How Service Can Help Telecom Ride Out Competition's Price Aggression and Build Sustainable Advantage

Jacqueline Mundkur, Group Head – Customer Service, Future Group | Thursday, 05 January 2017, 08:45 IST

The telecom industry is in turmoil with incumbents i.e. the existing service providers both local and MNC, facing the heat due to the aggressive price offerings from the latest operator to hit the market. The sheen around Telecom is fast wearing thin after years of basking in the limelight. In the last 6 months or so, stockprices of listed Telecom companies have tumbled, some have been bailed out by the parent company, undertaken asset rationalization and yet others have merged or been acquired.

The new kid on the block Jio has reportedly set a scorching pace of new acquisitions with 50 million new customers in the bag within 2 months of launch. While only some of these would be first time users, significant numbers include those customers who will fit the new Jio Sim into their dual sim device and sample the attractively advertised freebies out of sheer curiosity. Industry watchers agree that this has adversely impacted incumbents market share (RMS and ARMB), nett adds, voice and data usage etc.  India has one of the lowest telecom tariffs in the world and this means that tariffs and profitability will move further south.

This isn’t another article to second guesshow will the overall telecomindustry will manage impact on profitability. Rather this article seeks to push Service to the center of the plate. Ironically, very little has been written of how a retention strategy using service centricity can play spoiler to a price aggressor.

Incumbents possess a huge advantage in the very the richness of usage information of  their existing  subscribers where they  can harvest micro level information whose relevance and contextual richness  is especially pronounced  in customers whose  AON  >6 months . The much delayed Jio launch would have given incumbents enough preparation time. Presumably Marketing and Strategy Think-Tanks would have after, intense deliberations designed appropriate multi – level strategies down to segment, product and usage slab levels etc. Traditional marketer’s favorite arsenal of price reduction, freebies, bundled offers, advance commitment programs etc would feature prominently. Unfortunately Customer Service function is alertedsome times only at the execution level rather than at a build strategy level. Now, that’s a tragedy surely!

When we suggest including a Service centric approach in the strategic mix, we are running counter to traditional Price-only focused strategies. There is immense merit in creating a service anchored campaign around emotions where the brand has delivered by being a true friend and support. Customers relate to  moments of “mobility insecurity” for example when a customer loses a phone, changes a phone , needs a sim upgrade or forgets to activate international roaming before departure! And every one remembers the horror of a bill shock only to realize it was self inflicted  by (unknowing / Silent) data usage of his smart device or calling back a fraudulent call from an unknown missed call !The service providers’handling of these ‘moments of truth ‘  would have included monetary and non – monetary service gestures to  facilitateworry-free future data experience  thus creating immense good will. Indeed re-playing these instances into the customer conscious is worth it rather than just matching the competition prices reactively.

The key element to a great retention strategy is  matching the emotion with hard benefits and reminding customers of the value of associationover the  years. Most people wrongly  place too much importance on price rather value. The tipping point of a senior citizen churning is never price, its lack of consideration. Similarly a corporate employee turn-off is when he was travelling on work; his roaming experience was patchy and so on. The key value considerations are quality of service retrieval, empathy, support in a crunch situation etc and not so much cost but value even in a price focused Indian market.

To sum, 4 quick service based recommendations to leverage relationships to retain market share and profitability are:

Get the timing right! Any initiative should be perceived as Proactive and a Value enhancer by customers. Oft made mistake is to launch action “only when necessary” and not as a calibrated proactive offering. Approvals are kept in waiting till the competition launch and only then are the “match off” strategy unveiled. This matching strategy is normally price driven and not service driven and with so many caveats that today’s smart customer doesn’t bite and worse it sometimes triggerschecking out competition.

More is Good..Create Goodwill and Positive Buzz by connecting substantial customers through the retention programGranted this is absolutely counter to what we practice. Price rationalization (retention) strategies are targeted at the highest end covering a select base. The irony is that the mass of consumers at the base are ignored because contribution evaluation hinges on how much is the “total bleed” instead of the ‘per unit bleed’ thus wasting a valuable opportunity to create a brand advocate to a potential threat. While the unit purchasing power at the top is indisputable, the positive rub off is limited and any price “concession” is received with cynicism and perceived as an entitlement. Rather, proactively targeting the price reduction towards customers at the lower end of the pyramid would reap better dividends.

Make Every Customer Facing Interaction CountWhen a customer  calls or walks-in , a strong defensive strategy can  activated  aimed at  either engaging and adding value, influencing, building equity, seeding the benefits of continuity  and / or offering a tailor made solution. Smartly tapping intothe immense potential of a human touch and dialogue by using contextual conversations willbuild brand loyalty. Customer history in CRM can be matched to ensure promotions and offers are relevant and Create the Service WOW! Subtly done it should garner goodwill. Shoddily executed will play out as a defensive action of a desperate incumbent.

Family Matters! Identify and Tackle Family ClustersA grassroots program should be undertaken to harvest the opportunities this segment brings. Building relationships at the family level and target family usage with differentiated product and services (both core and surround services) around all family devices. Tailored services can bring in cohesiveness and stickiness which is difficult to dislodge. Some times family clusters are not easily recognizable and Big Data analytics works around this challenge quite nicely. The execution if done by a tight specialized desk can seed rich customer relationships.

In today’s age with most services becoming undifferentiated, Customer service can add the edge and emerge from a peripheral execution role into a strategically holistic one thus pivotal in enhancing value differentiation for customer longevity.