Technology, Media and Telco

Keepingup with the Customer

Consumers today are spoilt; they are provided with rich experiences at their fingertips from companies across industries and it is increasingly transparent when high quality services aren’t being provided. Surveys reveal that 60% of consumers have higher expectations of customer service now than they did just one year ago1 and interestingly, whilst 80% of companies believe they deliver a superior service only 8% of customers feel that they receive one1.

This paper explores the challenges being experienced by the Telco industry in an environment where customers expect flawless, cross-channel service from a sector with an historically poor track record of providing it. We introduce six key steps which outline the starting point for a customer-centric business transformation, a journey critical for the future success of Telco organisations.

PURPOSE OF THIS PAPER

1 Source: http://www.mycustomer.com/service/management/infographic-why-bad-service-is-burning-your-bottom-line

1 Purpose of this paper

2 The challenge

3 What next?

4 The six key steps

14 Summary

Customer perception is reality, a key to success is setting customer expectations accurately and then exceeding them. Richard Brackstone TMT Client Director

80%of companies believe they deliver superior service, only 8% of customers feel they receive one1.

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THE CHALLENGE SO WHAT NEXT?

The challenge for Telcos is clear. Incremental improvements in customer service will not be enough and organisational transformation is required, to create an agile and ‘disruptive mind-set’ that encourages and embraces learning from themselves and from others. Telcos need greater agility to rapidly respond to the ever-changing demands of both consumers and business customers. Whilst overarching strategies can be set around quad-play and network coverage, within the customer service space a far more dynamic response is required. Telcos need to learn lessons from industry leaders such as Facebook, Google and Amazon, who have rewritten the rules of business. They are built on a fundamentally different ethos, with a ‘disruptive mind-set’, and set up to enable them to continuously evolve and respond to customer needs and demands. Finally, Telcos shouldn’t forget to learn from within, as beacons of excellence and innovation do exist internally and these approaches need to be applied across organisations, breaking down historical operational silos which hinder the ability to respond effectively to customer needs.

The Telco Industry is particularly challenged by changing customer expectations and finished last place in the Institute of Customer Service Customer Satisfaction Index 2016, with an index of 72.9 (out of 100), behind Utilities and Public Services2. While there were measured improvements in some areas over the course of the last year, increasing the overall score by 1.2, the sector receives the highest number of customer complaints; at 20% compared to an average of 12%2. The effect of poor customer service is impacting the industry and company bottom lines in two ways; increasing churn between providers - nearly half (49%) of customers stating poor service is their major reason for changing providers,3 and increasing regulatory intervention. Ofcom is becoming more active in this space, implementing audits and significant financial penalties, the most recent examples of which include a £4.6m fine for Vodafone for serious customer failings4, and a £2.7m fine for EE for overcharging customers5. Whilst the fines are relatively small, the dominant headlines that announce them are incredibly damaging to brand perception.

We recommend starting small and remaining focussed. Target an area of the business where real change is achievable for the customer, proving the business case and learning lessons en route. This will help to build momentum and belief in the requirement for change, which combined with committed leadership and well publicised wins can organically drive the wholesale transformation of a business.

Customer-centric transformation is a long journey and not a quick fix, but starting the journey is critical to the future success of Telco organisations. The first six steps on the customer transformation journey are detailed on the following pages.

2Source: http://telecoms.com/474249/Telco-industry-still-bottom-for-customer-service-satisfaction/ 3Source: http://www.customerservicemanager.com/poor-customer-service-is-top-reason-consumers-switch-service-providers/ 4Source: http://www.ft.com/content/d695ded0-9b42-11e6-8f9b-70e3cabccfae 5Source: http://www.bbc.co.uk/news/business-38661039 6 Source: http://www.mycustomer.com/service/management/infographic-why-bad-service-is-burning-your-bottom-line

60%of consumers have higher expectations of customer service now than they did just one year ago6.

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UNDERSTAND THE CURRENT SITUATION

STEP 1

Most organisations have great examples of good customer practice. The problem is they are likely to be isolated and not replicated elsewhere in the business. This challenge can also be compounded by senior leadership having differing views on where the problems lie.

With this in mind, Step 1 is about understanding an organisation’s current maturity level across all elements that impact or touch the customer. What are the good areas of practice and how do you know? Which of these areas should be replicated across the business? What are the problem areas and what is the root cause? This analysis requires buy-in from the senior leadership team to build a common understanding of what is working and what isn’t.

The assessment of ‘customer maturity’ can be combined with learning from within and outside the Telco sector, to define a single road-map of improvements required which the whole senior leadership team can align to.

49%of customers state poor service is their major reason for changing providers7.

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7Source: http://www.customerservicemanager.com/poor-customer-service-is-top-reason-consumers-switch-service-providers/

Understanding the customer means investing time to interact with them, measuring and analysing data and observing how they respond with the brand. This applies equally to consumer and business customers.

Organisations need to go beyond the traditional Net Promoter Score (NPS) measure and deepen understanding of the customer base. Whilst NPS gives a good indication of how loyal a customer base is and a good benchmark against other organisations, it does not provide specific data to gather useful insight and target improvement areas. In addition to NPS, you should define the KPIs and metrics that will be measured by the business to tailor customer insight.

The nature of the Telco industry provides access to a rich source of customer data, which remains an underused asset. TV, Broadband and Mobile companies can see how customers use their services such as mobile usage, browsing, television and at what price point. Analysing the data provides a powerful insight into Telco customers, indicating opportunities for investment.

However, organisations need to find the balance between analysing personal data to glean insight about their customers and ensuring the right security and privacy measures. The sheer volume of sensitive data held by Telco and a lack of investment in security makes them the most vulnerable in Britain to cyber-attacks8.

LISTEN TO WHAT YOUR CUSTOMERS SAY AND WHAT THEY DON’T SAY

STEP 2

Recent hacks at Yahoo and TalkTalk, as well as the data breach at Three, are all reminders of how important it is to get this right. With TalkTalk, over 150,000 customers were impacted which lost the business 95,000 customers9. This painfully reinforces the risk and the real concern customers have in providing personal data10.

Getting up to speed with, and investing in, data security credentials is vital for companies that want to protect customer data and avoid the publicity and fallout of a data attack. The introduction of the General Data Protection Regulation (GDPR) will introduce stricter requirements on when brands and businesses can use customer data. As well as a regulatory intervention, it is a clear opportunity for businesses to use customer data strategy as a differentiator in the market place, with cyber security and transparency around the use of data, in providing tailored services.

So, step 2 is to combine data insight with customer interviews as well as formal and informal ethnography to provide a relatively quick and comprehensive view of an organisations customer base. Having done this, it is then possible to segment them based on both who they are and how they behave. This needs based segmentation will result in a deep understanding of the different types of customers an organisation interacts with, how their specific needs differ and supports Step 1, in both wider understanding of the current situation and where to invest in transformation.

8Source: http://www.telegraph.co.uk/business/2016/03/15/telecoms-bosses-falling-behind-on-cyber-security-economists-say/ 9Source: http://www.wired.co.uk/article/talktalk-hack-customers-lost 10Source: http://www.mycustomer.com/marketing/data/57-of-consumers-dont-trust-how-brands-use-their-data

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5%Businesses that grow retention rates by 5% see profit increases ranging from 25% - 95%12.

REAFFIRM YOUR BRAND PROMISE AND CLARIFY YOUR PROPOSITIONS

STEP 3

With so much activity in the market and increasing numbers of start-up and challenger brands, many companies choose to become fast followers and adopt similar models to those who have gone before them. Whilst this may be required to retain and attract customers, if incoherent, it becomes confusing for your existing customer base.

It is really important that organisations clearly understand who they are there to serve. What is the brand promise and what is the core proposition? In Telco, for example, the Giffgaff proposition is clear for everyone to see; low price, no contract and run by customers. Their success was recognised in 2016, when they won the best mobile network award11. Second was Tesco Mobile and third, Three, which demonstrates how clear market segmentation and targeting drives customer satisfaction.

Customers are looking for tailored Telco services based on their needs and expect TV, mobile and internet providers to supply a simple spread of services based on quality and value for money. The £10-a-month subscription services such as Netflix and Spotify set the pace and tone for all Telco and Media service providers.

A customer needs segmentation (Step 2) highlights the different approaches required for customer segments and reaffirms the need to organise propositions and business around them. This may drive the creation of sub-propositions to the core brand. Sky’s development of NOW TV allows them to “lose” contract customers but keep them within the Sky sphere – although at a lower price point. The separate branding and positioning is smart with Sky accepting the risk of cannibalisation, but recognising that overall it would help retain and acquire customers.

So, Step 3 is to ensure organisations understand their brand and it is tuned to meet the needs of customer segments, across both business and consumer. Whilst organisations can’t be everything to everyone, a strong brand promise and proposition results in customer satisfaction and loyalty. Even with more complex offerings like quad or triple play, it is important to focus on how these are simple and strong brand propositions that ultimately deliver on the customer promise. Do not fear disruption and opting to offer bold new sub-propositions to service different segments. The examples of Now TV and BT, who successfully created sub-brands like BT Sport and BT Mobile, bear testament to being bold. In a saturated market, customer retention is key, as businesses that grow retention rates by 5% see profit increases ranging from 25% - 95%12.

11 Source: uSwitch Awards - http://www.ispreview.co.uk/index.php/2016/02/uswitch-reveals-the-best-uk-mobile-operators-in-2016-awards.html 12 Source: http://www.mycustomer.com/service/management/infographic-why-bad-service-is-burning-your-bottom-line

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13Source: http://www.sciencedirect.com/science/article/pii/S2352250X15003036 14 Source: http://sloanreview.mit.edu/article/when-unhappy-customers-strike-back-on-the-internet/ 15Source: http://www.bbc.co.uk/news/business-37772118 16Source: http://www.decision-wise.com/show-me-the-money-the-roi-of-employee-engagement/

GET THE RIGHT TOOLS ANDPROCESSES IN PLACE

STEP 4

The right tools and processes are key; without them your people and subsequently your business cannot consistently meet, or get close to, exceeding customer expectations. The challenge for Telcos is that they were generally built up through a mix of rapid organic growth in the 1990s and acquisition; they have multiple legacy systems; and have brought different channels online at different times which makes consistency of service a significant challenge.

This is exacerbated by the rising expectations of customers in the B2C and B2B arenas. Telcos are no longer compared with the best in class, but against the best of the best. Next day delivery services by Amazon set the expectations for Telcos as well as retailers and if we can click and collect with John Lewis, a Telco needs to offer the same service for a new handset. A better contact centre experience through a bank in comparison to a major Telco simply doesn’t make sense!

Customers who feel let down by a service provider are a real danger; 96% of highly damaging online revenge post-incidents are made after a double deviation, i.e. an initial service failure followed by a failed service recovery13 with customers far more likely to act “vindictively” and complain publicly. The United Airlines music video on YouTube, which outlined a customer’s frustration with the airline received 150,000 views in one day and 5 million in a month14. An increasing focus on service recovery could hugely impact retention rates where simple mantras such as ‘fix it first time’ can be all it takes.

The need to resolve these challenges has been recognised, and led many organisations to focus on overhauling legacy systems. However, the introduction of new systems and focus on digital channels has too often led to organisational disruption, internal focus rather than customer focus, and at times added more touchpoints to an already fragmented customer journey. The Vodafone £4.6m fine has been linked to their new billing system and shows the negative impact new systems can have on customer service, even when they are designed to improve it15.

It is a long journey to switch from legacy systems to more agile platforms that can support simplified, fully digital offerings. So, there is a need to focus on how the customer journey flows through the IT landscape, information flows through the organisation and therefore how systems need to connect with each other. Investment needs to be made in the skills and capabilities that ultimately build these connections.

Technology cannot solve everything. Whilst customers will want to interact with an organisation through digital channels and expect this to work, they may also want human interaction and expect the experience and service standards provided to be high. Your workforce need to be skilled in providing a good customer service. Companies with high employee engagement scores have 2x the customer loyalty than customers with average employee engagement scores16.

So, Step 4 is to understand your customer journeys, systems, processes and workforce limitations. Develop a strategy to tackle these in a phased manner, focusing on the key areas of challenge first. Don’t opt for revolution, but evolution. Replacing your legacy system and putting a wholesale new IT stack in will be difficult and is unlikely to resolve everything. You are better to focus on the end results of how to get it right first time and ensure channel consistency rather than the internal issues of replacing legacy systems.

Companies with high employment engagement score have 2x the customer loyalty than companies with average employee engagement scores16.

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BRING YOUR CUSTOMER CLOSERSTEP 5

Transparency, honesty and personalisation are a strong driver for customer loyalty and advocacy. All customers want to feel a connection with a brand. Consumer customers are expecting that ‘local grocery store’ interaction from every business, regardless of the channel or company size; and business customers expect a tailored service.

The data Telcos have presents an opportunity for ‘Personalisation’ of services and this is vital for companies to continue to meet customer expectations. As personalisation becomes the norm across sectors, customers will start to expect the same from Telco companies. Forrester states: “Customers will reward companies that anticipate their individual needs and punish those that have to relearn basic information at each touchpoint”.17 Telcos should look to retail and technology sectors for examples of using personalisation to drive customer interaction, and ultimately, improve customer experience.

These examples include:

— Very.co.uk (Shop Direct) – fully personalised homepage, with plans for searches to be personalised to show preferred brands and styles first

— Thread – clothing start-up which uses algorithms to produce personalised picks of outfits, while still offering customers interaction with a personal stylist (Artificial Intelligence support means each stylist has 50,000 customers) Customers are also becoming more tech savvy and want the feeling of being more in control of issues they have encountered. Encouraging self-service and a sense of community helps connect customers to the brand and makes them feel like they are in control. The Giffgaff no call centre model has proved that it is possible.

So, Step 5, when re-designing your customer journeys, stress test it against service failures, design the processes and steps required to resolve them and encourage as much self-service as possible.

Get closer than ever to your customers. So close that you tell them what they need well before they realise it themselves. Steve Jobs

BUILD A SUSTAINABLE MODEL FOR CUSTOMER CENTRIC CHANGE

STEP 6

If you approach completing steps 1 to 5 in a linear fashion, you will find that by the time your complete step 5 the market has moved on. This is not a point in time exercise, each of these steps need to be built in to an approach to drive continual improvement.

To do this, businesses need to break down organisational silos. Whilst it may have been operationally expedient to divide businesses into functions, the customer experience does not conform. This does not necessarily mean a complete organisation redesign. Ownership of the customer needs to be a collective responsibility and cut through existing departmental structures in a more seamless and joined up way.

1. Build a customer centric operating model Define the principles and future way of working for the customer centric organisation, encouraging cross functional teams and collaborative working. Some organisations have created a Chief Customer Officer to help cut across organisational boundaries and promote this view.

2. Culture changeEmbedding the customer first philosophy throughout the organisation will require a cultural shift. Bring people together, make the organisation collaborative and highlight inter-dependencies between departments and the impact it has on customers.

3. Ensure senior leaders are part of the journey The leaders in the organisation are responsible for making this change effective. It’s more than a poster on the wall and needs to be meaningful to employees in the organisation. Senior leaders need to look at things through the eyes of the customer and experience what they experience. Encourage them to buy a product or service or make a complaint and follow the journey.

4. Change in job descriptions Everyone in the organisation has a part to play in the customer journey, what is expected of them and how they are rewarded should reflect this. First Direct, which is consistently recognised as one of the top brands for customer experience, “empowers its employees to make their own decisions, ensuring they’re always able to adapt the customer experience to the specific needs of the individual”.18

5. Change incentive structure Historically organisations have built incentives focused on their own functional silo. For example, sales teams may be measured on sales and marketing teams may be measured on number of views for a campaign, but neither will be linked together to understand and improve effectiveness.

There is no one size fits all and the ‘right’ model depends on the organisation and the market it operates in.

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17Source: http://technologybeacon.wordpress.com/2015/11/

18Source: http://www.ijgolding.com/2015/03/24/what-makes-the-the-worlds-1-customer-experience-brands/

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THE SUMMARY

Consumer and business customers expect an outstanding service from every interaction with an organisation. Expectations are growing at an alarming rate. Customers no longer compare you to your competitors, they compare you to the best experience they receive from other organisations, be that Google, Amazon, John Lewis or Uber. This presents a considerable challenge to companies in the Telco sector, which have a mixed track record and a set of customers expecting flawless service across all channels.

By 2020, customer experience will overtake price and product as the key brand differentiator,19 so you need to make your move now starting with the 6 steps outlined. These will kick start your journey to building an organisation which is customer centric and drives continual improvement in customer service. This transformation is essential and has moved from being a competitive advantage to underpinning survival. It is a long journey, so remember to pace yourself - it is a marathon not a sprint.

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19Source: http://www.walkerinfo.com/Customers2020/

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Moorhouse is a management consultancy that works with major corporate and public sector organisations. We support our clients in turning their strategy into action, by providing ‘out of the ordinary’ delivery capability and by establishing a culture of change.

Moorhouse regularly runs discussion dinners and breakfast seminars that seek to draw out perspectives and to identify lessons for broader benefit.

Visit our website at moorhouseconsulting.com for more details or call 020 3004 4482

For further information about how we work with TMT clients and support their customer programmes, please contact:

FURTHER INFORMATION

Dominic Tritton TMT Principal dominictritton@moorhouseconsulting.com

Richard Brackstone TMT Client Director richardbrackstone@moorhouseconsulting.com

Authors Dominic Tritton and Richard Brackstone SME contributors Richard Goold and James Easterbrook

Strategy into action

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and programmes.

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delivery of change.

Out of the ordinary delivery Supporting the delivery

of complex programmes and projects.

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Technology, Media and Telco