2013/08/06 Differentiating through customer experience should go beyond addressing the reasons for dissatisfaction – it needs to create mot
Competition in the telecoms industry is threatening to intensify the pressure on the traditional revenue of established communications service providers (CSPs). This article discusses the importance of improving the customer experience and the lessons that can be learned from the airline industry.
You board a flight to return home. Before take-off, you are offered a drink and some snacks. The plane takes off, but you don't even notice because you are watching that movie you missed last month in the cinema. After 20 minutes, a member of the highly efficient cabin crew offers you a delicious meal. Later, when you are informed that the plane is about to land according to schedule, you are surprised at how quickly the trip went. The whole flight experience was designed to please the senses. After a few flights, you start to associate the airline with high-quality customer service. Next time you are booking a trip and the name of that airline shows up in the list, you will instinctively select it, overlooking the hefty price premium you will be paying compared with the cheapest option. You will be paying for the customer experience, and you will not be alone. Many will do the same, feeding the profits of the companies that strive to please you.
The liberalisation of the airline industry led to its commoditisation, driven by the appearance of several low-cost airlines. The price pressure that this caused reduced the margins of established airlines, leaving them with no alternative but to differentiate through customer experience. The successful ones have done so, and manage to retain a price premium despite offering a commoditised service. The ones that did not, mostly state-owned companies, struggle or have vanished. Telecoms operators are in a very similar situation. More competition is driving a significant price reduction, eroding margins and forcing CSPs to improve efficiency. OTT players threaten to have the same impact on the traditional revenue of established operators as low-cost airlines had in the airline industry. However, the potential to differentiate exists and examples from other industries can offer some guidance.
Although large numbers of CSPs' subscribers are price sensitive, the value is typically concentrated in a small proportion of high-value customers. Above all, these customers are looking for a problem-free, enjoyable telecoms experience. When subscribing to a service, customers want their CSPs to guide them in the process, speak the same language and allow for service experimentation. Once subscribed, customers want to be able to quickly and easily access the services and activate additional services with the minimum hassle possible. Customers should never need to contact the CSP to solve problems, but if they do, the customer support should be readily available and knowledgeable. It seems simple, but a good customer lifecycle experience is hard to design and implement. However, it does not need to be expensive. In another recent article, Mike Pearson discusses a real case of a telecoms operator that improved the experience for its customers and reduced its costs.
If telecoms operators are to improve the experience of their customers, they must make a concerted and cross-functional effort. Commercial and technical departments should work together and the right incentives should be in place to ensure that the organisation is focused on the same final goal. Roughly speaking, implementing a good customer experience involves five steps.
- Understand the pain points: The starting point of this assessment should be customer perception, but this can be misleading. Is your call centre really that good, or do customers think it is good because they have low expectations? A mix of customer perception, competitor benchmarking and internal quantitative measurements need to be part of this assessment.
- Identify the root cause of the problem: This requires a detailed internal analysis, examining KPIs and processes to understand where a gap exists. If your customers perceive that you are overcharging, the cause could be anything from an issue with the BSS to a miscommunication by the sales team.
- Quantify the impact of the problem in order to understand how much it is worth investing to solve the it: Improving customer experience improves price premium and margins, but also requires investment. Ensuring a positive return on these investments is a key part of the overall performance improvements.
- Solve the problem: A proper workplan and resources with the right incentives need to be put in place. Having the right KPIs is essential to ensuring that the impact of the transformation is quantifiable. Involving the whole company is also vitally important – changing only a part of the customer experience will not be enough. It only works if it all works.
Obviously, not having dissatisfied customers is different from providing a differentiated customer experience. Differentiating through customer experience should go beyond addressing the reasons for dissatisfaction – it needs to create motives for delight. This is where the real challenge lies, but the process is similar – assess the customer lifecycle, identify improvement potential, implement and quantify impact.
CSPs are very focused on avoiding commoditisation and margin squeeze by adding value-added services to their propositions. That is needed, but, as with airlines, the best value-added service CSPs can give to customers is an excellent customer experience.
Source:Analysys Mason
