In a March, 2007 column, I pointed out with amusement an instance of consumer media behavior leaking into the oil and gas business:
Consumers have a fetish for ranking products. This seems to be all the more so if the products competing for first place are electronic, mechanical, sporting, or entertaining (or some combination of the above). Magazines and Web sites devoted to every conceivable special interest inevitably publish a top 10 something-or-other list. A magazine-slash-Web site like Consumer Reports casts its net wider and apparently finds no product category too mundane to dissect and examine with the gimlet-eyed seriousness of a disease-battling microbiologist.
If you’ve wondered if such an urge to rate and rank has ever manifested itself in the oil and gas industry, wonder no more—it has. EnergyPoint Research recently issued its 2006 Customer Satisfaction Rankings, a survey of customers of “drilling and wellsite service providers.” This report is the second after EnergyPoint’s initial survey in 2004.
It notes that the current business climate “…has also brought its own set of challenges, including that of meeting customers’ insatiable demand for services at a time when the personnel and equipment needed to fulfill these services are as scarce as they have been in a generation. Throw in the threat from cash-flush competitors and hungry new entrants looking to exploit instances of market opportunity, and executives and managers have plenty to keep them awake at night.”
A comment from one anonymous respondent quoted in the report should have them reaching for the Sominex: “Virtually all providers are suffering from a lack of qualified personnel these days. Equipment maintenance has deteriorated, service is a fraction of what it was a few years ago, and constant supervision to the point of micro-management is almost a necessity. And rising costs and inefficiencies are beginning to severely impact project economics.”
That opinion is not exceptional. According to the report “…results indicate that operators are overall less pleased with the quality of service they are receiving from providers compared to just 2 years ago.” Ouch.
Is there any hope? The report points to a few companies scoring at the top who share a similar long-term outlook, a factor the report considers key to their rankings. Amazingly, one of them has never had a layoff in its 80-plus year history. (That implausible fact could probably win you a few bar bets.)
How did the company that made the biggest leap up the rankings do it? “The company increased dialog with major customers and instituted a more formalized program to survey and actively address their needs. Training was beefed up, and the dissemination of best practices was improved across the organization,” the report said.
Someone has to finish last, of course. Even then, all is not lost. As the report notes, the 2004 last-place finisher climbed higher up the ranks in 2006 by changing chief executive officers, relocating its headquarters closer to its major customers, jettisoning non-core operations and increasing spending on personnel and equipment to improve safety and efficiency.
The report offers some bits of useful advice for improving performance but adds ominously that “…today’s providers would be well advised to pay close attention to their customers. After all, one hears rumors that there may come a day when demand for their services can no longer be taken for granted.”