Churn management is not complicated
Churn and customer acquisition rates are maybe the most important metrics in the carrier business. Each carrier invests significant effort into both. They implement databases, IT systems and analytics to identify potential churners or potential new customers. They develop loyalty schemes to keep subscribers, sell long-term contracts, and make expensive customer acquisition campaigns. But still it looks like they often don’t put enough effort into the most important solutions.
I collected real life experiences from people I know well and myself.
A customer walks into a carrier’s store.
Customer: I would like to upgrade my data plan, but your online system didn’t allow me to do it.
Sales person: Of course, we can do it for you.
After the sales person has all the customer’s details, she tells him that it is not possible to update the data package for the existing plan, but the customer must change the package and then take a new data plan. The customer is ready to do it, although he feels it is crazy to pay more for his voice and text plan, when he hardly uses them. He would rather have a clear transparent price for data he wants to use.
S: Now we have changed your plan and upgraded data, so all done now.
The customer looks at his phone. His data connection doesn’t work.
C: No data connection at all, it worked when I walked in here.
S: It must be something with your phone settings, can I check them.
C: It cannot be the settings, it worked in your network 5 minutes ago and I have used your data for long time, it is something in your system when you changed the plan.
S: Sir, I must see the settings of your phone, otherwise I cannot do anything.
So, she then goes through all settings, but no data connection. She walks away and leaves the customer to wait 10 minutes and comes back with another person, who is the store manager.
Manager: So, you have some problems.
C: My phone worked when I came here, and when she updated the plan it stopped working. There must be something wrong in your system.
M: We just did what you asked us to do, that is to update your plan. It is not our fault if your phone doesn’t work. There may be some delays with activation. If you just let it be it will probably start to work during the next 24 hours.
C: No, I won’t leave this place until it works. It worked when I walked in!
M: There is really nothing we can do.
Then another sales person, the young, male, nerd type hears the discussion and interjects.
Sales person 2: Let me see, I think I know the problem.
He takes the phone, goes to the back office and comes back in a few minutes.
S2: Sir, now it works.
C: Excellent, what was the problem?
S2: I don’t know exactly, but it happens quite often, it is something in our system. I just removed the new plan and re-set it and then it typically starts to work.
This young sales man saved the customer relationship.
A customer wants to get new iPhone. He walks to his existing carriers store.
C: I would like to upgrade my phone to the new iPhone, but I also would like to check my price plan. I travel a lot, so I would particularly like to check my roaming plan, when I pay quite a lot for that.
S: Unfortunately, we have no iPhones now, and we don’t know when next ones will come. You must come back another day.
C: OK, but could we check my plan now anyway?
S: It is probably better that you check the roaming plans from our web site, as they are complex. Then you can call our calling center.
C: But I don’t want to call your calling center, it has a long queue and terrible service.
S: OK, maybe we can look at it a little bit.
But after a few minutes the customer realized that this person is not actually helpful. It is actually easier to check the plans on the website and then come back to tell them exactly what he wanted to have.
C: Okay, I’ll check these at home, but could you at least reserve one iPhone for me and call me when you have it.
S: No, we cannot reserve them, and it is better if you come or call daily to check the situation.
The customer walks out and goes to another carrier in the same mall. And they have a more helpful person who actually finds an attractive roaming plan for the customer. This sales person also promises to call when they get new iPhones. Two days later they call the customer, the customer gets the new iPhone and changes to this other carrier.
A customer has been loyal to one carrier for 17 years, since he got his first mobile phone. He travels and gets his next phone bill: over $100 for 0.7 MB roaming data. He thinks it cannot be correct. He calls the carrier’s calling center and they also say, it cannot be right, and ask him to write a letter and copy the bill and they will correct it. The customer sends the letter. Four weeks later he gets a letter from the carrier. It says “You should study our roaming prices, and terms and conditions before you travel. You must pay your bill in 7 days or otherwise we will take other actions to collect the payment.” The customer is surprised and angry. He knows some people in the management of the carrier and asks about this from them. They also say that the bill cannot be correct, because they have no pricing like that. They also contact customer service and ask them to contact the customer. A person from the customer service calls the customer. She says that she cannot do anything about the old bill, but she could sell a new package to the customer. The customer is angry and frustrated. $100 is not so much money, but after 17 years of a customer relationship he would like to have justice in this case. The customer decides to leave the carrier, and the customer service person responsible reported to management that “the customer was so unhappy, it was impossible to do anything.”
There are many more stories I have heard and seen, such as a carrier forcing a customer to go from one store to another to get a spare phone when his is sent to warranty repair. Only after a few days, many stores and phone calls later, another person is able to tell them that they don’t have the spare phone system anymore. Or a carrier changing a broadband connection to a new house when a customer moved, only to move it back to the old house a week later. This set off a series of hopeless calls with carrier’s calling center and each call actually generated more problems, when the carrier’s IT system became clogged with conflicting orders from customer service people who just entered a new order to the system, not trying to solve the existing issue. Only the carrier’s Twitter team finally was able to solve the issue, when the customer complained publicly on the site. Or how a sales person literally had no clue about the products he was selling, but used most of the time to beg the customer to give him an excellent rating after his store visit.
Carriers have a lot of customers and a lot of products. So, it is not easy to handle them all. And roaming prices can easily cause problems, when they are so high. Many carriers still claim that problems and unhappy customers are a small percentage of all cases. But I see that carriers could put more effort on customer service, competence of sales and customer care people - and also teach these people to behave better with customers. Many problems are linked to situations where something has gone wrong with a system, but customer service people make it worse with their arrogant and ignorant behavior, or their lack of competence in handling the situation.
I think some problems also derive from external consultants and process thinking. They are too often just there to optimize the service level and minimize costs. These process experts don’t remember that this is about human beings, how to respect customers, take responsibility to fulfill customer’s needs, and possess needed knowledge and competence to handle different kinds of situations. Competence alone is not enough, if a customer service person cannot behave well with people, and if he believes he knows things better than a customer. I think carriers should go see luxury brands, top-level hotels and other companies that excel in customer service and try to learn from them.
My claim is that this kind of investment in customer service would have an excellent return on investment. I have seen also excellent service persons, e.g. from SmarTone in HK, from EE in London and AT&T in San Francisco, and wanted to buy products from these guys. It can return much more than one more process consulting project, new IT system or expensive customer acquisition campaign. At same time, carriers should also really invest in the user experience of their web services. All these together could allow carriers to offer much more human services and experiences, not only processes and technology that look good in charts. This would surely be the best churn management and customer acquisition solution for carriers currently.
Jouko Ahvenainen is serial-entrepreneur and co-founder of Grow VC Group (growvc.com), a new funding solution. In the 1990s Jouko worked for Nokia in Europe and Asia, and then lead the 3G practice at Capgemini globally. The last 12 years Jouko has been an entrepreneur and investor.