pleased with your
purchase. After all, that’s a $100 savings!
But imagine a slightly different scenario:
scenARio b: You walk down the appliance store aisle and spot the
Phantom P170. It’s just what you’ve been looking for. It’s not only perfect—
it’s on sale. Originally priced at $255, it is now only $240.
Do you buy the Phantom P170 or go look for it at the store down the
street? Hmmm. It turns out most people don’t think Scenario B is such a
great deal.
The two scenarios were played out with 100 people, and 75 of them
opted for the vacuum in Scenario A. Only 25 shoppers said they’d purchase the vacuum in Scenario B. Fully 3 out of 4 people, it seems, preferred
“saving $100” as opposed to paying 10 bucks less for their treasure.
© 2014
78 American Water Works Association
Perception and the Value of Water: It’s All Relative
What seems, at first glance, to be perfectly logical in terms of relative
pricing makes no sense at all when you stop to rationally consider Scenario
B: It’s the same vacuum!
But whether you’re looking for the best price, battling a “limited time
offer,” or you just want that cool trinket for your very own, the underlying
psychology involves going along with the crowd. Being one of the guys.
And then there’s the Lottery. We all love to moon over our dreams
of winning the Lottery. This is an almost universal application leveraging
relative perception. Watch the television commercials: There’s you—and
there’s that one lucky winner. Lottery promoters are geniuses at helping
you perceive yourself as the winner of those mega-millions in prizes. It’s
easy! But these advertisements are very effective by tricking our mind’s
perception of relativity. We see one winner, and we relate it to a single,
wannabe winner—our own self. It’s a fever, and it’s contagious.
Ideally, we never see the millions of people (like us) who lost. We
never stop to calculate the unfathomable odds of actually winning the
mega-millions. (Do the math: Showing the 1 million losers, each in their
own ad, from a single week’s Lottery would require running 30-second
commercials around-the-clock for an entire year!)
Utilities and Relative Perception
What’s the takeaway for utility gurus? What is important for the utility to
know about relative perception is that most people make their decisions
by comparing to local alternatives—favoring the choices they can see with
their own eyes and hear with their own ears.
In other words, what does the neighboring community pay for tap
water?
In Colorado, hundreds of water providers provide service outside the
Denver Water service area, which is far and away the state’s largest and best
endowed. Here in the United States, many consumers consider tap water to
be a commodity, and thus, those customers living outside the Denver Water
service area strive to understand the relatively higher price they pay. “Why
is it that my friends living a few miles away in Denver pay a fraction of what
we pay in the suburbs for water?” And it’s a valid question that’s asked over
and over, in towns and communities across the United States.
“Making relative judgments is the natural way we think,” behavioral
economics guru Dan Ariely asserts in his watershed book, Predictably
© 2014 American Water Works Association
79
Communicating Water’s Value: Talking Points, Tips & Strategies
Irrational.26 But in almost the same breath, Ariely notes that his friend,
James Hong, is a rare exception to the rule—a dot-com entrepreneur whose
social circle includes a gallery of wealthy friends such as the founder of
PayPal, among a host of others.
Eschewing the need to compare himself to another, Hong went out
and bought a Toyota Prius, trading his flashy Porsche Boxster for the significantly cheaper car. Hong expressed great satisfaction in recognizing
and breaking the wealthy comparison game: “When you get a Boxster, you
wish you had a 911,” Hong told the New York Times. “But do you know what
people who have 911s wish they had? They wish they had a Ferrari.”
What does Ariely’s doctrine of relative perception have to do with the
utility and its rates? One of the best examples involves the town of Castle
Rock, Colo., located a half-hour south of Denver. With a population of
about 50,000, it has in the past relied solely on groundwater. Historically,
its groundwater has been very good, but given that this source is embedded in rock, the replacement rate is virtually nothing. As the town grew, it
needed to convert to a sustainable, surface source of water.
But that cost money—lots of it.
Rates were forced up immediately, and notices of incremental increases
were spread over several more years. Naturally, residents of Castle Rock
wanted to know why their rates were higher than those just up the road in
Denver. Town Council members and the utilities department were backed
to the wall with a substantial public communications challenge.
Here’s what they did.27
Officials created a “you live here—they live there” strategy (Figure 11-2), and showed two houses, using a map to illustrate why “local”
water was not comparable in the two localities. Operation of a system,
barely three decades old, to deliver water from groundwater sources bore
scant resemblance to Denver Water’s 160-year history of acquiring water
rights and installing service systems.
Little could be done to change the reality of the situation, but at least
people in the town of Castle Rock had a basic understanding of costs in the
greater scheme of things. So, yes, their water bills continued to be relatively
high compared with those of Denver, but their perception had been altered
through better understanding of the process—and it should be noted that
other outlying utilities picked up on the town’s success and incorporated
Castle Rock’s approach into their own community outreach strategies.
Often the best way to compare apples-to-apples is to show how a comparatively smaller utility’s rates stack up against similarly sized or located
utilities (Figure 11-3).
©80
2014 American Water Works Association
Perception and the Value of Water: It’s All Relative
Figure 11-2 The “you live here—they live there” strategy
© 2014 American Water Works Association
81
Communicating Water’s Value: Talking Points, Tips & Strategies
Figure 11-3 Comparison of drinking water cost for SMWSA utilities
Source: Graphs are public record and were provided by Castle Pines North Metropolitan District,
2011
When the utility’s rates are average or a bit below average compared
with neighboring communities, the use of bar charts can give a visual
side-by-side comparison. By making posters out of the graphs and placing them at community meetings, on websites, and on billing statements,
there is a relative perception benefit. Instead of comparing the apple to the
orange—the teeming metropolis versus the sleepy bedroom community—
the choice of comparisons must be appropriate to others similarly situated
in the general area. Real estate agents call these comparables. Perhaps, as
in the case of Denver/Castle Rock, it is a question of size or the maturity
of infrastructure. Another area might be confronted with challenges of
topography, population density, or innate water quality. In any case, the
clear communication of an honest rationale, drawing upon valid methodology, often wins understanding and approval from customers. Somehow we
can accept our own situation as long as we realize why our rates are higher
(or lower) or why our water quality is better or worse than our neighbors
two or three valleys away.
Think of a mother explaining to her teenage son why he can’t be one
of the Cool Kids with the newest, hottest iPhone. Maybe Johnny won’t fully
understand the depth of the family’s tight budget, but at least his resentment is tempered by the reality of understanding why.
©82
2014 American Water Works Association
Perception and the Value of Water: It’s All Relative
Simply stated, it’s human nature to make decisions by blending a
healthy dose of emotional irrationality with the logical calculation of concrete factors like price, history, quality, service, and availability. Utility
rates, like everything else, are no exception to this rule. The question for
utilities is how they overcome this innate human weakness to view things
from a relative perspective and make their customers understand the true
value of what is being provided. Perhaps the answer lies in finding a recipe
of just the right blend of daydreams and cold hard facts—because all of
us, in the public and private sectors alike, are coming face-to-face with
impossible options in a national and world economy built on a foundation
of facts that seem to just keep on getting colder and harder.
© 2014 American Water Works Association
83
Communicating Water’s Value offers tips and tools to assist communications staff,
management and employees at both small and large utilities in shaping their messages
about the value of water to the public. The tactics outlined can especially be useful during
situations such as advocating for proposed rate hikes, or when conservation measures are
needed. Communicating Water’s Value also includes “success stories” from various utilities and
corporations who implemented strategies that effectively shaped and changed the public’s
perception of the value of water.
About the author:
Melanie Goetz is a speaker, consultant and writer. She specializes in assisting water utilities
to effectively convey the value of water and energy to their customers. With more than
three decades of public communications experience, she has been a driving force behind
community-supported rate increases and effective strategic marketing, education and
outreach campaigns to change behaviors. An ongoing contributor to Journal - American Water
Works Association, she holds a bachelor’s degree in business from the University of Colorado
Boulder and a master’s degree in business administration from Old Dominion University in
Norfolk, Va. President of Hughes & Stuart Marketing since 1980, Goetz serves as the Senior
Account Executive.
About the publication:
Communicating Water’s Value: Talking Points, Tips & Strategies
By Melanie Goetz
Published by American Water Works Association
ISBN: 978-1-58321-979-9
Softcover, 250pp.
Price: $59.95 AWWA members, $79.95 non-members
Product #: 20757
This Book is Available at the AWWA Store
Buy Now!
www.awwa.org/CWV
© 2014 American Water Works Association