By Rob van den Dam, global telecommunications industry leader at the IBM Institute for Business Value.
Despite investments in loyalty and customer satisfaction programmes, the telecoms industry has not achieved its customer-related goals.
Even though they had measured high customer satisfaction (CSAT) scores, many communications service provider (CSPs) indicated they were shocked in the 1990s when they lost market share as new entrants came along. And as their market share shrank, there was no correlation between CSAT and loyalty, repurchase patterns or willingness to promote to others.
Typically, customer satisfaction-based KPIs have little to do with customer experience. CSPs should offer an experience that helps consumers to form an emotional engagement, compels them to stay, spend more and recommend the brand to others.
An example of customer experience excellence is Apple, whose customers have become passionate champions for the brand because of the unique experience the company provides.
Research has revealed that Apple advocates generate revenues about 45 percent higher than their competitors’ best customers. Other examples of customer experience excellence include Starbucks and Walmart.
There are no such examples of customer experience excellence in the communications industry.
The good news is that some CSPs are beginning to realise the importance of the customer experience and advocacy – and starting to take action.
O2 in the UK, for example, puts enormous emphasis on the customer experience to keep customers coming back. It calls its customers “fans” and even has a “fandom” measure to track their loyalty.
It rewards fans by giving them access to major music and art events at the O2 Arena and includes them in various loyalty and discount programmes. Consequently, O2 has a significantly higher advocacy level compared to its competition.
The bar for service excellence has been raised higher than ever. In today’s “always on” environment, some CSPs feel their customers pulling away rather than getting closer. As they encounter new products, services and experiences on virtually a daily basis, many consumers feel less loyalty toward specific brands.
At the same time, consumers now wield unprecedented power over how brands are perceived. They can build and demolish brand strength as they blog, text and comment via social media about their various consumer experiences.
Increasingly, it seems that they trust other consumers more than providers. CSPs need to recognise that consumers are in control and are conducting conversations in which they may not be included.
Now, more than ever, CSPs must communicate with their customers to understand what matters to them. Here are some suggestions:
- Take action to become part of the digital dialogue and be prepared to proactively respond to negative “chat”.
- Integrate traditional and new digital channels to interact with customers in an effective way.
- Invest in advanced analytics to mine digital channels, such as blogs, tweets, social networks, peer reviews and consumer-generated content to access customers’ honest, unmediated views, values and expectations.
- Consider a new set of metrics and tools - such as the Customer-Focused Insight Quotient (CFiq) - that goes beyond a single measure of satisfaction, and has a more direct linkage with customer advocacy and experience.
- Programmes should target behavioral, emotional and rational aspects of the customer relationship to directly improve the bottom line and customer key performance indicators.
Ultimately, by deepening their understanding of consumers to enhance their experience, CSPs can increase the value of the relationship.
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