Technology advances and service innovation will drive changes in how consumers use telecom products and services. Monetizing these services requires that communications service providers (CSPs) provide more flexible offers and manage each interaction in the customer lifecycle to optimize the customer experience.
CSPs in developed and emerging markets must focus on extending the customer lifecycle and creating a positive experience to differentiate themselves from other CSPs that are focused on price, device offerings and network coverage.
The figure below illustrates why CSPs need to pay more attention to their processes and measure the interactions at each stage of the customer lifecycle to keep customers longer and sell more products and services with the overall goal of improving profitability. Our research shows that in the first year after acquiring a customer, a CSP spends between 12% and 20% of revenue on acquisition costs, which include marketing, selling, on-boarding and equipment subsidies.
With such high costs in the first year, how do CSPs measure and manage their operational activities against the perceptions of how well they are doing according to their customers?
CSPs can improve customer retention and drive revenue growth by simplifying the pricing, packaging and purchasing process. They need to understand the usage and consumer behavior patterns to promote relevant offers that customers value.
In addition, streamlining the on-boarding process can reduce customer frustration and support costs. By understanding what drives customer requests, they can also reduce contact care cost and raise net promoter scores (NPS) for customers who prefer self-care.
After getting the basics right, CSPs should aim to ensure a consistent customer experience across all customer touch points. Each phase in the customer lifecycle needs contact points between the customer and CSP employees, which are either online or a live interaction.
We have identified some areas where most of the value-based service differentiation can be achieved to raise NPS and customer satisfaction.
Data we collected from a CSP show that 50% of its customer interactions occur in the billing phase, with a large number of enquiries resulting from customers failing to understand how services were billed. This drives up support cost and creates frustration. The obvious conclusion is to redesign the bill.
Requests for technical support also generate high levels of customer contact activity. Almost one-third of customer contact occurs in this area. It is in this phase that the CSP may want to focus on only the top 6% of its customer base to provide exceptional support. This model is used in other industries such as airlines, but outside the business market segment, most CSPs have not actively developed any meaningful strategies to date. In many developed markets, high-value post-paid subscribers do not receive any special perks until they contemplate leaving at the end of their contract.
Patrick Kelly is research director at Analysys Mason - patrick.kelly@analysysmason.com
This article first appeared on Telecom Asia CEM & Big Data Supplement June 2014 issue