Survey: Customers Need More Love from Their Mobile Operators

Perfecting the customer experience has long been the goal for many communications service providers (CSPs). We certainly saw this issue reflected upon at last year’s Mobile World Congress. However, each year, as customer demands become more complex, it’s increasingly important for operators to do everything in their power to understand and anticipate customers’ needs and deliver on them.

We at Comptel wanted to gauge what customers think about their relationships with their mobile operators, and shed light on how mobile operators can better engage with them to increase loyalty and capitalise on potential upsell opportunities. (A big thank you goes to research firm Vanson Bourne who we commissioned last month to survey 2,000 consumers from across the United Kingdom, France, Germany and the United States.)

The survey findings clearly indicate that customers need more love from their mobile operators. Two-thirds of respondents said that they feel neglected by their mobile operators, and more than two in five are likely to churn within the next two years as a result.

Would you appreciate your mobile operator being more interactive with you based on how you use its services?

More interaction would certainly go a long way in ensuring customer satisfaction. For instance, more than one in five respondents reported experiencing poor quality of service (QoS) at least once a week. Yet, the majority of customers (72 percent) are largely willing to forgive and forget if their mobile operator apologised and sent a special offer. Younger customers aged 18-25, in particular, are most likely to become more loyal if shown more love.

If your mobile operator noticed this poor service when it happened and sent you an offer (e.g. free coffee at Starbucks) and apologised, would you be more loyal to them?

The survey also revealed that there are significant revenue opportunities to be had if mobile operators were more attentive to their customer bases. Nearly three in five respondents said that if their mobile operator offered faster download rates, they would pay for it. In fact, nearly one in five respondents said that they would be willing to pay more than five pounds, euros or dollars extra monthly for such an upgrade.

If your mobile operator offered you faster download rates, how much would you pay for this a month?

Like I said in today’s press release, with so many customers expected to churn if their needs are not better met, mobile operators need to adapt to their demands for more personalised and dynamic services to survive. Comptel believes real-time data collection and analysis and increased customer interaction are critical to fostering loyalty and maximising revenue opportunities.

A full copy of this research report will be available at our booth at Mobile World Congress (27 February – 1 March in Barcelona) in Hall 1 at Stand 1C06, or email [email protected]. We hope to see you at the show and look forward to discussing the issue of customer engagement further in the coming months.

Customer Experience Automation: Beyond the Order, Beyond the Trouble Ticket

By: Andy Hicks, Research Manager, EMEA, Telecoms, IDC

If your job involves talking to a lot of different people, you probably find that you end up saying a few things over and over just to lay the groundwork for whatever conversation you’re having. Since I’m a telecoms analyst, for example, I often find myself saying something like this:

“As an industry, we’re entering a whole new level of complexity on the IT side. We’re seeing an explosion of services, user types, devices, quality of service (QoS) levels and service level agreement (SLA) obligations. The permutations of all those factors make for more than any service provider can manage manually, so we’ll have to make sure that all that service and network management is automated to the maximum extent possible.”

So far, this is pretty unobjectionable stuff, and that’s the point. It’s something that most people in the industry can agree on before getting into specific cases. But as with its implementation, plans for automation vary both between carriers and within each one’s IT infrastructure. There is some common ground though. In the fulfillment part of the chain, one-touch provisioning and the like are generally accepted goals.

Where the promise of automation is still not as well understood, I believe, is in the service inventory, especially as it affects customer experience. Discussions of customer experience are often limited to either the fulfillment process (Is the order filled quickly and correctly?) and customer service (Is the problem resolved satisfactorily and cheaply?). Both the order and the trouble ticket are events, which are easier to measure and address. Extending the purview of customer experience to ongoing operations requires diagnosing and averting service problems before they affect customers. This requires systems to predict network and service outages in real time, and provision new resources to proactively fix the problem. The same components can also help engineers model the consequences of any changes to the system before they affect users.

The difference between “good enough” capabilities in this area and true differentiation in customer experience will increasingly inhere in the ability to model the effects of outages and planned changes alike on individual services and the individual customers that use them. Since each of those services is aggregate of smaller elements, and since the most valuable customers are likely to use the most services, a successful extension of the service inventory must be able to analyze the effects of system changes and failures not only on the network, but also on the services provided across it, especially as they affect the “gold” customer base. The criteria for that analysis will come from SLAs as well as service providers’ service assurance goals for each category of its users.

To date, Internet service providers and enterprise network providers seem to have more advanced offerings in these areas than mobile providers and fixed-line incumbents. As markets mature and competition in services increases from over-the-top (OTT) players, every service provider will have to improve its predictive and proactive capabilities to remain competitive in customer experience.

Andy Hicks covers telecom software, services, and business strategies in EMEA, with special focus on emerging markets, at IDC. Currently, he is focussing on the IT-ification of telecoms, the increasingly complex services market they compete in, and the work of multinational groups to rationalize their operations across borders.

Consumer Research Confirms Importance of Policy and Charging Control to Operators

Mobile broadband has become a part of everyday life, and with so many people depending on—and demanding for—mobile connectivity, we at Comptel wanted to explore consumers’ evolving relationship with providers of mobile broadband services and their levels of satisfaction with operators’ service and price plans and flexibility.

Last month, we commissioned independent research firm Vanson Bourne to survey 2,000 consumers from across the United Kingdom, France, Germany and United States, and found that mobile broadband users are now ready and willing to pay for a higher quality of experience (QoE).  Seventy-four percent of respondents who are willing to pay for a higher QoE said that they are prepared to spend more money just for faster download speeds.

Which of the following would you be willing to pay more for?

And, 61 percent indicated that they want their CSPs to offer more personalized yet simpler service plans, such as having pricing based on individual usage habits while getting just one bill for all Internet and broadband services.

Would you like to see your CSP offer service and price plans that are simpler and bespoke?

Further to this, 87 percent of consumers see QoE as a key driver that will influence their allegiance to their CSP, and the majority of them would not only move but also pay more money for faster and personalized services.

Is a high QoE a key driver for you when it comes to changing CSPs?

In today’s highly competitive market, providing high QoE could be the most powerful mechanism for gaining or even just keeping customers—and the demand for a better mobile broadband experience presents a major revenue opportunity for CSPs.

Policy control and charging is key for operators to capitalize on consumers’ demand for faster download speeds and more personalized yet simpler service plans.  It can help them optimise QoE by smoothing data usage more evenly across their networks, while dynamically adapting and simplifying service bundles based on individual customers’ wants or needs, and introducing progressive pricing strategies that monetise this consumer demand.

Full copies of this research report will be available at the Comptel’s booth at Mobile World Congress (14-17 February in Barcelona ) in Hall 1 at Stand 1C06—be sure to stop by and say hello!

Around the World

Microsperience…
Capacity crunch: It’s Not What You Think
Analyst Teresa Cottam looks at the truth behind the capacity crunch and why it is somewhat misunderstood.  She believes that the term “capacity crunch” is a complete misnomer and disguises what the real problem is—not increased network traffic.  Rather, Teresa says, “traffic is rising, capacity is being consumed, and we’re not making sufficient incremental revenues to compensate for this usage or justify further investment.”  If revenues were going up along with the traffic, we would have a pure play engineering challenge. The difficulty is, of course, that revenues are not increasing in line with traffic; so not only do we have an engineering challenge, we also have business, operational and customer challenges.  Customers require adequate Quality of Service and desire greater capacity and faster speeds, but in many countries, the business case for continual network investment may be far from clear cut.

Connected Planet…
Mobile Operators Brace for Bill Shock Proposal
Joan Engebretson reports on the Federal Communications Commission’s (FCC) plans to introduce a proposal that attempts to help prevent wireless “bill shock”.  This has been a hot topic for some time now, and becoming even more of an issue in the U.S. with Verizon admitting that its customers had been erroneously charged more than $50 million for wireless data services. The proposal reportedly will require carriers to warn users when they are close to reaching voice, text or data limits or about to incur roaming charges.  Carriers are opposing these regulations and arguing that they are not needed.  Most certainly, they are concerned about potential lost revenue—particularly if the FCC requires them to give customers the opportunity to have service automatically shut off when they reach a certain usage level.  According to news reports, the plans would not impose that requirement, but the FCC will seek input on whether it should do so.

Billing & OSS World…
Cloud Services Will Change Customers’ Service Expectations
Charlene O’Hanlon blogs about a new report by IDC that shows as more companies adopt cloud, service providers will be forced to change from their traditional, labour intensive service delivery models to an asset-based one.  According to a study, the change in business models will arise as a result of the industry’s move towards outsourced cloud services and the accompanying performance and relationship expectations of customers.  The increased use of new delivery models, such as cloud services and SaaS, will change customer expectations regarding the performance of their providers and subsequently change their relationships with providers.  Service providers will need to develop road maps that show how customers are looking to adopt these utility-based services that cut across entire organization requirements.  Additionally, many outsourcers and providers will need to make major adjustments to their delivery capabilities, partnership ecosystems, business models and service offerings, and will need to examine their roles and positions within and beyond the traditional IT and business process services market.

Are Cloud Services a Market for Telcos to Lose?

At the Comptel User Group last week, a number of the communications industry’s issues du jour were offered to the delegates for roundtable discussion. Amongst the most popular was the topic of cloud services.

It’s a subject which has not exactly suffered from neglect this year, but nonetheless, it was interesting to hear it discussed between communications service providers (CSPs) and network specialists (such as Comptel partners IBM, Cisco and Alcatel Lucent)—people who have a real and pressing interest in how cloud will play out as a credible service for CSPs as well as a possible new revenue source for equipment and software suppliers.

The attention of the group was quickly caught by the question of how big an opportunity cloud could be for telcos.

There is little doubt that cloud services are going to be big and in great demand—the business case is easy to make, in terms of both cost savings and business flexibility. Furthermore network and virtualisation technologies are making cloud increasingly viable. This will continue with the roll out of 4G, which will make access to cloud-based services ubiquitous across fixed and mobile networks.

And no one questions that carriers have some real competitive advantages to exploit in the cloud services market, particularly through their command of the communications network and their influence and control over the quality of delivery.

So cloud services for telcos—it’s all good? Well maybe.

Our delegates raised an issue which we don’t believe has been widely discussed—exactly how evident are telco advantages to the addressable market? Telcos know the value of their technology, but to what extent is it a differentiator for the average customer? After all, it’s hard to value what you don’t understand. Are SMEs aware of the difference between ‘smart pipe’ and ‘dumb pipe’? Do they know (or care) how little influence the IT- or Internet-based provider can have over the quality of service (QoS)? Do they understand the difference that QoS will make to the reliability of their connection?

Telcos undoubtedly have great advantages in the provision of cloud services, but there’s still a lot of education to be done to sell those advantages to the market. Now, as we move out of the early-adopter phase, telcos must grab that all-important mindshare.

New Business Models? What New Business Models? Part II

Part Two

In my previous post I discussed some ideas that were stimulated by a UK business news piece on Tune hotels.

The second piece in that bulletin concerned Hamleys, the biggest toyshop in London, and arguably one of the most famous in the world. The CEO was being interviewed about the impact of the recession on the store, which doesn’t discount its items. Wasn’t the recession driving their customers elsewhere, asked the interviewer – to go online, for instance, or to visit “stack-‘em-high, sell-‘em-cheap” out-of-town retailers, like Toys‘R’Us?

No, he replied, that hadn’t been their experience, and nor had they been forced into price wars with low-cost rivals.

What kept people coming to Hamleys, he said, was the unique experience that the store could offer, and the company had focused even harder on that. Rivals had a lower cost base and could always beat them on price, even on stock and range, but they couldn’t match the experience of visiting the biggest toyshop in the world, right in the middle of London and all the fun that went with that.

Again this is something that we seem only slowly to be coming to terms with in telecoms: that price doesn’t keep customers loyal – there’s always someone cheaper, and over time the price differentials get smaller and smaller. Nor does technology and products – any new product is quickly matched by rivals, particularly in these digital times, and rarely justifies switching.

What really differentiates a telco – or any other company – is the customer experience.  This is slower and harder to develop, for sure, but is also much harder to imitate, which in the long term makes it a much more effective way of generating customer loyalty and spend.

The telco’s interactions with its customers, at critical points in the customer lifecycle, are likely to be much more influential on their loyalty and their inclination to spend than a discount of a few percentage points. As a customer, how I feel about my telco is more likely to be influenced by how fast and how accurately my new handset or DSL line was delivered, whether it worked first time, how quickly customer service responded to my query, whether they knew what products I had and how I used them, whether they offered me an upgrade to a new handset without me having to ask… by any one of dozens of possible interactions where the telco has a chance to impress – or disappoint me.

So what did I take away from listening to these pieces?

Telecommunications is an increasingly open and competitive business – telcos compete not just with other telcos but with many other providers of apps, content and services. Utility-oriented business models and supporting systems won’t cut it any more.

New business models are needed if telcos are to be competitive in this new world, but maybe there’s less to fear than the industry sometimes seems to think, as whatever issues we’re struggling with, other sectors have often been there already and have found ways to be highly successful. In processes and systems there’s a lot we can learn, and maybe copy, from the wider economy.

New Business Models? What New Business Models? Part I

At Comptel we spend a lot of time talking about the ‘new business models’ that telcos are adopting to face a new generation of communications, and how these are likely to affect their OSS and BSS. But listening to the UK business news this morning made me wonder how many of our challenges are actually new, or unique to the telecoms industry.

This two part series will look at some surprising similarities between the business challenges under discussion and some key issues of the day in telecoms.

The first piece concerned Tune hotels, a chain that offers ‘5* hotels at 1* prices’.  Tune has just brought its proposition to London. It consists of a basic room with a shower for a low, low price – averaging around £40 to £50 for a double room. Though you’ll pay more at weekends and other busy times, these prices are pretty good for London, where a single room in a 3* hotel would typically set you back over £100.

The rooms look clean and decent, but for your money, that’s pretty much all you get – a room. Anything extra is, well, extra – and not just breakfast. You want aircon? There’s a charge. TV or WiFi? Ditto. Towels? Toileteries? They don’t come for free either.

So it’s the budget airline model. You can keep it cheap if you’re determined and self-sufficient, but most people won’t and will rack up the bill with those many extras.

Listening to this, I couldn’t help thinking about the very similar issues we face in telecoms – in particular, how to attract and retain the customer in a competitive market, while at the same time turning a profit on our costly investments.

This seemed like a great example of a service that did all that. Customers can genuinely personalise and tailor it to their own needs and preferences, so they feel like they’re getting a good deal, a good service and that they’re in charge of their spending. Most importantly, it allows Tune to offer a great headline price while still turning a profit and to fully exploit the resources at their disposal. So how do they work this magic?

Their business model requires a flexible tariff, with many individually priced components and rates that can be easily changed, in response to shifts in the market. It requires a customisable offering – so that they can easily add or change the items available to the customer. It needs to let the customer self-configure their service and see it fulfilled on demand with minimal human intervention (got to keep those costs down!). It needs to support payment in advance and in real time – and immediate charging for those extras that suddenly seem important when you’re in the room.

As with budget airlines, it also needs to recognise and balance demand for, and availability of, resources – or ‘rooms’ as they call them in the hotel business – and control and exploit those two forces, with charging that maximises return in peak times and occupancy in off-peak times – or what we in telecoms like to call Policy Control.

So Tune seem to be well down the road towards effective control and charging which can balance the often competing forces of supply and demand, availability and price, in a way which attracts customers and turns a tidy profit. Are the legacy chains of established, incumbent hotels looking over their shoulders at Tune? You can bet they are…

In the next post I’ll look at the other item that was covered in that bulletin – what Buzz Lightyear has to tell us about how you hang on to customers and business in recessionary times… Stay tuned.