Getting smartphone consumers to spend more

For the likes of Telstra, Optus and Vodafone the drive to win over customers has serious implications on their profits. Keeping customers happy will inevitably lead to a better bottom line.

Australian telcos are stuck in a conundrum. They’re being sandwiched between rising network maintenance costs and a growing demand for cheaper services. With nowhere to turn, it seems the only way out of the situation is to… keep their customers happy. 

Could it really be that simple? 

Around 88 per cent of smartphone users around the world claim to be willing to pay up to 30 per cent more to their service provider, if they are happy with the service, according to a smartphone consumer survey conducted by industry analyst firm Coleman Parkes in June 2013.

“This type of research helps quantify the link between customer loyalty (measured by the Net Promoter Score) and profitable growth,” said Fred Reichheld, founder of Bain & Company’s Loyalty Practice and creator of the Net Promoter Score system of management. “The results provide a clear message to the industry: improve customer service if you want to grow.”

Negative backlash

Unfortunately, the reality is that many Australian service providers receive lower rankings in net promoter scores in comparison with their European, Asian and even major North American counterparts.

Most telecommunications consumers are unwilling to tell their friends that their service provider is great or that they should also become subscribers. This level of dissatisfaction obviously hurts service providers’ bottom line and creates a high level of churn.

For Australian service providers, the drive to win over customers has serious implications on their profits.

While Australia’s mobile industry has experienced rapid growth in the last few years, service standards have slipped and have not kept up with the sharp spike in new customers.

Telco executives are now looking to another once deeply despised industry – banking –  when it comes to ways of winning back customers.

According to the Coleman Parkes survey, consumers aren’t keeping their negative experiences to themselves either. Three-quarters (73 per cent) of consumers have complained about their service provider on social media at least six times in the past year.

Consumers mostly used their own Facebook page to complain (45 per cent), followed by Twitter (26 per cent) and service providers’ Facebook pages (25 per cent). But all is not lost… half of all consumers (49 per cent) said that because they aren’t satisfied with their current experience, a positive service provider recommendation by friends and family would cause them to switch providers.

These findings echo the sentiments of CEO, Jeff Bezos. “If you do build a great experience, customers tell each other about that. Word of mouth is very powerful.”

Don’t call it a comeback

Turning consumers’ frowns upside down will necessarily start with correctly identifying the issues that are most important to consumers. What do consumers consider the top issues that will make them feel more loyal to their service providers?

The survey, which included 20,000 smartphone users, revealed a few interesting facts. The most important factor relates to technical issues, such as network quality, coverage and equipment properly functioning.

The big “mystery” of billing issues was a very close second place – this includes how clear the bill is, and how big of a surprise consumers will receive at the end of the month. Users hate surprises and many of them have experienced errors in charging and have other reasons for disputes. This of course negatively impacts trust in the service provider, which will be difficult to regain.

The multi-channel factor was also highly ranked, meaning the availability of customer service and consistency across multiple channels. People today prefer to use online channels rather than calling the contact center, but many consumers still resort to calling because they can’t find what they need online, or experience inconsistent treatment online.

This leads to frustrated telecommunications consumers tying up one of service providers’ most expensive customer service resources – call centre agents.

The payoff?

Obviously turning detractors (those who publish negative comments about a brand) into promoters is good for business, but service providers might not understand just how good it is. According to the Coleman Parkes smartphone survey, promoters are three times more loyal than detractors.

Promoters are “very likely” to buy additional services (wireline, cable, broadband, etc.) from their service provider, unlike detractors. Eighty-six per cent of promoters commented positively about their service provider to friends and family 9.5 times on average over the last 12 months.

Australia’s largest service provider Telstra, as a matter of strategy is promoting customer advocacy for the company.  According to Gordon Ballantyne, the telco's chief customer service officer, the company is determined to "change the way every Australian talks about Telstra as an iconic brand.

"We measure every single customer interaction," he says. ''We have NPS for customer interaction; we have NPS for every product launch. We measure the actual end-to-end customer service experience."

Ballantyne says the company is not just paying lip service to improving customer experience. The salary of executives (40 per cent) and front line sales staff (10 to 25 per cent) are linked to NPS.

The solution

An earlier survey by Amdocs showed how much customers value proactive measures and self service, with 84 per cent of consumers saying they would be more likely to recommend their service provider if the provider were able to identify and preemptively resolve potential issues affecting them. And 83 per cent said they would be more likely to recommend their provider if they were offered easy-to-use and consistent self-service via their mobile device.

Service providers can look at mobile service and proactive care solutions which will enable them to better enhance their customers’ mobile experience.

We’ve long known that customer satisfaction is important. But surveys such as the recent one from Coleman Parkes are helping us to understand exactly how vital it is to any business, and not just those in the telecommunications industry.

Liam Fraser is the head of business development and strategy at Amdocs ANZ.

InvestSMART FORUM: Come and meet the team

We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.

Want access to our latest research and new buy ideas?

Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.

Sign up for free

Related Articles