Telco strategy shifts to the customer

Improving customer service is a mantra in the telecommunications industry right now and there sure is plenty of room for improvement.

Complaints to the Telecommunications Industry Ombudsman (TIO) have ballooned in recent years as the complexity of telco products has grown and customer expectations have risen. Our major operators, hands on hearts, have sworn to do better.

Of course, they are not doing this as an act of charity. They have learned the hard way that bad customer service is expensive to provide. It drives "bad volumes" within the business (like complaints) that raise cost and it promotes expensive customer churn. It turns out that what is bad for customers is bad for the telcos too.

So why haven't operators already achieved the win-win outcome of better customer service? There are lots of reasons.

Many operators' legacy IT systems just weren't designed to cope with the rapidly changing multi-product nature of the modern telecommunications business. The problems are worst where stove-piped business units fragment the operators' view of the customer and add complexity to the task of customer management.

Many operators still don't fully know what data they have, where it is, or how to get it to front-line customer service. Even if they did, they often don't have the business processes to use this information to respond to customer needs in real time.

Solving these problems requires a multi-pronged strategy of IT investment and business re-engineering that is, unsurprisingly, hard to execute. This all has to be done while the business is running at full tilt, without disrupting the services the business provides.

Telstra's strategy

We got some insight into the challenge at last month's Telstra analyst event. Customer service has been one of David Thodey's preoccupations since taking over as chief executive of Telstra but it has taken nearly two years for significant, quantifiable change to flow through.

Telstra's strategy has three main components: process simplification, customer service improvement, and cost savings. But as we have seen, all three are closely related.

"Bad volumes" in the company are drivers of cost, and are often caused by poorly-designed process.

It was also clear that there were no silver bullets where attention could be focused; instead, Telstra has gone through a painstaking process of process re-engineering and IT investment across the whole organization for 18 months.

Nevertheless, the benefits are beginning to show.

Telstra announced savings of $622 million in its last full-year results, and predicts an even bigger benefit in the next year.

• But it has done this while also improving customer service outcomes:
• Call centre volumes were down 28 percent in the September quarter, year-on-year;
• First-call resolution of complaints were up six percent;
• TIO complaints were down 50 percent in the three months to September 2011; and
• Field revisits are down 34 percent, year-on-year.

These improvements are off a base of poor customer service, so there is still a lot of work to do. But "where there's muck there's brass".

If our telecommunications operators succeed in cleaning up their customer service act, we can all be winners.