Who’s dropping the ball?
BLOGGER: ERIC M. DANIS 
National Basketball Association, you are dead to me. Despite a childhood spent as a basketball-obsessed Celtics fan with a huge poster of Larry Bird on my bedroom wall, I am sickened by the spectacle of team owners and players potentially cancelling this year’s season because they cannot equitably divide four billion dollars in revenue. Basketball fans, some of whom are struggling just to make ends meet, are predictably outraged at the shocking disregard being shown by billionaires (the owners) and multi-millionaires (the players). Some of them, like me, will never return to the NBA.
Although communications and cable service providers thankfully aren’t dropping the ball on loyalty as dramatically as the NBA, they could definitely be scoring more points with their customers. Seventy percent of the service providers participating in a global survey conducted by leading analyst firm Informa said customer retention and loyalty were a low priority for their organizations just two years ago. And the majority of polled operators (66 percent) believe that customers are less loyal today than they were two years ago, which is obviously worrisome.
One recent wake-up call was the surprising announcement that Nokia customer loyalty fell for the first time, according to Bloomberg, with only one in two Nokia users in the U.S. saying they plan to buy their next handset from Nokia.
Some of the lessened loyalty affecting the industry is a result of the stiff competition service providers are facing from over-the-top (OTT) players, device manufacturers (such as Apple) and mobile virtual network operators (MVNOs), while operators are simultaneously investing in their networks, IT services and customer care. Service providers simply can’t afford to allow customers to easily slip away, because it’s very difficult to add customers in today’s competitive and saturated market (it is amazing that the NBA brain trust doesn’t realize how dangerous it is to allow consumers to realize they no longer need you). In order to reduce churn, service providers should focus on maximizing each customer’s value and transforming their organizations from reactive to proactive, among other steps.
AT&T appears to be working hard to maintain its customers’ loyalty. Although some predicted the industry giant would suffer losses when Sprint and Verizon began offering the iPhone, “churn has not moved at all,” said Glen Lurie, president of emerging devices for AT&T. Perhaps we shouldn’t be surprised, since AT&T has made significant efforts to cultivate wireless customer loyalty – and is reaping the rewards.
There is nothing to stop other service providers from doing the same, and most of them now understand the importance of customer loyalty across all lines of business. In response to the Informa survey, 82 percent of service providers said that customer loyalty programs would be “very important” or “important” over the next five years to their respective companies.
Operators need to start devising their game plans now, so they have a good shot at beating the competition.
Hi Eric,
I like the analogy, and hope that the NBA players and owners are wise enough to look at other businesses, especially when their particular customer base (fans), has so many other entertainment options.
Points well taken. It’s important for us to both market ourselves as the value proposition and then deliver. And always, of course, let our opponents be caught fouling so we can make the three-point plays.
Hi,
Does this really make sense in Indian market? I believe service providers are less bothered about customer retention due an existing huge customer base.If one customer leaves, 2 new ones are coming. A simple example is if a DTH provider is charging Rs. 10 as a fine because could not recharge his account on or before due date.
I think this view is more suitable for the US market.
Ashish,
Thanks for the comment. It’s always nice to get different global perspectives.
The survey results I cite are based on feedback from executives responsible for retention strategies at 40 service providers across North America, Europe, Asia Pacific and Central and Latin America. So it’s not solely a North American issue/viewpoint.
You are right. Higher prepaid penetration regions (like India) are facing the biggest customer loyalty challenges. But I’m not sure they are “less bothered” by it. The Indian market is quickly approaching mature market status, and the leading providers are beginning to change their viewpoint from loyalty as a cost-and-churn issue to loyalty as a revenue driver.
Josh and Richard, thanks for the comments!
Eric,
I am actually in favor of the strike. Maybe all the players will come and play in Israel now!! :)
Love the NBA comparison. I, too. had a Larry Bird poster hanging on my wall, pierced with hundreds of darts that I tossed at it every day. Which is how I feel about my mobile service provider.
Why will I eventually leave my current provider? The mobile service is great. But they get proverbial darts thrown at them for constantly calling my children’s phones asking them to upgrade their service, despite the fact we have repeatedly asked them not to call their numbers, and despite the fact that we now require an authorization code to make any change to the plan.
Dart number two gets thrown at them for consistently lying to us at every opportunity. Is the sales girl ignorant, or malicious, when she says that the 300 minute package we purchased for my son means units, and can either be minutes or SMSs. I choose to believe she is poorly educated in her company’s plans, but that isn’t putting the $75 back in my pocket that I had to pay because my son, after being told he had 300 minutes/SMSs, decided to send 150 SMSs on the last two days of the billing cycle.
Dart #3 at my cell phone service provider. After buying insurance on my phones, and trying to use it to fix the phone, they said I could just take a new phone. Stuck in the small print was that I was now paying for the new phone, as well as the old phone, plus I was paying insurance on both phones. With providers like that, maybe darts aren’t enough.
Companies like my cell phone provider claim to be customer-centric, but really, they take advantage of the limited choices consumers have in our marketplace.
That old, tattered Larry Bird poster eventually had to be replaced, because I had thrown hundreds of darts into it, and my mobile provider will need to be replaced as well.
Arye,
Thanks for the detailed example of how service providers who don’t work hard to earn customer loyalty open themselves up to churn and eventually lose valuable opportunities to drive future revenue. Oren, thanks for your comment, too.
PS – throwing darts at a Larry Bird poster is just WRONG and cannot be endorsed by Amdocs Voices :)
The NBA owners take the players for granted. Mobile providers — particularly outside of EU and US – take their customers for granted. Eventually, those taken for granted either revolt or bolt.
Hi Milton,
Thanks for the comment.
I agree with your principle, although I would say both the NBA players and owners took each other for granted (the NBA owners, after all, are the ones absorbing the costs).
Am more worried about the lessons learnt after such a bad lockout. If you observe the trading of players, the trend is still the same as it was. Good teams are becoming better and bad teams are becoming worse, which will not improve situation and eventually end up in same scenario again.
Rules and Regulations should be designed in a way that will avoid such situations from occuring again and again.
Relating this to telecom service providers, if they ignore the customer loyalty, it wont be a surprise to see some of them shutdown their operations (same could be with some of the NBA teams too, what do you say?)!
PS: I too have the poster of Larry (and of course Kobe and Jordan too) but I dont throw darts at anyone:)
Hi Hari,
Thanks for the comment. Yeah, there is already talk that maybe the Charlotte team will be contracted. Fans of small market teams feel there is no hope, so many of them will leave. Likewise, as you say, end users who are not hopeful about a good customer experience will also leave, with disastrous consequences for service providers.
Which Larry poster do you have? ;)