When Telstra sacked 110 staff from its Sensis division last week, it explained the move by saying its self-service tools mean customers can now more easily manage their Sensis advertising on their own.
The irony is, there’s little that Sensis does today that advertisers haven’t been trained by Google to do themselves since the advent of AdWords around 10 years ago.
Sensis may have altered its business to offer customers a range of digital advertising options, but the risk has always been over-servicing. Despite rationalisation, Sensis still has a sales team built to serve customers that were once willing to pay thousands of dollars for print directory advertising, but now can do far more targeted advertising with social media and search sites at a fraction of the cost. They get it for a fraction of the cost because support is often limited to email, and if they’re a small business they can forget about talking to a real person about their campaign.
Even at the bigger end of town, online advertising exchanges are taking hold as publishers seek to create open markets for inventory in what is a high-turnover, low-margin business.
In low-margin businesses self-service is essential, and when margins are being squeezed it’s inevitable that strategists will explore new ways to get customers to look after themselves.
Last year Telstra hired former UBank general manager Gerd Schenkel to head up its new online customer service unit. The unit was given the task of developing online self-service platforms to give customers the option of performing their own transactions online "rather than speaking to agents over the phone”.
Telstra wants customers to be performing 35 per cent of transactions using online self-service channels by 2013. Chief David Thodey knows Telstra is woefully behind other sectors including banking and airlines, which have self-service rates of more than 60 per cent.
If anyone knows how to run a self-service business it’s Schenkel, who helped NAB build millions of dollars in new deposits using a previously unheard-of brand.
But there’s a key difference between the challenge Ahmed Fahour gave Schenkel at NAB and the one Thodey has given him at Telstra. NAB decided to build a new brand from scratch, insulating its larger business from the lower cost, but even lower margin UBank unit.
UBank also got new IT infrastructure and a 24-hour call centre – something of a miracle given the interest rates it offered customers to get them in the door.
If Schenkel is successful at Telstra, it’s inevitable that more jobs will go. But what analysts should be watching is whether the culture of self-service and improved online delivery can permeate Sensis, where it is really needed.
Tomorrow, Telstra will let us know just how bad the picture is for Sensis, a business that once contributed 25 per cent to Telstra’s profit growth, but today is looking more like a shackle around its parent’s neck.
Back in 2004, when then Telstra chief Ziggy Switkowski had a hankering for Fairfax, Alan Kohler said Telstra should have partnered with Google or Microsoft. That was when Seek was still an independent business stealing classifieds market share from Fairfax.
In the game of corporate chess that ensued Sensis ended up on the sidelines, and little has changed since.