Can improved customer loyalty efforts increase revenue for mobile operators? For the small independents and new MVNOs, the answer absolutely is “yes.” For large mobile operators, though, managing customer information and call volume is challenge enough, making personalized care a nice idea but difficult to achieve. Whether this will impact the effectiveness of up-sales initiatives to drive content revenue remains to be seen. If the majors want to learn something about building customer loyalty through rewards and recognition, their smaller counterparts provide good examples. For the little guys, building long-term customer relationships is the entire business.
Loyalty and the Customer Experience
How a mobile operator creates customer loyalty depends on many elements, from network coverage and new handsets to retail stores, call center quality and online self-care. “Loyalty is influenced by a number of factors,” says Mike Cholack, vice president of customer intelligence services for Convergys, “but what we continue to see is that the moment of truth—the customer experience in the care environment—is critical to retention... You will without question lose ground to the competition if you don’t provide a strong frontline customer experience.”
Anecdotal evidence suggests, however, that most major mobile operators do not provide a strong frontline customer experience, yet their businesses continue to thrive. In the world of content services, churn isn’t so much the issue as rejection of up-sales. In short, a customer might stay with a carrier for its network coverage or to avoid inconvenience and cancellation fees. That does not mean that same customer will be open to spending more money per month for content without receiving something additional in return.
The Art of Customer Satisfaction
The major mobile operators, Verizon Wireless in particular, like to stress their customer satisfaction scores when asked about customer loyalty. Verizon Wireless typically has the highest customer satisfaction ratings and lowest churn rate in the industry, but its television ads touts its network. Cingular pushes deals for high-end phones and iTunes. T-Mobile sticks to giving the most minutes for the price. Sprint-Nextel is turning the world into a workplace. Not one of these primary marketing messages has anything to do with customer care—and neither does customer satisfaction.
Customer satisfaction is measured by a number of different groups for very different purposes. Two of the most visible are J.D. Power and Associates and the American Customer Satisfaction Index (ACSI) produced by the University of Michigan’s Ross School of Business. The ACSI aims to determine the relationship between customer satisfaction for a given economic sector and that sector’s overall contribution to the U.S. economy. J.D. Power aims to rank companies, products and services for the sake of the consumer.
Both J.D. Power and the ACSI take into account everything from perceived network quality and brand impression to the number of “negative” care calls a carrier receives and availability of handsets. These measurements are subjective and have relatively little to do with customer care or loyalty. Customer churn is factored into customer satisfaction measures, but there are ways to reduce customer churn that have nothing to do with creating loyalty or improving care.
J.D. Power is a trusted name when it comes to rankings, but although its surveys can say a lot about general customer impressions, they are “notoriously misinterpreted,” says Jeff Fried, CTO for Empirix. The measurement and the rankings are nice for marketing, but they don’t have anything to do with results. Often, this is the problem most operators build into the measurements they take that actually relate to customer care.
Measuring the Call Center
Every major mobile operator spends significant dollars to measure the performance of its call centers, but those measurements don’t tend to measure whether call centers create a positive customer experience. “It’s amazing how many of our clients are spending on process measures and on compliance, but they don’t calibrate whether those adherence or compliance measures result in more satisfied customers,” says Convergys’ Cholack. “More progressive firms are doing quality management by analytically evaluating what they are measuring in their quality process and whether it creates a good customer experience.”
Traditionally, call center performance has been judged by the time it takes to handle calls and the number of them resolved on the first attempt, but these measures “have more to do with efficiency than effectiveness” says Empirix’ Fried. The problem with these kinds of measurements is that a short call isn’t necessarily a quality call, and whether a call is resolved may be open to interpretation or falsification. “Half of contact centers probably still use [average call length] as a metric, and it is shortsighted and counterproductive,” says Fried. Call center agents “find holes and have their friends call them and hang up immediately” to reduce their average call time, he says.
Fried suggests that service-level metrics for factors like speed of answer, or customer perceived latency—how quickly a machine responds to the customer—are more effective and better measures of customer experience quality. Further, anything that does not depend on the opinion or input of the agent is more reliable, such as post-call surveys. These, however, typically have “low participation rates and [are] skewed because the people who fill them out tend to be the most disgruntled,” says Fried.
Some operators are beginning to use data mining and modeling strategies, says Cholack, that focus on behavioral data in order to predict the patterns or reasons that lead to customer churn. New measurements that involve audio mining can provide supervisors with statistics on every call their agents take and whether they are saying the right things and getting the best response. Many calls and comments from customers are captured but never analyzed. Automated speech mining can provide more reliable measurements than recording and screening calls at random. “Speech analytics is a way to look at whether calls were resolved,” says Fried, “and it’s a first call resolution metric that does not depend on the agent.”
Up-selling
With operators looking to drive ARPU, the emphasis is on up-selling in all channels. CRM functions such as prompts that encourage a call center agent to up-sell specific services are increasingly common. But how targeted can these up-sales prompts be? With so much disparity in the way customer and service data is managed, it’s difficult to believe that any major mobile operator can target sales at specific customer segments. There’s a reason Internet providers differentiate themselves on their ability to filter out unsolicited ads and spam—they turn off customers.
Mobile operators, in contrast, seem to be preparing to bombard customers with new offerings, so the potential is there to turn what should be a premium experience into pure schlock. What is worse is that the right hand often has no idea what the left is doing, evident when one’s name and account information isn’t passed from one agent to the next. When a customer calls up because a download has failed, it’s not the time to try to up-sell another download—though that seems likely to happen.
Solving Front-end Disparity
The way to avoid overwhelming the customer or up-selling at the wrong time is to have visibility into the customer’s services, usage patterns and care history—admittedly a huge challenge for large operators. In the IT world, this discussion typically turns to enterprise-wide customer data integration. The problem is that new services are coming to the fore now, so operators need practical capabilities that take advantage of assets they already have in place.
One obvious approach is to put the most important information in front of call center agents. “We’ve built a tickler into our CRM system that shows on screen the most recent two calls, and if in fact any of the calls was a trouble or complaint it highlights that. There may still be an up-sell prompt, but the system will notify the agent that they need to make sure the account is clear of any trouble or problems before they try to up-sell,” says Joel Daniels, CIO for UDP. The agent provides the integration—in this case, with the right information on the screen to allow a good decision.
For major mobile operators, multi-channel customer care is a growing challenge. Customers may have bad experiences with online care and then call into a center as a result. If the online interaction information doesn’t show up on the agent’s screen as well as call history, the effectiveness of the tool is diminished—but the tool can only work with the data it’s given.
On the front end, the challenge is to provide the right information and functionality without overloading the agent desktop. “Sometimes the agent can be overwhelmed with technology. There’s too much on the screen, and that negatively impacts the customer experience,” says Cholack. “A lot of technologists get excited around functionality, but if it doesn’t deliver at the moment of truth, then it’s over-engineered.
Loyalty Through Rewards
Rewards programs like the ones credit cards and airlines offer are essentially non-existent in the U.S. mobile market, particularly among the major operators. The lack of programs to reward customers for their loyalty could be a sign of organization indifference. Consider, for example, that every operator wants to drive customers to online billing and care, but typically they do not proactively reward customers for making the jump. A subscriber might be penalized for keeping a paper bill, but won’t share in the profits for going all electronic. If this is the mentality, then rewards could be a long way off.
“In terms of loyalty programs and building long-term relationships, the U.S. market is about five years or so behind Europe,” says James Colby, chief marketing officer–Comverse Americas at Comverse Technology. “There is a lot of very obvious theory here. … You know that for a few months before a customer’s contract expires is when you should offer them promotions and deliver good incentives,” he says. Proactive incentive offers are not only the way to drive loyalty and revenue, but also to reinforce the kind of customer behavior an operator wants to see—such as uptake of online care and billing.
In pre-paid markets, recharge is a critical, regular touch point between customers and operators who typically want customers to move to the lowest cost recharge method. Operators “would launch new recharge options and hope customers adopted them, but did not drive customers to the channels they wanted to encourage,” says James Anderson, product manager for BCGI. One successful proactive method, he says, involved giving customers rewards, such as a $10 bonus to their account, for using the optimal recharge channel. “One of our domestic customers improved its uptake rate by five times from being proactive,” says Anderson.
Without a complete view of the customer, it can be difficult if not impossible to recognize the kind of multi-service, multi-channel behavior that rewards are meant to reinforce. As a result, Anderson says he expects to see “dedicated loyalty systems dealing with redemption and calculation of loyalty rewards.” This means rewards can become yet another silo. With little convergent billing happening yet, the process for calculating rewards and pushing them back into the proper systems and into all care channels will be complicated and yet another reason for rewards programs not to be prioritized or implemented.
Cingular Tackles Volume, Education
To its credit, Cingular Wireless is working to personalize its care experience and educate customers about its new services and related support options. This is tough for a company with tens of millions of subscribers. At the point of sale customers are given a customer service summary that outlines the details of the handset and rate plan they have purchased. This information is available online, and customers can use online tutorials to learn the features of any phone. They can also venture into online forums to share information with other customers.
These are all good first-step efforts to put more control and information in customers’ hands. As is often the case with large operators, Cingular offers so many handsets and rate plans that the non-personalized navigation menus for finding the right tutorial could be too much for customers who aren’t software savvy.
To deal with the flood of new products, Cingular is relying on technology to help manage the volume, but it believes the key is to put the same tools in the hands of both agents and customers. “With the number of new data products, … customers need to have access to a lot more information. … It is difficult to keep all of your customer service representatives up to speed on every new product that is being launched,” says Clay Owen, spokesman for Cingular Wireless. Owen says after visiting with call center agents just recently, he found that agents are less concerned about knowing all of the information they need than they are about knowing where to find it.
This puts the burden on Cingular to ensure that the tools it rolls out are easy to use. One of the benefits of having common tools in place is that agents can essentially educate customers on how to use the tools in front of them, thus reducing the fear factor and encouraging customers to help themselves when they encounter trouble in the future. This method can foster positive interactions—if the customer is willing to learn—while also proactively promoting the online tools the company has spent significant time and money to put into place.
In terms of up-sales, Cingular’s Owen focuses on the positives and suggests that up-sales are often done to save customers money. “I witnessed several calls this week where people called to complain that their teenager had used a lot of text messages. … Our agents were able to offer them a one-time credit and sell them a monthly package of text messages which brought the cost down to a reasonable level,” says Owen. He also states that Cingular will examine usage patterns to make sure that customers are on the right rate plans. Taking Owen at his word, this is a far cry from accusations many major operators hear that they do not optimize rate plans because, were they to do so for every customer, they would fail to be profitable.
Tier 2s and 3s Compete on Care
Smaller operators are forced to compete on customer care, so they often can be more creative than the large operators when it comes to fostering loyalty and providing personalized attention. They seek practical ways to deliver more value in everything they do.
“We’re getting a lot of uptake on providing useful information,” says Andy Wilson, sales and marketing director for Ryder Systems. “If you provide the right bit of information you get a bit of lock-in, because customers come to rely on that information as a management tool.” For example, helping a business customer allocate personal and business costs among its users helps the customer’s accounting process and can add practical value using information that already lives in the billing process.
Small operators also tend to focus on community service and offerings that create a positive local presence. “The wireless customers I deal with today view their customers as long-term relationships, as opposed to how the Tier 1s view it, which is all about the money,” says Ron Whaley, vice president of sales and marketing for OSG Billing Services. “I’m seeing more and more community involvement and fund-raising activities. I’ve seen more things on our bills like charity events, golf outings, and just saw one customer—a wireless provider in Illinois—offer a 25 percent discount to see Drew Carey at a local arena.” Another OSG customer, he says, offered a three-day stay at any one of a number of national resorts, as well as a free basic handset, for any customer who added a new line in a given month. “The additional lines they added for a minimal incremental cost was phenomenal, and churn rates are minimal,” says Whaley.
Similarly, he says, locally oriented operators tend to focus heavily on making their in-store experiences as positive as possible. With many small carriers, as much as one-third or more of their customers will pay their bills in-store and like to stop in to see the folks who work there. “Our customers make sure that the interaction at the store level is a positive experience for the customer, and they have found this will reduce churn and drive incremental revenue,” says Whaley. This is something the major wireless operators can learn from, as studies show the typical in-store interaction is getting longer each year, but not for positive reasons.
MVNOs
For MVNOs, the challenges are different today. These companies will need to focus on marketing, services and customer care to win customers away from the majors. Many are in start-up mode, however, and rather than attacking Tier 1 weaknesses, they are simply learning how to ply their trade. “I think it’s safe to say they are still trying to figure it out for themselves,” says Susan Gould, vice president of business development–wireless markets at Info Directions. MVNOs have to do lot of process development and business-to-business integration just to get up and running.
“You need to be able to serve the customer from the beginning to the end—manage the shipping of phones and accessories, track that, have a real-time interface with the wholesaler. … Once the customer is live, you’ve got to keep information about them,” says Don Culeton, president of Info Directions. The risk from a customer loyalty standpoint is that a lack of efficiency or customer familiarity can result in a bad first impression. “You’re trying to protect your brand and provide good customer support as part of that brand,” Culeton says, “so it can be a high-risk adventure and can damage your brand if you don’t have a holistic view of the customer.”
Virginia Cellular: A Case Study
For a rural operator like Virginia Cellular that competes with all of the major Tier 1 carriers, fostering customer loyalty comes second to none. The independent, facilities-based mobile provider, based in Virginia’s Shenandoah Valley, operates in four counties and serves a market of roughly 260,000 subscribers. Its customers range from personal to business users, and from credit-worthy to the credit-challenged.
In its early days the company drew a lot of revenue from roaming agreements with the majors and benefited from highway traffic along two interstates. Over time, though, the majors built out their own networks in this rural area, which led to a decline in Virginia Cellular’s roaming revenue base. That revenue has been replaced, however, and the company continues to grow and succeed, thanks to a focus on community involvement and personalized customer care.
“We contact our customers and have relationships with them,” says Karen Cline, marketing and relationship manager. Virginia Cellular has 25 sales representatives whose job is to contact all of the carrier’s subscribers at least three or four times per year. These calls are used to ensure not only that customers are happy and driving referral business—the carrier’s primary means of customer acquisition—but also to ensure that customers are using the optimal rate plan.
“We’ll call them to put them on a plan that better matches up with their usage,” says Cline. “We customize their rate plans and listen to their needs, … so we don’t fit our customers into a box—we build a box to suit them. … We’re not so big that we can’t look at our customers as individuals.”
A major part of the company’s customer outreach involves surveys that achieve close to a 20 percent response rate. Customers not only fill out the surveys, but write handwritten notes about their sales representatives, the positive experiences they’ve had, and ideas for improvement. These letters are shared with the sales reps so that they can respond to them directly.
“When you do that it makes it easier to sell and drive down churn,” Cline says. “We compete with [the majors] without charging people or locking them in when they change their plans,” and still maintain a churn rate below the industry average.
Community Effort
Another of Virginia Cellular’s primary outreach activities is to drive community involvement by all of its 100 employees. “It’s important to go out into the community so you’re seen,” Cline explains. “We have a lot of fun with that. This area is big on fairs and parades, and we participate in all of those.” The company, for example, founded a growing arthritis walk, which has seen great success—due in part to the company promoting the event through bill backers, but also because it can bring 100 people to the table to spread the word and participate.
The company has even invented cartoon characters as part of the marketing around an offering it calls Gizmo, and employees actually dress up as these characters to participate in everything from parades, children’s events and nursing home visits around the holidays to fundraisers and high school football games. The characters have become so popular that the company receives regular requests for them to make public appearances.
“We do that because it’s the right thing to do in the community,” says Cline. “In January we got a call back from the nursing home wanting us to come back and to use our service. When our salesperson went back, they showered him with photos from our visit. They remembered us for doing the right thing, … and when people see you doing the right things, they want to be involved in businesses that are doing something positive.”
Virginia Cellular participates in eight parades a year and regularly participates in Friday night high school football tailgate parties. In September it was able to raise funds for Hurricane Katrina relief, which the company matched dollar for dollar. Similarly, the company ran a promotion as part of its referral program where any customer who referred two new customers received a $100 credit plus a $10 donation to Katrina relief. This goes well beyond cutting checks and is more about how a business with the ability to pull together a positive workforce can impact its community and provide services that go well beyond the cell phone.
In-Store Experience
In addition to its community involvement and customer outreach, Virginia Cellular concentrates on making its in-store experience as personal and positive as possible. Thirty-nine percent of its customers come into its five retail stores to pay their bills, making the in-store experience critical to the customer relationship. “They’re in town so they drop in. They want to see the people in the store, and we have excellent employees who are young, fun and cute and call customers by name,” says Cline.
Virginia Cellular also has authorized repair technicians in each of its stores so that customers who come in with handset problems either have their phone fixed while they wait, or are given a loaner if the problem requires more attention. Repair service is also offered to customers of other operators who bring their phones into Virginia Cellular’s stores.
This level of service is essentially unheard-of in the major operators’ retail outlets, but it’s what keeps customers coming back. “We went through a time when [one of the major operators] came to town, and people thought it was the thing to do because you could get all of the bells and whistles,” says Cline. “But when it came to the customer care, the customer came back to us.”
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