-
WDS.CO @WDSCOMPANY [email protected]
ExperienceWDS | DELIVERING ACTIONABLE INSIGHT FOR THE WIRELESS
COMMUNITY
LOYALTY VS SATISFACTIONWHY THE TWO
MUST NOT BE CONFUSED
IS THREE A CROWD?
CAN WINDOWS PHONE CRASH THE
OS PARTY?
SPRINTWHY CUSTOMER
EXPERIENCE IS SO IMPORTANT
TO SPRINT
ISSUE 02 | Q4 2012
THE SMARTPHONERACE TO
THE BOTTOMCAN OEMS DIFFERENTIATE IN A WORLD
OF LOW-COST SMARTPHONES?
-
The science of customer experience WDS, A Xerox Company is
trusted by many of the worlds best-known wireless brands to help
assure the customer experience, improve future products and
services and build long-term, profitable relationships with
end-users.
Quite simply, we know what makes smartphones smarter and apps
more appealing. Scan the QR code opposite and see how we do it.
wds.co
-
The science of customer experience WDS, A Xerox Company is
trusted by many of the worlds best-known wireless brands to help
assure the customer experience, improve future products and
services and build long-term, profitable relationships with
end-users.
Quite simply, we know what makes smartphones smarter and apps
more appealing. Scan the QR code opposite and see how we do it.
wds.co
-
editorial
contents
One of the principle mistakes made by wireless organizations is
to correlate satisfaction directly to loyalty. Although
intrinsically linked, the two are very different and while the
desire to make this link is understandable, its also dangerously
ineffective.
In such a saturated market environment, one of the greatest
challenges facing todays wireless brands is the ability to
differentiate, as such the need to inspire loyalty through the
customer experience has become all the more obvious. However, if
the end-goal is to improve loyalty, are todays customer
satisfaction methodologies even appropriate and is the industry
making a link between satisfaction, loyalty and profitability that
simply doesnt exist?
In this issue we investigate whether the industry is mistaking
satisfaction for loyalty, highlight why many reward-based loyalty
programs are only serving a very short-term purpose and outline how
wireless brands can better guide investment to drive true brand
loyalty. Its this type of insight that we believe creates
actionable business intelligence for our customers and the wireless
community at large.
In what is now our second edition of Experience, we also take a
look at the smartphone race to the bottom and the challenges this
presents to the top-end of the smartphone market; mobile operators
migration to 4G technologies and the potential pitfalls that
threaten to keep price as the primary differentiator; as well as
an
in-depth analysis of the OS market economics and whether Windows
Phone can break the current duopoly of Android and iOS?
We hope you enjoy the magazine and we welcome your feedback at
[email protected]
David Ffoulkes-Jones CEO, WDS, A Xerox Company
06 Meet a WDS customer Deeanne King from Sprint talks about
Sprints drive to improve loyalty and the challenges facing todays
wireless carriers.
08 Build it and they will come... right? We ask whether
technology and consumer expectations are aligned.
11 Race to the bottom Mature markets are now looking to drive
growth in low-cost smartphones, but at what cost to brands at the
top-end of the smartphone market?
16 Loyalty vs. SatisfactionIs the industry mistaking
satisfaction for loyalty? What are the key differences and why does
it matter?
21 Mobile patents landscapeIndustry analyst Chetan Sharma looks
at the explosion of mobile patents and the power shift from Europe
to the US.
26 Is three a crowd?Can new Windows Phone break the duopoly of
iOS and Android?
Email : [email protected] twitter: @wdscompany Blog:
blog.wds.co
Creating industry value through the customer experience
WDS, A Xerox Company is the trading name of Wireless Data
Services Ltd. Registered in England and Wales (company number
01714719). Wireless Data Services Ltd., Alder Hills Park, 16 Alder
Hills, Poole, Dorset, BH12 4AR, UK. VAT number GB 911330278 . WDS
cannot accept (and hereby disclaims) any responsibility for loss or
damage caused by errors or omissions. All rights reserved WDS, A
Xerox Company 2012
26
1106 16
-
editorial
contents
One of the principle mistakes made by wireless organizations is
to correlate satisfaction directly to loyalty. Although
intrinsically linked, the two are very different and while the
desire to make this link is understandable, its also dangerously
ineffective.
In such a saturated market environment, one of the greatest
challenges facing todays wireless brands is the ability to
differentiate, as such the need to inspire loyalty through the
customer experience has become all the more obvious. However, if
the end-goal is to improve loyalty, are todays customer
satisfaction methodologies even appropriate and is the industry
making a link between satisfaction, loyalty and profitability that
simply doesnt exist?
In this issue we investigate whether the industry is mistaking
satisfaction for loyalty, highlight why many reward-based loyalty
programs are only serving a very short-term purpose and outline how
wireless brands can better guide investment to drive true brand
loyalty. Its this type of insight that we believe creates
actionable business intelligence for our customers and the wireless
community at large.
In what is now our second edition of Experience, we also take a
look at the smartphone race to the bottom and the challenges this
presents to the top-end of the smartphone market; mobile operators
migration to 4G technologies and the potential pitfalls that
threaten to keep price as the primary differentiator; as well as
an
in-depth analysis of the OS market economics and whether Windows
Phone can break the current duopoly of Android and iOS?
We hope you enjoy the magazine and we welcome your feedback at
[email protected]
David Ffoulkes-Jones CEO, WDS, A Xerox Company
06 Meet a WDS customer Deeanne King from Sprint talks about
Sprints drive to improve loyalty and the challenges facing todays
wireless carriers.
08 Build it and they will come... right? We ask whether
technology and consumer expectations are aligned.
11 Race to the bottom Mature markets are now looking to drive
growth in low-cost smartphones, but at what cost to brands at the
top-end of the smartphone market?
16 Loyalty vs. SatisfactionIs the industry mistaking
satisfaction for loyalty? What are the key differences and why does
it matter?
21 Mobile patents landscapeIndustry analyst Chetan Sharma looks
at the explosion of mobile patents and the power shift from Europe
to the US.
26 Is three a crowd?Can new Windows Phone break the duopoly of
iOS and Android?
Email : [email protected] twitter: @wdscompany Blog:
blog.wds.co
Creating industry value through the customer experience
WDS, A Xerox Company is the trading name of Wireless Data
Services Ltd. Registered in England and Wales (company number
01714719). Wireless Data Services Ltd., Alder Hills Park, 16 Alder
Hills, Poole, Dorset, BH12 4AR, UK. VAT number GB 911330278 . WDS
cannot accept (and hereby disclaims) any responsibility for loss or
damage caused by errors or omissions. All rights reserved WDS, A
Xerox Company 2012
26
1106 16
-
Serving over 56 million subscribers, Sprint is the third
largest wireless carrier in the United States (US). Founded
over a hundred years ago it has a strong pedigree of technical
innovation, including the first
wireless 4G service from a national carrier in the US. It is
also one of the industrys most
vocal advocates for the customer experience and winner of
several
awards, including being ranked No. 1 for customer
satisfaction
among US national carriers by the American Customer
Satisfaction Index.
WDS has been working with Sprint since 2011, helping the
carrier to implement a business change program designed
to deliver a more consistent customer experience. We
spoke with Deeanne King, Vice President, Customer
Management Operational Support about her role, Sprints drive to
improve loyalty and the wider challenges facing todays
wireless carriers.
WDS: Sprint has been highly vocal in its support for a better
customer experience. Why has customer experience become such an
important topic for you?
DK: When Dan Hesse became CEO of Sprint in December 2007 he set
three key priorities, these were Brand, Cash and Customer
Experience. Prioritizing the customer experience at this level has
helped us to achieve many of our key financial improvements and
focus our efforts where it really counts.
WDS: And those improvements have come in the form of improved
net additions and subscriber retention?
DK: Yes, absolutely. In Q1 2012 we achieved net adds of over a
million subscribers for our sixth consecutive quarter, we were the
only US carrier to do this. Our churn is also very stable. If you
get the experience right, then the financial benefits will follow;
our operating revenues have increased year-over-year for the
seventh consecutive quarter (as at Q1 2012).
WDS: So, how do you define the Sprint Customer Experience?
DK: Being a Sprint customer should be easy. We work hard to make
it easy for our customers to engage with Sprint services. They
shouldnt have to expend a lot of effort trying to set up services
or fix things if they go wrong.
WDS: Can you tell us about your role in achieving this
ambition?
DK: As Vice President, Customer Management Operational Support,
my role is to drive greater performance benefits into our Customer
Operations division. This may come in the form of improved IT or
better knowledge management to empower Customer Service
Representatives (CSRs). My team also looks at analytics to identify
call drivers and how those can be mitigated. I believe support
interactions provide a great opportunity to better understand
subscriber behavior and the customer experience. The CEO has put a
laser light focus on finding out why consumers are calling, and
everyone in the company has an incentive around reducing calls to
care.
WDS: So theres a company-wide appreciation of how customer
insight can deliver benefit across the Sprint business?
DK: Absolutely. We continually use customer insight to drive
improvements. A great example is how we look to understand the
typical requirements of a customer in the first 30 days of device
ownership. This is a critical period in the customer lifecycle and
if we can anticipate likely call drivers we can reduce the support
burden and also improve the experience.
WDS has been a great partner in helping us to ensure we have the
insight and the content we need to drive such improvements. The
support content is
Meet a WDS customer Deeanne King,
Vice President, Customer Management Operational Support
shared across multiple channels to ensure we are setting up our
customers for success at each step in a way that meets their
individual preferences. This focus on optimizing the customer
experience has seen Customer Satisfaction (CSAT) increase by 66%
and FCR improve by 41% since 2008.
WDS: Most carriers are now starting to appreciate the importance
of the retail touch point in shaping customer expectations and user
behavior. How much do you relay care insight back into the retail
environment?
DK: Each year we are consistently improving the level of
integration with our retail partners and the knowledge we collect
from the care channel is distributed across the board to create a
consistent customer experience. WDS has been the corner stone for
many of these improvements, making key knowledge available across
the full spectrum of touch points, including retail, to both our
staff and to customers.
Sprint wants to be the brand that does the right thing for the
right reasons. This is one of the reasons why we continue to offer
unlimited pricing; its hugely valued by our customers who
appreciate the transparency and, as a benefit to Sprint, it reduces
the volume of calls we take relating to overages and other billing
concerns.
WDS: Can you give us an example of how youve improved the retail
experience?
DK: Our Ready Now concept is well known in the industry. As part
of the Ready Now initiative, customers are walked through their new
device, shown how it works, how to set it up and how to get the
most out of it for their everyday needs. Again, the initiative uses
key customer insight and knowledge collected from Customer
Operations so we can be sure where to focus our efforts.
This initiative has been very successful and as such we are now
looking to implement a Virtual Ready Now for customers purchasing
online or at third party retail outlets where the opportunity to
provide a one on one discussion with a Sprint representative may
not exist.
In addition, this content also helps us to deliver Sprint Zone
which is an app that provides content and information about the
customers account and device. We believe that this is a key channel
for customers.
WDS: What are the key challenges to customer experience and
retention anticipated by Sprint within the next couple of
years?
DK: The market is highly competitive and heavily penetrated, its
a switchers market and as such we really want to continue our focus
on churn reduction by delivering a customer experience that is
truly consistent across the entire lifecycle and across all touch
points.
We will continue to focus on the network, not only in terms of
upgrading and enhancing the infrastructure through the network
program, but also to continue growth and increase our coverage
within the US market. Ultimately we want to create value for our
customers and offer the right products and services as well as a
high performing and reliable network. Sprint wants to be the brand
that does the right thing for the right reasons. This is one of the
reasons why we continue to offer unlimited pricing; its hugely
valued by our customers who appreciate the transparency and, as a
benefit to Sprint, it reduces the volume of calls we take relating
to overages and other billing concerns.
WDS: Churn reduction and loyalty go hand-in-hand. How do you
define a loyal customer?
DK: If I think back through the history of wireless I would say
that the industry was too focused on retaining customers in a way
that wasnt always in the customers best interests. At Sprint we
want to build a degree of loyalty that inspires brand advocacy.
This can only be achieved by delivering on the Sprint promise. It
isnt achieved through simple reward programs.
At Sprint we want to build a degree of loyalty that inspires
brand advocacy. This can only be achieved by delivering on the
Sprint promise. It isnt achieved through simple reward
programs.
WDS has been working with Sprint since 2011 to deliver a
business change program called Device Service Experience (DSE).
DSEs goal is to support an increasingly intelligent device
portfolio through the application of device knowledge and content
across multiple channels and touch points. The result will be a
highly consistent customer experience that in turn drives
operational cost savings across the Sprint business.
This interview took place in July 2012.
Experience Issue 2 0706 Experience Issue 2
66%INCREASE IN CUSTOMER SATISFACTION
-
Serving over 56 million subscribers, Sprint is the third
largest wireless carrier in the United States (US). Founded
over a hundred years ago it has a strong pedigree of technical
innovation, including the first
wireless 4G service from a national carrier in the US. It is
also one of the industrys most
vocal advocates for the customer experience and winner of
several
awards, including being ranked No. 1 for customer
satisfaction
among US national carriers by the American Customer
Satisfaction Index.
WDS has been working with Sprint since 2011, helping the
carrier to implement a business change program designed
to deliver a more consistent customer experience. We
spoke with Deeanne King, Vice President, Customer
Management Operational Support about her role, Sprints drive to
improve loyalty and the wider challenges facing todays
wireless carriers.
WDS: Sprint has been highly vocal in its support for a better
customer experience. Why has customer experience become such an
important topic for you?
DK: When Dan Hesse became CEO of Sprint in December 2007 he set
three key priorities, these were Brand, Cash and Customer
Experience. Prioritizing the customer experience at this level has
helped us to achieve many of our key financial improvements and
focus our efforts where it really counts.
WDS: And those improvements have come in the form of improved
net additions and subscriber retention?
DK: Yes, absolutely. In Q1 2012 we achieved net adds of over a
million subscribers for our sixth consecutive quarter, we were the
only US carrier to do this. Our churn is also very stable. If you
get the experience right, then the financial benefits will follow;
our operating revenues have increased year-over-year for the
seventh consecutive quarter (as at Q1 2012).
WDS: So, how do you define the Sprint Customer Experience?
DK: Being a Sprint customer should be easy. We work hard to make
it easy for our customers to engage with Sprint services. They
shouldnt have to expend a lot of effort trying to set up services
or fix things if they go wrong.
WDS: Can you tell us about your role in achieving this
ambition?
DK: As Vice President, Customer Management Operational Support,
my role is to drive greater performance benefits into our Customer
Operations division. This may come in the form of improved IT or
better knowledge management to empower Customer Service
Representatives (CSRs). My team also looks at analytics to identify
call drivers and how those can be mitigated. I believe support
interactions provide a great opportunity to better understand
subscriber behavior and the customer experience. The CEO has put a
laser light focus on finding out why consumers are calling, and
everyone in the company has an incentive around reducing calls to
care.
WDS: So theres a company-wide appreciation of how customer
insight can deliver benefit across the Sprint business?
DK: Absolutely. We continually use customer insight to drive
improvements. A great example is how we look to understand the
typical requirements of a customer in the first 30 days of device
ownership. This is a critical period in the customer lifecycle and
if we can anticipate likely call drivers we can reduce the support
burden and also improve the experience.
WDS has been a great partner in helping us to ensure we have the
insight and the content we need to drive such improvements. The
support content is
Meet a WDS customer Deeanne King,
Vice President, Customer Management Operational Support
shared across multiple channels to ensure we are setting up our
customers for success at each step in a way that meets their
individual preferences. This focus on optimizing the customer
experience has seen Customer Satisfaction (CSAT) increase by 66%
and FCR improve by 41% since 2008.
WDS: Most carriers are now starting to appreciate the importance
of the retail touch point in shaping customer expectations and user
behavior. How much do you relay care insight back into the retail
environment?
DK: Each year we are consistently improving the level of
integration with our retail partners and the knowledge we collect
from the care channel is distributed across the board to create a
consistent customer experience. WDS has been the corner stone for
many of these improvements, making key knowledge available across
the full spectrum of touch points, including retail, to both our
staff and to customers.
Sprint wants to be the brand that does the right thing for the
right reasons. This is one of the reasons why we continue to offer
unlimited pricing; its hugely valued by our customers who
appreciate the transparency and, as a benefit to Sprint, it reduces
the volume of calls we take relating to overages and other billing
concerns.
WDS: Can you give us an example of how youve improved the retail
experience?
DK: Our Ready Now concept is well known in the industry. As part
of the Ready Now initiative, customers are walked through their new
device, shown how it works, how to set it up and how to get the
most out of it for their everyday needs. Again, the initiative uses
key customer insight and knowledge collected from Customer
Operations so we can be sure where to focus our efforts.
This initiative has been very successful and as such we are now
looking to implement a Virtual Ready Now for customers purchasing
online or at third party retail outlets where the opportunity to
provide a one on one discussion with a Sprint representative may
not exist.
In addition, this content also helps us to deliver Sprint Zone
which is an app that provides content and information about the
customers account and device. We believe that this is a key channel
for customers.
WDS: What are the key challenges to customer experience and
retention anticipated by Sprint within the next couple of
years?
DK: The market is highly competitive and heavily penetrated, its
a switchers market and as such we really want to continue our focus
on churn reduction by delivering a customer experience that is
truly consistent across the entire lifecycle and across all touch
points.
We will continue to focus on the network, not only in terms of
upgrading and enhancing the infrastructure through the network
program, but also to continue growth and increase our coverage
within the US market. Ultimately we want to create value for our
customers and offer the right products and services as well as a
high performing and reliable network. Sprint wants to be the brand
that does the right thing for the right reasons. This is one of the
reasons why we continue to offer unlimited pricing; its hugely
valued by our customers who appreciate the transparency and, as a
benefit to Sprint, it reduces the volume of calls we take relating
to overages and other billing concerns.
WDS: Churn reduction and loyalty go hand-in-hand. How do you
define a loyal customer?
DK: If I think back through the history of wireless I would say
that the industry was too focused on retaining customers in a way
that wasnt always in the customers best interests. At Sprint we
want to build a degree of loyalty that inspires brand advocacy.
This can only be achieved by delivering on the Sprint promise. It
isnt achieved through simple reward programs.
At Sprint we want to build a degree of loyalty that inspires
brand advocacy. This can only be achieved by delivering on the
Sprint promise. It isnt achieved through simple reward
programs.
WDS has been working with Sprint since 2011 to deliver a
business change program called Device Service Experience (DSE).
DSEs goal is to support an increasingly intelligent device
portfolio through the application of device knowledge and content
across multiple channels and touch points. The result will be a
highly consistent customer experience that in turn drives
operational cost savings across the Sprint business.
This interview took place in July 2012.
Experience Issue 2 0706 Experience Issue 2
66%INCREASE IN CUSTOMER SATISFACTION
-
There is no doubt that operators played a key role in bridging
the chasm and delivering the smartphone into the hands of the
masses. Fundamentally it was the operators efforts that conceived
the thriving digital ecosystem we have today. However in the midst
of fresh revenue opportunities, have they been caught sleeping?
Having invested in the network infrastructure only for OTT players
to come and eat their lunch? After all despite growth in data
consumption, are operators really seeing any incremental gains in
revenue and loyalty?
For many operators, revenue has now become stagnant, or worse
still has begun to shrink. Some of the worlds largest operators
suffered from falling revenues, in Q2 2012, from -1.9% to -5.2%
YoY.
Meanwhile, smaller more agile over-the-top (OTT) providers have
made opportunist endeavors that leverage the operators network
infrastructure in the provision of more compelling and lower cost
VoIP
and IM services that rival operators more traditional voice and
text services; not to mention delivering a host of cloud enabled
services that consumers are growing thirsty for. As the market
fragments, and customers devour a picknmix of services from a
multitude of vendors, the customer experience is becoming
increasingly dynamic and subsequently the operators customer
relationships are becoming more fragile as their involvement and
influence threatens to fade.
Treading Water
Network investment is a fundamental requirement in enabling the
delivery of customer expectations, however, its not this element
that will provide the necessary competitive advantage and inspire
loyalty in this increasingly commoditized market.
Operators have concentrated solely upon building new networks
for the explosion of data they expected to replace voice revenues
and have thus been stuck treading water.
Experience Issue 2 0906 Experience issue 1
Build it and
they will come right?
The future sustainability of global operators, according to
analysts and
business commentators, is dependent upon the uptake of new data
services
and the expectation that data will fill the hole left behind by
the downturn of voice
revenues. It is this market opportunity that fuelled investment
into high speed 3G data
networks, and is today what drives the roll-out of 4G
infrastructure in the latest
multi-million dollar investment on the operator road map.
After all, if you build it, they will come, right? Wrong. Of
course, once one operator makes this move in any given market, the
rest have
little choice but to follow, stripping any initial element of
network differentiation
and competitive advantage. In essence, this relegates the
network to the hygiene factor
level for consumers comparing operators with one another.
Without a richer, more compelling
proposition, the consumer will always fall back to price as the
primary differentiator.
Network investment is a fundamental requirement in enabling the
delivery of customer expectations, however, its not this element
that will provide the necessary competitive advantage and inspire
loyalty in this increasingly commoditized market.
The industry is currently experiencing a challenging and
turbulent period of change. Technologies have evolved rapidly, as
have consumers expectations and behavior. This dynamic environment
calls for a level of reactivity that large telco organizations are
finding particularly difficult to manage, especially where
inter-operational departments remain highly siloed.
-
There is no doubt that operators played a key role in bridging
the chasm and delivering the smartphone into the hands of the
masses. Fundamentally it was the operators efforts that conceived
the thriving digital ecosystem we have today. However in the midst
of fresh revenue opportunities, have they been caught sleeping?
Having invested in the network infrastructure only for OTT players
to come and eat their lunch? After all despite growth in data
consumption, are operators really seeing any incremental gains in
revenue and loyalty?
For many operators, revenue has now become stagnant, or worse
still has begun to shrink. Some of the worlds largest operators
suffered from falling revenues, in Q2 2012, from -1.9% to -5.2%
YoY.
Meanwhile, smaller more agile over-the-top (OTT) providers have
made opportunist endeavors that leverage the operators network
infrastructure in the provision of more compelling and lower cost
VoIP
and IM services that rival operators more traditional voice and
text services; not to mention delivering a host of cloud enabled
services that consumers are growing thirsty for. As the market
fragments, and customers devour a picknmix of services from a
multitude of vendors, the customer experience is becoming
increasingly dynamic and subsequently the operators customer
relationships are becoming more fragile as their involvement and
influence threatens to fade.
Treading Water
Network investment is a fundamental requirement in enabling the
delivery of customer expectations, however, its not this element
that will provide the necessary competitive advantage and inspire
loyalty in this increasingly commoditized market.
Operators have concentrated solely upon building new networks
for the explosion of data they expected to replace voice revenues
and have thus been stuck treading water.
Experience Issue 2 0906 Experience issue 1
Build it and
they will come right?
The future sustainability of global operators, according to
analysts and
business commentators, is dependent upon the uptake of new data
services
and the expectation that data will fill the hole left behind by
the downturn of voice
revenues. It is this market opportunity that fuelled investment
into high speed 3G data
networks, and is today what drives the roll-out of 4G
infrastructure in the latest
multi-million dollar investment on the operator road map.
After all, if you build it, they will come, right? Wrong. Of
course, once one operator makes this move in any given market, the
rest have
little choice but to follow, stripping any initial element of
network differentiation
and competitive advantage. In essence, this relegates the
network to the hygiene factor
level for consumers comparing operators with one another.
Without a richer, more compelling
proposition, the consumer will always fall back to price as the
primary differentiator.
Network investment is a fundamental requirement in enabling the
delivery of customer expectations, however, its not this element
that will provide the necessary competitive advantage and inspire
loyalty in this increasingly commoditized market.
The industry is currently experiencing a challenging and
turbulent period of change. Technologies have evolved rapidly, as
have consumers expectations and behavior. This dynamic environment
calls for a level of reactivity that large telco organizations are
finding particularly difficult to manage, especially where
inter-operational departments remain highly siloed.
-
27 mi
llion
10 Experience Issue 2
Using unlimited tariffs to drive growth
was a great customer acquisition strategy; however its
created a generation of consumers that now associate operator
value with
price. This leaves little room for growth or generation of new
consumers.
Operators have struggled to engage properly with consumers and
discover what it is they really want. What are consumers willing to
pay more for?
The answer cannot and should not be network speed. The first to
the 4G party have built it and subscribers have come, but will they
stay once the playing field levels?
The battle for consumer loyalty
Competitive and social pressures are causing traditional revenue
to shift to other parts of the ecosystem, namely to applications or
content providers. The operator community is in need of a more
sustainable business model that can successfully leverage its
investments and ensure the operators themselves become the
beneficiary of revenue streams supported / enabled by their
[expensive] infrastructure.
According to research from Cisco IBSG, close to 50% of all
mobile users viewed mobile operators as their preferred provider of
mobile cloud services, dwarfing the less than 20% of respondents
who preferred web companies.
The window of opportunity is far from closed here and with the
next phase of the industrys evolution residing within the concept
of a connected home, innovative differentiation in this arena may
provide a feasible route to rebuilding valued customer
relationships. Already, nearly 21% of US households, totaling about
27 million, have either an Internet-ready TV, game console, Blu-ray
player, or smart set-top box connected to their home network,
according to ABI Research.
With increasing price and commercial pressures, in a battle for
customer loyalty against the ecosystems being built by companies
such as Google, Microsoft and Apple; and against Over The Top (OTT)
services that threaten to commoditize the operators core offer,
operators must reverse the trend and win back customers loyalty
based not on price, but service and brand value.
Optimizing the customer experience to achieve a compelling and
sustainable competitive advantage
A focus on network speed stands only to further position the
carrier as a pipe, a perception the operators are openly eager to
avoid. Instead, their complex infrastructures must be synchronized
across interdepartmental operations, to enable
a compelling, interlinking proposition that can successfully
overcome the key challenges within todays market landscape.
In understanding the frequent interactions that its brand has
with subscribers throughout the course of the customer lifecycle,
operators can design a customer journey that is able to provide an
experience that delivers to the brand vision so tightly, business
strategy and customer experience become inseparable. It is a well
thought-out customer experience program that can ensures the entire
organization pulls in the same direction to deliver on the brand
promise; building customer loyalty when its needed most by driving
investment into key customer touch points that differentiate the
brand.
A short term strategy based on continued technological
iterations of the network, will not deliver long term value. Users
must be able to build a connection with the
brand, not the network. Its the customer experience, knowing the
customer,
delivering a great service, managing them in the way thats right
for them
that will help achieve a sustainable competitive advantage
According to research from Cisco IBSG, close to 50%
of all mobile users viewed mobile operators as their preferred
provider of mobile cloud services, dwarfing the less
than 20% of respondents who preferred web companies.
Nearly 21% of US households,
have either an Internet- ready TV, game console, Blu-ray player,
or smart set-top box connected to their home network
Its not only emerging markets driving the growth of low cost
smartphones. Mature markets too are showing keen interest as they
look to slash their subsidy investments. But at what cost to brands
at the top-end of the smartphone market?
THE SMARTPHONE
RACE TO THE BOTTOM
-
27 mi
llion
10 Experience Issue 2
Using unlimited tariffs to drive growth
was a great customer acquisition strategy; however its
created a generation of consumers that now associate operator
value with
price. This leaves little room for growth or generation of new
consumers.
Operators have struggled to engage properly with consumers and
discover what it is they really want. What are consumers willing to
pay more for?
The answer cannot and should not be network speed. The first to
the 4G party have built it and subscribers have come, but will they
stay once the playing field levels?
The battle for consumer loyalty
Competitive and social pressures are causing traditional revenue
to shift to other parts of the ecosystem, namely to applications or
content providers. The operator community is in need of a more
sustainable business model that can successfully leverage its
investments and ensure the operators themselves become the
beneficiary of revenue streams supported / enabled by their
[expensive] infrastructure.
According to research from Cisco IBSG, close to 50% of all
mobile users viewed mobile operators as their preferred provider of
mobile cloud services, dwarfing the less than 20% of respondents
who preferred web companies.
The window of opportunity is far from closed here and with the
next phase of the industrys evolution residing within the concept
of a connected home, innovative differentiation in this arena may
provide a feasible route to rebuilding valued customer
relationships. Already, nearly 21% of US households, totaling about
27 million, have either an Internet-ready TV, game console, Blu-ray
player, or smart set-top box connected to their home network,
according to ABI Research.
With increasing price and commercial pressures, in a battle for
customer loyalty against the ecosystems being built by companies
such as Google, Microsoft and Apple; and against Over The Top (OTT)
services that threaten to commoditize the operators core offer,
operators must reverse the trend and win back customers loyalty
based not on price, but service and brand value.
Optimizing the customer experience to achieve a compelling and
sustainable competitive advantage
A focus on network speed stands only to further position the
carrier as a pipe, a perception the operators are openly eager to
avoid. Instead, their complex infrastructures must be synchronized
across interdepartmental operations, to enable
a compelling, interlinking proposition that can successfully
overcome the key challenges within todays market landscape.
In understanding the frequent interactions that its brand has
with subscribers throughout the course of the customer lifecycle,
operators can design a customer journey that is able to provide an
experience that delivers to the brand vision so tightly, business
strategy and customer experience become inseparable. It is a well
thought-out customer experience program that can ensures the entire
organization pulls in the same direction to deliver on the brand
promise; building customer loyalty when its needed most by driving
investment into key customer touch points that differentiate the
brand.
A short term strategy based on continued technological
iterations of the network, will not deliver long term value. Users
must be able to build a connection with the
brand, not the network. Its the customer experience, knowing the
customer,
delivering a great service, managing them in the way thats right
for them
that will help achieve a sustainable competitive advantage
According to research from Cisco IBSG, close to 50%
of all mobile users viewed mobile operators as their preferred
provider of mobile cloud services, dwarfing the less
than 20% of respondents who preferred web companies.
Nearly 21% of US households,
have either an Internet- ready TV, game console, Blu-ray player,
or smart set-top box connected to their home network
Its not only emerging markets driving the growth of low cost
smartphones. Mature markets too are showing keen interest as they
look to slash their subsidy investments. But at what cost to brands
at the top-end of the smartphone market?
THE SMARTPHONE
RACE TO THE BOTTOM
-
price points left consumers defaulting to the price tag when
making purchasing decisions? If so, this is bad news for high-end
device sales.
Consider an average consumer looking to purchase their first
smartphone. Established requirements typically include the ability
to take photos, access social media sites such as Facebook, send
and receive email and perhaps join their friends and family in
enjoying gameplay of popular titles such as Angry Birds or
DrawSomething. In this instance, providing the device has a camera,
a touchscreen and access to the Android Market, Windows Marketplace
or Apples App Store it will meet all of the customers
requirements.
Overwhelmed with choice, and unable to see the benefits
delivered by improved hardware performance, the consumer will
frequently default to price. Reliant on subsidies and price points
to make their final decision it seems that for a large percentage
of consumers, the value of higher end smartphone products is not
currently understood nor appreciated.
Interestingly, Apple has managed to avoid this predicament
entirely. With only one device in the market place, the iPhone,
Apple maintains the perceived high-end value and prestige of the
device through its positioning and status. Although there are
iPhones available at lower price point, these are older generation
iterations; therefore there is a clear difference in value for the
consumer.
Continued
The new breed of smartphone Operating Systems have played a key
role in democratizing the smartphone. Allowing manufacturers
greater flexibility across reference designs and hardware
specifications, platforms such as Android have helped to drive down
unit costs and spur smartphone adoption across wider markets. But
just how low can prices go?
This year, according to analysts, low-cost smartphones will
replace high-end (and higher-margin) devices, as the primary growth
engine for the industry. This race to the bottom offers a welcomed
window of opportunity on a number of fronts for manufacturers and
operators alike. In particular it opens up a number of emerging
markets, where price sensitivity or local market regulation against
device subsidies has made it difficult for many manufacturers to
build significant market share or migrate featurephone customers
onto a smartphone platform.
How low can they go?
Much of this charge is being led by Android, and more recently
Windows Phone with the latest iterations being tuned to work as
well as possible on devices with as little as 256MB of RAM. The
Microsoft
platforms wider minimum hardware specifications were
dramatically reduced at the beginning of 2012; now minimum
processor requirements call for Qualcomms MSM7X27A S1 Snapdragon
processors that can be clocked as low as 800MHz; this enables
Windows Phone manufacturer partners to start competing at the
lower-end of the market with devices such as the Nokia 610 which
hit Indian shelves at an (unsubsidized) price of US$225. However,
some maintain that this still isnt low enough.
According to the India Smartphone Outlook for 2012 report
released by Convergence Catalyst, India is expected to witness 100%
growth in 2012. The Indian market has therefore become a prime
target for manufacturers looking for growth opportunities and price
has fast become the primary battlefront. In a bid to increase its
market share, RIM recently implemented a discount strategy and some
of its devices are now selling for as little as US$150
(unsubsidized) from online Indian retail outlets.
However, to put this into context, local Indian mobile operator
Videocon is currently selling its own branded V7400 Android device
for US$72 (again unsubsidized)! These market pressures are driving
profound efficiencies throughout the value chain, lowering price
points and ultimately helping manufacturers to nurture new market
opportunities and drive the smartphone into the hands of the next
billion users.
The race is on worldwide
But its not just emerging markets who are keenly watching the
race to the bottom. For operators in many mature markets the growth
of the entry-level smartphone category represents a welcome
opportunity to relieve some of the cost pressures associated with
heavy subsidy investments. Many Tier One operators routinely spend
over US$1.5bn a quarter on devices, recouping less than half of
that through sales revenue because of the large subsidy that has to
be applied to lower the price point to an acceptable level.
As part of an operators subscriber acquisition and retention
costs its a line item that many are looking to control in a bid to
improve profit margins. Lower-cost devices offer a fast-track to
this, offsetting more expensive products such as the iPhone which
typically requires an average subsidy of around US$400 per
device.
But does this potential reliance on entry-level devices actually
threaten the wider value of more established OEM brands looking to
maintain their margins on more expensive products?
An evolving market place
As we move away from the traditional landscape of non-smartphone
and smartphone products, to a monotonous mass of smartphone and
better smartphone products, how are value perceptions at the
high-end holding up?
Take, for example Motorola, Samsung and HTC. Like many wireless
OEMs, each occupies both ends of the smartphone pricing spectrum
with product portfolios that span both lower and higher tier market
segments. However, on the surface, these devices often look
identical, with similar form factors, they run the same (or
similar) OS, and they each tick the same boxes for functionality.
Frequently the only real difference comes in the form of
incremental processor speeds, camera resolution or graphical
performance.
But are hardware specifications really appreciated by the
average consumer and has the lack of clear differentiation
across
Emerging wireless
markets have becom
e
a prime target for
manufacturers
looking for growth
opportunities
and price has fast
become the
primary battlefront.
12 Experience Issue 2
For a large
percentage of
consumers, the
value of higher
end smartphone
products is not
currently understood
nor appreciated
Experience Issue 2 13
-
price points left consumers defaulting to the price tag when
making purchasing decisions? If so, this is bad news for high-end
device sales.
Consider an average consumer looking to purchase their first
smartphone. Established requirements typically include the ability
to take photos, access social media sites such as Facebook, send
and receive email and perhaps join their friends and family in
enjoying gameplay of popular titles such as Angry Birds or
DrawSomething. In this instance, providing the device has a camera,
a touchscreen and access to the Android Market, Windows Marketplace
or Apples App Store it will meet all of the customers
requirements.
Overwhelmed with choice, and unable to see the benefits
delivered by improved hardware performance, the consumer will
frequently default to price. Reliant on subsidies and price points
to make their final decision it seems that for a large percentage
of consumers, the value of higher end smartphone products is not
currently understood nor appreciated.
Interestingly, Apple has managed to avoid this predicament
entirely. With only one device in the market place, the iPhone,
Apple maintains the perceived high-end value and prestige of the
device through its positioning and status. Although there are
iPhones available at lower price point, these are older generation
iterations; therefore there is a clear difference in value for the
consumer.
Continued
The new breed of smartphone Operating Systems have played a key
role in democratizing the smartphone. Allowing manufacturers
greater flexibility across reference designs and hardware
specifications, platforms such as Android have helped to drive down
unit costs and spur smartphone adoption across wider markets. But
just how low can prices go?
This year, according to analysts, low-cost smartphones will
replace high-end (and higher-margin) devices, as the primary growth
engine for the industry. This race to the bottom offers a welcomed
window of opportunity on a number of fronts for manufacturers and
operators alike. In particular it opens up a number of emerging
markets, where price sensitivity or local market regulation against
device subsidies has made it difficult for many manufacturers to
build significant market share or migrate featurephone customers
onto a smartphone platform.
How low can they go?
Much of this charge is being led by Android, and more recently
Windows Phone with the latest iterations being tuned to work as
well as possible on devices with as little as 256MB of RAM. The
Microsoft
platforms wider minimum hardware specifications were
dramatically reduced at the beginning of 2012; now minimum
processor requirements call for Qualcomms MSM7X27A S1 Snapdragon
processors that can be clocked as low as 800MHz; this enables
Windows Phone manufacturer partners to start competing at the
lower-end of the market with devices such as the Nokia 610 which
hit Indian shelves at an (unsubsidized) price of US$225. However,
some maintain that this still isnt low enough.
According to the India Smartphone Outlook for 2012 report
released by Convergence Catalyst, India is expected to witness 100%
growth in 2012. The Indian market has therefore become a prime
target for manufacturers looking for growth opportunities and price
has fast become the primary battlefront. In a bid to increase its
market share, RIM recently implemented a discount strategy and some
of its devices are now selling for as little as US$150
(unsubsidized) from online Indian retail outlets.
However, to put this into context, local Indian mobile operator
Videocon is currently selling its own branded V7400 Android device
for US$72 (again unsubsidized)! These market pressures are driving
profound efficiencies throughout the value chain, lowering price
points and ultimately helping manufacturers to nurture new market
opportunities and drive the smartphone into the hands of the next
billion users.
The race is on worldwide
But its not just emerging markets who are keenly watching the
race to the bottom. For operators in many mature markets the growth
of the entry-level smartphone category represents a welcome
opportunity to relieve some of the cost pressures associated with
heavy subsidy investments. Many Tier One operators routinely spend
over US$1.5bn a quarter on devices, recouping less than half of
that through sales revenue because of the large subsidy that has to
be applied to lower the price point to an acceptable level.
As part of an operators subscriber acquisition and retention
costs its a line item that many are looking to control in a bid to
improve profit margins. Lower-cost devices offer a fast-track to
this, offsetting more expensive products such as the iPhone which
typically requires an average subsidy of around US$400 per
device.
But does this potential reliance on entry-level devices actually
threaten the wider value of more established OEM brands looking to
maintain their margins on more expensive products?
An evolving market place
As we move away from the traditional landscape of non-smartphone
and smartphone products, to a monotonous mass of smartphone and
better smartphone products, how are value perceptions at the
high-end holding up?
Take, for example Motorola, Samsung and HTC. Like many wireless
OEMs, each occupies both ends of the smartphone pricing spectrum
with product portfolios that span both lower and higher tier market
segments. However, on the surface, these devices often look
identical, with similar form factors, they run the same (or
similar) OS, and they each tick the same boxes for functionality.
Frequently the only real difference comes in the form of
incremental processor speeds, camera resolution or graphical
performance.
But are hardware specifications really appreciated by the
average consumer and has the lack of clear differentiation
across
Emerging wireless
markets have becom
e
a prime target for
manufacturers
looking for growth
opportunities
and price has fast
become the
primary battlefront.
12 Experience Issue 2
For a large
percentage of
consumers, the
value of higher
end smartphone
products is not
currently understood
nor appreciated
Experience Issue 2 13
-
Restoring value perceptions for high-end devices
Value statements for higher tier devices need to go beyond
incremental performance enhancements. While quad-core processing
will inevitably deliver a slicker experience, this value can only
really be appreciated once ownership and usage of the device has
begun; in most cases its not going to be on the consumers list of
established requirements while in store shopping for a new device.
OEMs need to deliver clear differential value that resonates with
consumers in order to maintain the higher-end of their device
portfolios.
Walk into any mobile retail outlet and the smartphones on offer
will fall into two camps; the anonymous black touchscreen or the
Blackberry / looks like a BlackBerry but
isnt Qwerty. The problem is compounded with the screens switched
off, devoid of any icons or branding to help in the identification
process. While form factor must always consider technical
limitations, that shouldnt stop experimentation in industrial
design, should it?
Gone are the days where devices were designed around specific
demographics and use cases. At one point OEM brands were part built
upon specific form factors. Wanted a flip phone, buy a Motorola. A
candybar, buy a Nokia. A Qwerty, buy a BlackBerry.
Today, hardware is homogenizing, the smartphone parts-bin
appears to be shared out across brands, with screens, keys,
processors and more becoming interchangeable between manufacturers.
There is no doubt that this standardization is helping to drive
cost efficiencies in a bid to achieve lower price points and enable
manufacturers to capitalize on high growth emerging markets,
however, as a result of this trend, there has been a seismic shift
in brand loyalty, moving away from hardware and over to software
and service providers.
The speed of innovation has reached a tipping point, resulting
in OEMs increasingly occupying the same all things to all men
proposition. No longer do consumers turn to a specific OEM to cater
to their established requirements, be it design or
functionality.
Instead, smartphone hardware hashomogenized to form a standard
black slab, capable of everything but nothing specifically well, so
as not to narrow the target market.
For manufacturers looking to add real value that can be both
understood and appreciated by the average consumer, perhaps a more
likely answer may come at the service level. There is a glimmer of
more promising activity on this front.
Already we are starting to see Samsung drawing down on its wider
product portfolio to offer value in the form of a connected home.
In addition, HTC is refocusing its Sense UI initiative. Partnership
and acquisition activity with music audio brand Beats and music
streaming service MOG, alongside Dropbox integration could help
evolve Sense into a truly differentiated platform of value adding
services. The development and momentum of this trend will be
intrinsic to the retention of brand value for the industrys most
popular mobile handset OEMs as the race to the bottom really starts
to set in.
For consumers navigating their way through a market offering an
extensive choice of smartphone product, higher end options need to
be better differentiated with clear justification of price
points
through relevant, understood and widely appreciated value adds.
The challenge will be in communicating this value so that it is
understood at the point of sale, during the purchasing decision. A
device may offer a best in class experience but unless the consumer
has used the device or can clearly see a feature-benefit,
manufacturers may find it increasingly difficult to build loyalty
not only to their high-end, high-margin devices but to the brand
itself
Were now in the age of the customer where weve seen the balance
of power shift from brands to consumers. This means that wireless
companies must work harder to engage customers and earn their
continued loyalty. To do this, you need to live up to your brand
promise by delivering an exceptional customer experience.
The challenge for the industry is delivering excellent customer
care that ensures that all touchpoints throughout the customer
lifecycle meet company goals for the quality of experience. This is
a major issue for wireless companies because often the outsourcing
model for customer care is focused solely on transactions how many,
how fast, at what cost. Traditional models were not designed around
the business process of the total customer experience. Because of
this, many customer care outsourcing solutions cant deliver on
todays customer-centric business objectives.
Xerox provides wireless customers with the ability to manage and
optimize all the touchpoints that impact the customer experience.
This aligns our relationship with our customers business goals and
results in a mutually beneficial partnership.
For instance, Xerox helped one of its wireless communications
customers address low customer satisfaction. Customers were
particularly unhappy with care received via social media. With a
comprehensive social Customer Relationship Management (CRM)
strategy mapped to the wireless providers business objectives,
Xerox helped the company significantly improve customer
satisfaction, turning customers into brand advocates and winning a
JD Powers Award for Best Customer Service.
Another wireless company was delivering a poor customer
experience and looking to improve it. At the same time, a major
acquisition meant a dramatic increase in volume and complexity.
Xerox helped this customer not only improve customer satisfaction
and quality, but process more volume while saving US$28 million
annually in support costs. This customer is now number one in the
industry for quality of service, as ranked by an independent third
party.
Rather than resting on its laurels, Xerox is taking their
commitment to the wireless industry a step further by adding deeper
domain expertise. Our acquisition of WDS adds deep mobility
expertise, tools, and
best practice-processes to enhance and scale our customer care
outsourcing offering.
What does this mean for Xerox and WDS current and future
wireless customers? First, it delivers unprecedented expertise and
breadth of end-user lifecycle consulting and solutions for the
mobility market. Customers gain more value from their partnership
with WDS and Xerox, as well as a closer alignment to their business
requirements and competitive advantage in a highly competitive
market. Second, with access to Xeroxs renowned research and
development centers, WDS can speed innovation and enhancements to
its suite of solutions.
Together, our goal is to become the worlds leading
wireless-focused solutions provider offering high-value,
high-impact solutions and services to our clients across the
wireless ecosystem. The bottom line for our customers is the
ability to raise the bar on the customer experience, which in turn
earns greater loyalty, turns customers into brand advocates,
garners a larger share of wallet, and differentiates the brand in
the marketplace
higher end options need to be better differentiated with clear
justification of price points through relevant, understood and
widely appreciated value adds
OEMs need to
deliver clear
differential value
that resonates with
consumers in order
to maintain the
higher-end of their
device portfolios.
14 Experience Issue 2
The New Customer Care Mandate: Manage all Customer Experience
Touchpoints
Chris TranquillGroup President / SVP Telecommunications and
Technology Group
-
Restoring value perceptions for high-end devices
Value statements for higher tier devices need to go beyond
incremental performance enhancements. While quad-core processing
will inevitably deliver a slicker experience, this value can only
really be appreciated once ownership and usage of the device has
begun; in most cases its not going to be on the consumers list of
established requirements while in store shopping for a new device.
OEMs need to deliver clear differential value that resonates with
consumers in order to maintain the higher-end of their device
portfolios.
Walk into any mobile retail outlet and the smartphones on offer
will fall into two camps; the anonymous black touchscreen or the
Blackberry / looks like a BlackBerry but
isnt Qwerty. The problem is compounded with the screens switched
off, devoid of any icons or branding to help in the identification
process. While form factor must always consider technical
limitations, that shouldnt stop experimentation in industrial
design, should it?
Gone are the days where devices were designed around specific
demographics and use cases. At one point OEM brands were part built
upon specific form factors. Wanted a flip phone, buy a Motorola. A
candybar, buy a Nokia. A Qwerty, buy a BlackBerry.
Today, hardware is homogenizing, the smartphone parts-bin
appears to be shared out across brands, with screens, keys,
processors and more becoming interchangeable between manufacturers.
There is no doubt that this standardization is helping to drive
cost efficiencies in a bid to achieve lower price points and enable
manufacturers to capitalize on high growth emerging markets,
however, as a result of this trend, there has been a seismic shift
in brand loyalty, moving away from hardware and over to software
and service providers.
The speed of innovation has reached a tipping point, resulting
in OEMs increasingly occupying the same all things to all men
proposition. No longer do consumers turn to a specific OEM to cater
to their established requirements, be it design or
functionality.
Instead, smartphone hardware hashomogenized to form a standard
black slab, capable of everything but nothing specifically well, so
as not to narrow the target market.
For manufacturers looking to add real value that can be both
understood and appreciated by the average consumer, perhaps a more
likely answer may come at the service level. There is a glimmer of
more promising activity on this front.
Already we are starting to see Samsung drawing down on its wider
product portfolio to offer value in the form of a connected home.
In addition, HTC is refocusing its Sense UI initiative. Partnership
and acquisition activity with music audio brand Beats and music
streaming service MOG, alongside Dropbox integration could help
evolve Sense into a truly differentiated platform of value adding
services. The development and momentum of this trend will be
intrinsic to the retention of brand value for the industrys most
popular mobile handset OEMs as the race to the bottom really starts
to set in.
For consumers navigating their way through a market offering an
extensive choice of smartphone product, higher end options need to
be better differentiated with clear justification of price
points
through relevant, understood and widely appreciated value adds.
The challenge will be in communicating this value so that it is
understood at the point of sale, during the purchasing decision. A
device may offer a best in class experience but unless the consumer
has used the device or can clearly see a feature-benefit,
manufacturers may find it increasingly difficult to build loyalty
not only to their high-end, high-margin devices but to the brand
itself
Were now in the age of the customer where weve seen the balance
of power shift from brands to consumers. This means that wireless
companies must work harder to engage customers and earn their
continued loyalty. To do this, you need to live up to your brand
promise by delivering an exceptional customer experience.
The challenge for the industry is delivering excellent customer
care that ensures that all touchpoints throughout the customer
lifecycle meet company goals for the quality of experience. This is
a major issue for wireless companies because often the outsourcing
model for customer care is focused solely on transactions how many,
how fast, at what cost. Traditional models were not designed around
the business process of the total customer experience. Because of
this, many customer care outsourcing solutions cant deliver on
todays customer-centric business objectives.
Xerox provides wireless customers with the ability to manage and
optimize all the touchpoints that impact the customer experience.
This aligns our relationship with our customers business goals and
results in a mutually beneficial partnership.
For instance, Xerox helped one of its wireless communications
customers address low customer satisfaction. Customers were
particularly unhappy with care received via social media. With a
comprehensive social Customer Relationship Management (CRM)
strategy mapped to the wireless providers business objectives,
Xerox helped the company significantly improve customer
satisfaction, turning customers into brand advocates and winning a
JD Powers Award for Best Customer Service.
Another wireless company was delivering a poor customer
experience and looking to improve it. At the same time, a major
acquisition meant a dramatic increase in volume and complexity.
Xerox helped this customer not only improve customer satisfaction
and quality, but process more volume while saving US$28 million
annually in support costs. This customer is now number one in the
industry for quality of service, as ranked by an independent third
party.
Rather than resting on its laurels, Xerox is taking their
commitment to the wireless industry a step further by adding deeper
domain expertise. Our acquisition of WDS adds deep mobility
expertise, tools, and
best practice-processes to enhance and scale our customer care
outsourcing offering.
What does this mean for Xerox and WDS current and future
wireless customers? First, it delivers unprecedented expertise and
breadth of end-user lifecycle consulting and solutions for the
mobility market. Customers gain more value from their partnership
with WDS and Xerox, as well as a closer alignment to their business
requirements and competitive advantage in a highly competitive
market. Second, with access to Xeroxs renowned research and
development centers, WDS can speed innovation and enhancements to
its suite of solutions.
Together, our goal is to become the worlds leading
wireless-focused solutions provider offering high-value,
high-impact solutions and services to our clients across the
wireless ecosystem. The bottom line for our customers is the
ability to raise the bar on the customer experience, which in turn
earns greater loyalty, turns customers into brand advocates,
garners a larger share of wallet, and differentiates the brand in
the marketplace
higher end options need to be better differentiated with clear
justification of price points through relevant, understood and
widely appreciated value adds
OEMs need to
deliver clear
differential value
that resonates with
consumers in order
to maintain the
higher-end of their
device portfolios.
14 Experience Issue 2
The New Customer Care Mandate: Manage all Customer Experience
Touchpoints
Chris TranquillGroup President / SVP Telecommunications and
Technology Group
-
16 Experience Issue 2 Experience Issue 2 17
After several years of strategy built around subscriber
acquisition, large parts of the wireless industry are now turning
their attention to subscriber retention. For many, most notably
mobile operators, this is proving difficult. Those same subscriber
acquisition strategies typically comprised price promotions,
discounted (and often free) devices and flexible contracts and
price plans. While proving successful in lowering barriers to entry
for consumers looking to benefit from the smartphone revolution,
they have seemingly created a generation of consumers that
associate service provider value with price. A very clear lesson is
being learnt; if you acquire a subscriber on price, chances are
youll lose him on price.
As a result, several markets around the world continue to suffer
double digit churn rates. In many cases this has been driven by
high levels of pre-paid subscribers, conditioned into shopping for
the best deal on a regular basis and continually jumping between
networks. In other markets, where contract-based plans still
account for more than 50% of subscribers, churn continues to
be driven through price-wars and discounted devices. But
regardless of the drivers for churn, one thing remains clear;
loyalty to a mobile operator requires breaking the continued cycle
of service commoditization and instead, building value-based
relationships with consumers. It means evolving the price-driven
relationship into something a little less tangible, but much more
emotional and, ultimately, valuable.
Does tenure indicate loyalty?
One of the principle mistakes made by wireless organizations is
to correlate satisfaction directly to loyalty. The two are very
different.
Customer satisfaction is just that, a customers degree of
satisfaction at any given time in the customer lifecycle. Often
measured through Net Promoter Score (NPS), customer satisfaction
recognizes and measures whether the customers expectations have
been met. As a key metric measured by nearly every wireless brand
on the planet the temptation is to believe that a high NPS leads
directly to improved loyalty and profitability per user. While the
desire to make this link is understandable, its also dangerously
ineffective.
While a measure of satisfaction may correlate to tenure it
doesnt imply loyalty. Customer segments with high customer
satisfaction scores may churn without warning or reason.
Satisfaction scores are merely a window in time, often measured
immediately after an interaction with customer care or an other
front-office function. Satisfaction, after all, is the result of a
process. Expose a seemingly satisfied customer to a more compelling
deal in the subsequent weeks
(perhaps a lower tariff or a free device) and they may happily
churn.
This is often because their relationship was developed on the
price-based expectations set at the time of their acquisition. The
wireless brand has been unable to develop the relationship any
further; there is no emotional investment or connection to the
brand and the consumer continues to associate value with price.
As a Key Performance Indicator (KPI), customer satisfaction has
gained global popularity across the wireless industry, with
hundreds of thousands of employees now being measured by customer
satisfaction or customer retention metrics. This is no bad thing of
course. When you witness how the industry struggles to
differentiate on its tangible assets, it makes the need to inspire
loyalty through the customer experience all the more obvious. But
if the end-goal is to improve loyalty, are todays customer
satisfaction methodologies even appropriate and is the industry
making a link between satisfaction, loyalty and profitability that
simply doesnt exist?
SATISFACTION
L O Y A L T Y
One and the same?
Acquire me on price, and youll lose me on price
Continued
Loyalty is expressed through a degree of resistance to
competitive price-based offers and of forgiveness towards the brand
when service dips below expectations.
-
16 Experience Issue 2 Experience Issue 2 17
After several years of strategy built around subscriber
acquisition, large parts of the wireless industry are now turning
their attention to subscriber retention. For many, most notably
mobile operators, this is proving difficult. Those same subscriber
acquisition strategies typically comprised price promotions,
discounted (and often free) devices and flexible contracts and
price plans. While proving successful in lowering barriers to entry
for consumers looking to benefit from the smartphone revolution,
they have seemingly created a generation of consumers that
associate service provider value with price. A very clear lesson is
being learnt; if you acquire a subscriber on price, chances are
youll lose him on price.
As a result, several markets around the world continue to suffer
double digit churn rates. In many cases this has been driven by
high levels of pre-paid subscribers, conditioned into shopping for
the best deal on a regular basis and continually jumping between
networks. In other markets, where contract-based plans still
account for more than 50% of subscribers, churn continues to
be driven through price-wars and discounted devices. But
regardless of the drivers for churn, one thing remains clear;
loyalty to a mobile operator requires breaking the continued cycle
of service commoditization and instead, building value-based
relationships with consumers. It means evolving the price-driven
relationship into something a little less tangible, but much more
emotional and, ultimately, valuable.
Does tenure indicate loyalty?
One of the principle mistakes made by wireless organizations is
to correlate satisfaction directly to loyalty. The two are very
different.
Customer satisfaction is just that, a customers degree of
satisfaction at any given time in the customer lifecycle. Often
measured through Net Promoter Score (NPS), customer satisfaction
recognizes and measures whether the customers expectations have
been met. As a key metric measured by nearly every wireless brand
on the planet the temptation is to believe that a high NPS leads
directly to improved loyalty and profitability per user. While the
desire to make this link is understandable, its also dangerously
ineffective.
While a measure of satisfaction may correlate to tenure it
doesnt imply loyalty. Customer segments with high customer
satisfaction scores may churn without warning or reason.
Satisfaction scores are merely a window in time, often measured
immediately after an interaction with customer care or an other
front-office function. Satisfaction, after all, is the result of a
process. Expose a seemingly satisfied customer to a more compelling
deal in the subsequent weeks
(perhaps a lower tariff or a free device) and they may happily
churn.
This is often because their relationship was developed on the
price-based expectations set at the time of their acquisition. The
wireless brand has been unable to develop the relationship any
further; there is no emotional investment or connection to the
brand and the consumer continues to associate value with price.
As a Key Performance Indicator (KPI), customer satisfaction has
gained global popularity across the wireless industry, with
hundreds of thousands of employees now being measured by customer
satisfaction or customer retention metrics. This is no bad thing of
course. When you witness how the industry struggles to
differentiate on its tangible assets, it makes the need to inspire
loyalty through the customer experience all the more obvious. But
if the end-goal is to improve loyalty, are todays customer
satisfaction methodologies even appropriate and is the industry
making a link between satisfaction, loyalty and profitability that
simply doesnt exist?
SATISFACTION
L O Y A L T Y
One and the same?
Acquire me on price, and youll lose me on price
Continued
Loyalty is expressed through a degree of resistance to
competitive price-based offers and of forgiveness towards the brand
when service dips below expectations.
-
18 Experience Issue 2
The true value of loyalty
This then, marks the value of a truly loyal customer. Loyalty is
expressed through a degree of resistance to competitive price-based
offers and of forgiveness towards the brand when service dips below
expectations. Loyal customers may even continue to purchase from a
brand after a bad experience or go out of their way to continue a
relationship.
Think, for example, of the famous Apple Antennagate controversy.
The brand equity, accumulated over time, across a base of highly
loyal followers almost certainly helped Apple come out of the
affair relatively unscathed; at least to a lesser extent than a
rival manufacturer may have fared. Of course, theres always a
tipping point at which loyalty has to concede to convenience, but
that point is entirely flexible and a measure of the strength of
the relationship.
Demonstrations such as this show clearly that unlike
satisfaction, loyalty does not occur spontaneously following a
process. It is built over time and following multiple consumer
interactions with multiple processes; from the retail experience,
through quality of service on the network and post-sale care and
maintenance. To this end loyal customers are highly prized,
typically delivering far greater Customer Lifetime Value (CLV).
This increase in CLV comes from more than increased tenure
(after all, a satisfied customer may stay on the network, even
an unsatisfied customer may stay through inertia). Loyal
customers exhibit several additional characteristics beyond a
greater resistance to churn, including advocacy levels that can
help to drive referrals (helping to reduce subscriber acquisition
costs) and a higher propensity to buy additional products and
services from the same provider. Anecdotally, many wireless brands
have also found their keenest and most loyal
advocates actively participating on official self-care forums to
support other end-users. Activity such as this, coupled with a more
predictable and stable retention rate, can have an immediate impact
on the profitability of a brands end-user segments.
Satisfaction has become a prerequisite
This is not to say that satisfaction and loyalty are not linked
(loyalty absolutely requires a degree of
satisfaction). Nor is it to undermine the importance of customer
satisfaction. Customer satisfaction has become a prerequisite for
doing business and almost all studies agree (as do most mobile
operators) that there is a link between customer satisfaction
scores and retention rates. The point is, without the associated
loyalty, the stability of that retention rate cant be guaranteed in
the event of a compelling competitive offer. Tenure is no indicator
of loyalty. Just because a customer has been a customer for five
years, it doesnt necessarily mean hes loyal or any less likely to
be tempted away. It is only true loyalty that protects against this
uncertainty.
When is a loyalty program not a loyalty program?
The problem is exacerbated by the insistence of many wireless
brands to fight churn with the very weapon that helped cause the
problem; price promotions.
So called loyalty programs are often little more than reward
programs. Industry Analyst
Helen Karapandi from Analysis Mason supports this logic,
identifying that loyalty is not just about specific programs, but
also about basic hygiene factors1.
Indeed, in many cases its misleading to even associate these
programs with loyalty. Often they have more to do with basic
retention (through rewards), often achieving little more than
financially rewarding established behavior. A study by Nokia
Siemens Networks suggesting that 33% of decisions to churn are
based on the end-user being exposed to a competitive offer, such
reward-based programs often serve a very short-term purpose; acting
only as a defense against competing offers.
Consider the two principal variables typically used by marketing
functions to guide investment in loyalty and retention programs;
value and risk of churn. In most cases, budget (in the form of
device upgrades, rebates and price concessions) is directed toward
high value customers with a high risk of churn (this risk of churn
is measured through a combination of NPS, tenure, interaction with
care and many other variables). See Fig 1.
One cannot argue with this logic and this is, of course, the
most appropriate quadrant for investing in retention; the churn
risk must be mitigated quickly. However, retention and reward
programs are often homogenized and simply rewarding this quadrant
with financial incentives serves only to reward a systemic failure
in the customer experience. If the customer is a churn risk, then
either the expectations of the customer segment have not been met
or the relationship hasnt been developed sufficiently enough to
protect the segment from competitive price-based offers. Can we
really be sure that this investment is actually going to move a
large part of that segment into the bottom right of the quadrant
where churn risk is no longer an issue? Often relied upon as the
sole weapon against churn, these programs risk creating a vicious
circle that again creates a price-based connection between service
provider and end-user that is broken only by a competitive, and
more compelling, rewards program.
Unfortunately, and unlike many other industries, loyalty often
goes unrewarded. This follows the assumption that the longer a
customer has stayed within the network the less likely they are to
churn. We know, however, that tenure is no indication of loyalty
and that while this assumption may apply to a collective
(considering customer inertia), it doesnt allow for segmentation to
dig deep enough to identify those customers who remain within the
network through loyalty. Consider the segment defined in the
quadrant (Fig 1.) as low-value but low-risk of churn. They too
deliver a medium CLV comparable to that delivered by the
high-value, high churn-risk segment typically targeted by retention
programs. Are they any less valuable? Indeed, perhaps they display
the early signs of loyalty that will shift them towards the bottom
right of the quadrant (through increased spend) and deliver
additional value through advocacy.
The value-based relationship
Wireless brands almost certainly understand the logic of this
issue, and the value of creating truly loyal customers. However,
realigning the vision and separating customer satisfaction from
customer loyalty requires a major business transformation
initiative. Internal functions have been built around satisfaction
measures and while these remain valid, their limitations must also
be acknowledged.
Value must also be better defined. What is value and how is it
measured? Should customer segment value be based on revenue per
user, margin or even advocacy? Perhaps its a blend of all three or
perhaps different value metrics should be associated to different
customer segments.
Fundamentally, we must acknowledge that loyalty cannot be
bought. Unfortunately, understanding the true nature of loyalty has
been lost in the semantics of our industry. It is too often
confused with satisfaction and too often we see loyalty programs
are driven not by a desire to engender loyalty but to retain
satisfaction.
Loyalty is not the product of a single experience, and therefore
cant be measured through single-point methodologies such as NPS
alone. While it is convenient to make the immediate association
between process-driven NPS and Customer Satisfaction scores with
loyalty, the reality is that true loyalty and all of its defining
characteristics, is developed over time and is the result of a
sustained level of interaction designed to deliver on the original
brand promise. It is the customer experience, and how it is
controlled, that allows this to happen, ensuring expectations are
met (and exceeded) and that the original proposition remains
compelling enough to retain the customer as part of a value-based
relationship and not just because theres a free device or a
discount on offer
Loyalty does not occur spontaneously and it cannot be bought. It
is built over time and is the result of a multiple interactions
between the consumer and service provider.
Risk
of c
hurn
ValueLowHigh
High
Medium CLV
HighCLV
Medium CLVLow
CLV
Customer
Lifetime Value
Loyalty programs are not a panacea for reducing churn: operators
need to make sure the basics, such as customer satisfaction and
pricing, are right before loyalty programs will have an impact.
Helen Karapandi, Analysis Mason
Fig 1.
Experience Issue 2 19
1http://www.analysysmason.com/About-Us/News/Insight/Insight_Mobile_loyalty_Oct2011/
-
18 Experience Issue 2
The true value of loyalty
This then, marks the value of a truly loyal customer. Loyalty is
expressed through a degree of resistance to competitive price-based
offers and of forgiveness towards the brand when service dips below
expectations. Loyal customers may even continue to purchase from a
brand after a bad experience or go out of their way to continue a
relationship.
Think, for example, of the famous Apple Antennagate controversy.
The brand equity, accumulated over time, across a base of highly
loyal followers almost certainly helped Apple come out of the
affair relatively unscathed; at least to a lesser extent than a
rival manufacturer may have fared. Of course, theres always a
tipping point at which loyalty has to concede to convenience, but
that point is entirely flexible and a measure of the strength of
the relationship.
Demonstrations such as this show clearly that unlike
satisfaction, loyalty does not occur spontaneously following a
process. It is built over time and following multiple consumer
interactions with multiple processes; from the retail experience,
through quality of service on the network and post-sale care and
maintenance. To this end loyal customers are highly prized,
typically delivering far greater Customer Lifetime Value (CLV).
This increase in CLV comes from more than increased tenure
(after all, a satisfied customer may stay on the network, even
an unsatisfied customer may stay through inertia). Loyal
customers exhibit several additional characteristics beyond a
greater resistance to churn, including advocacy levels that can
help to drive referrals (helping to reduce subscriber acquisition
costs) and a higher propensity to buy additional products and
services from the same provider. Anecdotally, many wireless brands
have also found their keenest and most loyal
advocates actively participating on official self-care forums to
support other end-users. Activity such as this, coupled with a more
predictable and stable retention rate, can have an immediate impact
on the profitability of a brands end-user segments.
Satisfaction has become a prerequisite
This is not to say that satisfaction and loyalty are not linked
(loyalty absolutely requires a degree of
satisfaction). Nor is it to undermine the importance of customer
satisfaction. Customer satisfaction has become a prerequisite for
doing business and almost all studies agree (as do most mobile
operators) that there is a link between customer satisfaction
scores and retention rates. The point is, without the associated
loyalty, the stability of that retention rate cant be guaranteed in
the event of a compelling competitive offer. Tenure is no indicator
of loyalty. Just because a customer has been a customer for five
years, it doesnt necessarily mean hes loyal or any less likely to
be tempted away. It is only true loyalty that protects against this
uncertainty.
When is a loyalty program not a loyalty program?
The problem is exacerbated by the insistence of many wireless
brands to fight churn with the very weapon that helped cause the
problem; price promotions.
So called loyalty programs are often little more than reward
programs. Industry Analyst
Helen Karapandi from Analysis Mason supports this logic, id