Telco Web Sites Present Customer Satisfaction Opportunity

Consumer adoption rates for online bill presentment and payment seemed somewhat stagnant in the past, but today, the telecommunications industry is seeing an increase, according to a J.D. Power and Associates study.

J.D. Power's 2004 Residential Local Telephone Customer Satisfaction Study found that 20 percent of U.S. households have visited their local telephone provider's Web site in the last six months. This is up 6 percent from the previous year and is the largest increase in four years.

The study revealed that billing drives most Web site visits, with more than half respondents stating that they viewed their bill online. The number of people who actually paid their bill online increased 13 percent from 2003 to a total of 44 percent. This is up significantly from the 12 percent who said they paid their bill online in 2001.

"More and more people who are reviewing [their bill] are now paying," says Steve Kirkeby, senior director of telecommunications at J.D. Power. Kirkeby believes that the ability to pay with a credit card online is one factor causing online bill payment adoption.

While 44 percent of those surveyed said they pay their bills online, another 12 percent said they go to the Web site only to review their bill. Providers need to understand what objections these customers have to actually paying online and entice them to overcome this, Kirkeby asserts.

Kirkeby believes another reason for the increase in online visits and bill payment is the availability and adoption of faster Internet access. "It appears to be more of a high-speed phenomenon," Kirkeby says, citing today's high-speed access subscribers to include more early adopters who are less likely to be intimidated by the Web. Of the people that visited telco Web sites, twice as many were using a broadband connection over dial-up. This swell in Web usage is also associated with the increased promotion of online billing by many telco providers. In one promotion, Verizon reported a 200 percent increase in web adoption after a three week campaign.

And, while security is still an issue with online bill payment, Kirkeby does not believe that it will be a deterrent to the current growth."I don't think the people that use online billing are that naive," he says, noting that companies like Bell South have even sent out warnings to customers not to respond to e-mail requests for subscriber information.

Kirkeby says telecom providers in general have done well when it comes to online security and reporting fraudulent, or spoof, e-mails.

Bundling and Costs

The J.D. Power study also found that the number of households that are now bundling at least local and long distance telephone services has increased to 51 percent, up 11 percent from 2003 and representing 10 million households nationally. About 43 percent of those surveyed said they would be likely to switch additional services to one provider where possible.

The major reasons cited among survey respondents for bundling in order of importance include; to receive one bill, convenience or to receive a competitive discount or price.

The study also found that local telco costs are rising. Consumers surveyed reported spending $38.10 per month on local service. This is up from $34 in 2003.

Kirkeby believes that this increase is largely attributable to the reallocation of costs for telcos, citing a decrease in the number of international calls that previously subsidized local calls. Now that people have separate long distance carriers or they go to a dial-around company, local providers cannot offset as much of their costs with these calls.

Other reasons for an increase in the local bill involve bundling. Kirkeby says when companies bundle more services, more call features are added in. These charges are allocated to the local bill versus the long distance bill.

The Customer Satisfaction Link

Customer satisfaction has continued to rise since 2002. The study found that customers with Internet access who visited their local provider's Web site in the last six months actually have much higher customer satisfaction levels than those who haven't.

The survey measured customers' overall satisfaction based on six elements: customer service, billing, performance and reliability, company image, cost of service and offerings and promotions. AT&T scored top among the most regions, ranking highest overall among other providers in the Northeast, Mid-Atlantic, Southeast and Southwest. Talk America ranked highest in the North Central region. In the West region, Cox Communications takes the top customer satisfaction rating.

Kirkeby says AT&T did so well in the customer satisfaction ratings primarily because it is new to the local market. "When you get it right out of the chute," Kirkeby says, companies are more ready and customers are thus happier.

The E-Care Opportunity

Now that telco providers have subscribers' online attention, Kirkeby says a real opportunity exists to expand usage from online bill presentment and payment to more general e-care.

He predicts that instant messaging and chat will become more effective online tools employed by providers. Chat is an opportunity if the telcos make the experience as valuable as talking to a person on the phone.

The J.D. Power study was launched in 1996 and is performed annually. The 2004 study included responses from more than 10,500 U.S. local telephone service subscribers.