Customer Retention, or Customer Detention? Mobile Customer Care and the Art of Building Loyalty
Ed Finegold
12/01/2005
There may not be a mobile subscriber anywhere who doesn’t have some horror story about a mobile operator’s customer care practices. Typically, the complaints speak to a lack of knowledge about the subscriber’s services and ongoing service problems; an unwillingness to help with equipment problems; penalties and mandatory contract extensions for service cancellation or account changes; confusing rate plans and bills with high taxes; and processes that require customers to conduct business at a retail outlet—especially when they’ve only ever dealt with the operator online. These complaints are incongruous with the rhetoric coming from mobile operators, which often stresses a drive toward customer-centricity and highlights investments in CRM technologies.
The problem is that from the outside looking in, mobile operators appear to be investing in their ability to automate and improve sales and up-sales capabilities. They do not appear to spending their efforts getting to know their customers better, or fighting churn by fostering loyalty rather than threatening customers with penalties. The question is whether there is a real business justification for advancing customer care as far as automated and online sales have come, or whether business as usual is what to expect as a mobile subscriber.
Customer Care Horror Stories
We’ve all heard or experienced our fair share of customer care horror stories, but it’s worth examining a few to illustrate the sorts of policies and practices that customers find so alienating and aggravating.
“I bought a phone each for my mother- and father-in-law, and they are billed to me,” explains Duffy Mich, CEO of Aperio CI, a company that provides customer analytics services and customer care strategy to communications service providers. “The flip part of my mother-in-law’s phone broke, but after waiting on line for more than an hour at the retail store where I bought it, they told her they could not help her because the phone was in my name and I had not given explicit permission for my in-laws to deal with their own phones.
“I went back myself, was not allowed to move to the front of the line, and waited for another hour and 10 minutes. They told me to come back in an hour and I’d have a new phone—but they charged me $50 for it when it was under warranty. When I asked why, they said it was because they thought people were breaking their phones deliberately, so the charge was meant to dissuade that. I got the new phone, gave it to my mother-in-law, and about seven days later received a letter from the carrier saying my contract had been extended two years—a fact that had been buried deeply and deliberately in the fine print.”
“My cell phone fell down a storm drain as I was getting out of a cab,” says Shira Levine, senior research analyst for IDC. “I tried to get [my operator] to give me credit toward a new phone, but they wouldn’t, even though I could get a new phone free or at a discount from another provider. So, I asked them, ‘What prevents me from canceling and moving to another carrier?’ And they said, ‘Well, go ahead.’ I finally got a manager on the phone who saw that I was a good customer, and he helped me out. But [my operator] wanted me to spend $200 on a new phone, even though it would cost me just as much to cancel my service and move somewhere else. In fact, they did cancel my service and said I had requested they do so, even though I’d only suggested I might move to another carrier.”
Separating the Wheat from the Chaff
These are just two examples of problems experienced by individuals, but they reveal a great deal about mobile operators’ care practices. They are inflexible and try to account for all possible negative contingencies, rather than treating each customer appropriately. This is likely the result of policies that are designed to protect operators from fraud and credit risks.
Anyone who has worked in a retail services business knows that the daily range of customers will span the entire gamut of the human condition. On one end are honest, flexible customers who are relaxed, relatively easy to please and willing to pay the full amount owed on time. On the other end are the scam artists and problem customers who refuse to pay, concoct schemes to avoid paying, or create so many unwarranted problems that they aren’t worth catering to.
There’s no problem with policies that protect mobile operators’ businesses. The problem is when these policies impact good, paying customers who do not deserve to be treated like crooks or cheapskates. The policies aren’t targeted, which suggests carriers aren’t segmenting their customer base or focusing very much on which customers are more valuable than others. “They’ve spent so much time trying to acquire new customers that they aren’t all that sophisticated when it comes to keeping customers and performing analytics around which customers they really want to keep,” says Levine. “Maybe you’d want to make an unprofitable customer have to go into a store, but not a profitable customer. I think in order to take the next step they need to improve on the analytics side of things and better segment their customer base.”
This speaks to the bottom line as much as it does to treating people well. The fact is that by knowing their customer base better, operators could separate the wheat from the chaff. The question is whether they can derive a tangible ROI from investing in significant analytical capabilities that could bring individual customers into better focus. “The analytic challenge is being addressed, but the ROI associated with an aggressive investment right now cannot be justified,” says Mike Cholak, vice president of knowledge management services at Convergys Corp. “The scope and associated investment to derive those relevant analytics outweigh the potential return in the near term.”
Hard Versus Soft ROI
This gets into hard versus soft ROI metrics, to some extent. Managers are under constant pressure to demonstrate ROI within 12 months, using metrics that are clear, tangible and easily measured. One such measure is average handle time (AHT), perhaps the most common metric in the customer contact center. This is an interesting one, because it can demonstrate short-term ROI very well, due to the direct relationship between cost and the amount of time care reps spend on the phone with customers. Metrics that might quantify customer satisfaction or improvements in customer experience can be more difficult to capture. These are soft ROI metrics that might have a significant long-term impact, but operators can’t necessarily measure them well enough to justify certain investments.
“When we are brought in, the way ROI is derived is around efficiency metrics like AHT, because it’s easy to identify and immediate,” says David Holmes, executive vice president of Jacada, a software company focused on optimizing agent desktops in order to improve interactions between agents and customers, and thus improve customer experience. “At the end of the day, the operators come back to us and say they recognize the efficiency benefits, but what they are looking for is a better interaction experience, because customers will be happy and will spend more.”
Improving the Interaction, but Leaving the Policies
According to Holmes, mobile operators do understand the importance of improving the customer experience, and they do understand that positive interactions can lead to loyalty and increased spending or ARPU. That does not mean, however, that operators’ negative policies—like cancellation fees and forced contract extensions—are likely to change. “You won’t see carriers move away from the penalties, but you might see them play good-cop-bad-cop, where they put the barriers in place to make it more difficult to leave, but also make sure that any interaction you have is a very positive experience,” says Brian Huff, director of product marketing for Jacada.
Huff suggests that improvements in customer experience and customer-centricity are largely a matter of organizational maturity, and he identifies three phases to consider. The first stage focuses on achieving short-term ROI with hard metrics like AHT. The second stage becomes more sophisticated to consider longer term, soft ROI metrics like customer satisfaction and customer experience. In the third stage, the barriers between marketing and the contact center are broken down so that they can communicate and respond to customer needs and demands more effectively. Currently, says Huff, mobile operators live somewhere between stages 1 and 2 and are only just beginning to embrace the value of long-term, soft ROI measurements and what they mean to customer satisfaction, customer experience and ultimately sales.
In addition to making contact center investments, says Aperio’s Mich, operators are investing in “understanding the propensity of customers to buy” so that contact centers can upsell more efficiently. This is a first step toward understanding customers as individuals, but it’s arguable that operators are putting the cart before the horse. If targeted upselling isn’t accompanied by a highly positive and personalized customer experience, it’s unlikely to be optimally effective.
Furthermore, given investments in IMS technologies intended to deliver niche-oriented services, personalizing the sales experience would seem critical. “What’s the point of investing in IMS infrastructure, if it isn’t coupled with the necessary support?” asks IDC’s Levine. “If operators want to be successful with content offerings, they are going to have to know their customers better, or they are going to alienate them.”
Operators do realize they need to move in this direction, however, and understand that “by virtue of a more satisfactory agent interaction, even in the presence of other factors that likely would lead to churn, there is mitigation of the overall churn rate due to the last contact being a positive interaction,” says Cholak. In other words, when people are treated well and catered to on an individual level, they are happier, they remain more loyal, they spend more, and they are less likely to leave for another carrier as a result of one mistake or bad experience.
Consumer Advocacy
With the majority of the population of United States now reported to be mobile subscribers—more than 197 million—it would seem time for some group to represent the common interests of mobile consumers. Oddly, very few of the major consumer advocacy groups bother to become involved in mobile industry issues. No group, for example, is standing up to cry foul over justifications for unregulated $175 cancellation fees and other surcharges operators are free to apply. The reason is that most advocacy groups are lobbying groups, and since mobile operators’ customer care practices aren’t regulated, they just don’t get involved.
CTIA, the mobile industry lobby, has launched a consumer advocacy initiative at mywireless.org, which is focused on awareness of wireless taxes and educating consumers about their bills. “Consumers are being hurt here,” says CTIA spokeswoman Erin McGee. “There are those consumers who only use a wireless phone, and then the other end of the spectrum are those who just want it for a safety and security tool. If you keep seeing these fees and taxes added to your bills, a mobile phone may not be an option anymore, and that shouldn’t happen for any consumer.”
The move to reduce taxation on mobile service is admirable, and something that any mobile subscriber is likely to applaud. CTIA’s impetus, however, is to represent major service providers’ interests. Lower taxes would in theory aid operators’ revenue, after all. Whether CTIA will tackle consumer advocacy initiatives that would propose, for example, a mobile subscriber bill of rights is undetermined, but also highly unlikely. In the meantime, mobile customers have few options, if any, to combat negative customer care practices and associated penalties. Subscribers, ultimately, have just one option: voting with their wallets. In the end, that’s what mobile operators are really listening to.
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