Why is Customer Care so hard?

Network operators and service providers are uniquely positioned amongst all industry sectors, in that they have the data that describes exactly how all their customers use their services, through call and data records. Every single time a customer uses the network, there is a record logging this.

All this data is painstakingly collected so that bills can be produced. And what else is done with it? Well, not enough in most cases. It will be used to ensure quality of service thresholds are being met, where appropriate, and it is aggregated to help with network planning and optimisation. No doubt various other reports are spewed out of data warehouses to tell directors if the number of call minutes has gone up or down this month, and other pertinent management information, but as to using the information to manage individual customer relationships – well, er....

One of the problems for telcos pretty much ever since number portability became mandatory has been that of churn. Estimates of churn rates vary wildly, and even those that the operators will admit to are difficult to compare, since what constitutes churn can be defined and measured in different ways. Nevertheless it is likely that a mobile operator in the UK will lose as much as 30% of its customers every year, and for ISPs it is even higher, perhaps as much as 50%.

Now these are pretty eye-watering numbers. Some churn is inevitable – people move away from the coverage area, or even die, companies may cease trading, and indeed some customers (such as bad payers) might even be encouraged to leave; however this would be a core churn rate down in the single figures. Something is not right!

Clearly it is much cheaper to retain a customer than to have to recruit a new one as a replacement, and add to the recruitment cost the loss of revenue stream from the existing customer and it all adds up to a significant cost of operation.

Now telcos do make efforts to identify potential churners through data mining and pattern analysis, but clearly these efforts are not bearing significant fruit as yet. The trouble is that the main actions of these operators is to find more attractive products and tariffs, such as double and triple plays which (in theory) are more difficult to churn from. But this simply fuels churn, as the ‘arms race’ between operators means that there is always a more attractive offer out there if you can find it. People are not entirely driven by slightly better deals elsewhere, however, especially as this requires effort on their part – there is usually some other reason why they are ready to move.

One survey by Pitney Bowes identified the three top reasons why people change supplier, and found that these are consistent across Europe and the US. They are:-

1. not being recognised as a valuable customer (all countries average – 55%)

2. unhelpful staff (all countries average – 47%)

3. ineffective call centres (all average – 42%)

Now although this research is almost 2 years old, I very much doubt the position is significantly different today. This should be giving COOs sleepless nights – this implies that better or cheaper deals may dictate the operator a customer switches to, but the trigger for leaving the existing supplier is poor customer care.

Take the first point: the worth of a customer should be apparent to an operator very easily – we are back to the fact of a complete data record of a customer’s activity. Of course a customer will have an inflated view of their own value, but take into account both revenue streams and cost of losing the customer, and most customers are valuable enough to merit effort to retain them. The second and third points above are simply variations on the theme of bad customer care.

And we all know from personal experience how frustrating these companies can be. Not just the call centres, which seem to specialise in getting you through to any department which can’t solve your problem, but also the web sites for self care, which are often impossible to navigate around and find what you want without resulting in dangerously elevated blood pressure.

The problem isn’t the people: they are usually trying to help you as best they can. The problem is partly in the technology that supports them (back to ways of analysing and understanding that customer data), partly the result of poorly designed processes and business flows, and partly the corporate structure, which stove-pipes customer care and treats it as a business cost to be handled as cheaply as possible.

Communications companies have to be better at treating customer care and customer value holistically, or these high churn rates and costs will never reduce - and as consumers we all pay the price.

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