Igla Brightman
TMT Trends 2009

Deloitte (News - Alert) Touche

 

The ability to communicate when and where we want is seen as a basic human right by many of us. Not only is on-demand communication part of our societal foundation, it’s quickly becoming an obsession. Even during these tough economic times, consumers continue to spend an astonishing amount of money on the ability to connect with each other.

 

According to The Telecom Industry Association, $1 trillion is spent each year on U.S. communication products and services with predicted growth of 2 percent between now and 2011.  

 

Despite the seemingly recession-proof qualities of this market, a more in-depth look at the competitive landscape and consumer behavior reveals an urgent need to focus more on customer retention and loyalty. The strengths of the home-based customer care model fit well with this need for improved customer service and are the reason we currently see an increase in inquiries and deployments of virtual home-based services from the communications industry.

 

The late 1990s and early 2000s are widely considered the glory days for communications companies. Technology advancements such as Signal System #7 (SS7), fiber optic networks and an explosion in wireless use spurred the invention of countless voice and data applications. Consumers clamored to be among the first users and, in order to keep up with the demand, communications companies focused on system expansion and technology development, not customer service. For every lost customer there was another new one waiting to sign up.

 

As the technology continued to evolve and stabilize, additional players entered the market. Speeds got faster, access became more widespread and still companies could rely on growth coming from increased market penetration and new user adoption. Customer service was viewed as an additional expense that had to be managed down, prompting many communications companies to outsource their call center work overseas.

 

Today’s Market Saturation Challenges

Communications companies face a much different situation today. The market is saturated with customers. Consider this: In 2002, only 47 percent of Americans had wireless service. Now, 90 percent of Americans have a cell phone. With the market near full penetration, future growth must come from customer retention and up selling, not typically an area of strength for most of these companies.

 

Nevertheless, the industry has recently taken steps to enhance customer service. Of the $39 billion spent on customer care in the U.S. each year, $11.5 billion ¾ or 28 percent ¾ now comes from the communications/media vertical. Unfortunately, these companies have a lot of ground to make up.

A recent contact center satisfaction study performed by the CFI Group, a leading customer satisfaction benchmarking organization, found that the wireless industry has experienced no discernable improvement in customer satisfaction from the past year, despite the increase in spending. On a scale of 1-100, cell phone service providers received a score of 71, five points below the average score across all industries. The culprit, according to CFI Group, is poor performance from call center agents.

Communication companies that have sent their customer care functionality off-shore are being forced to re-evaluate that decision in light of recent consumer back-lash. Whether justified or not, customers who perceive their calls are being handled by an offshore agent report significantly lower levels of satisfaction than those who believe their calls are handled in the United States. The gap can be seen in the satisfaction score of 76 for domestic calls versus 57 for offshore. Other surveys have found that customers who perceive they have called an offshore center are nearly three times as likely to discontinue business with the company and offshore centers have nearly twice as many unresolved first calls.

Companies in the communications market are losing 2 to 5 percent of their customers to competitors every month. Network reliability and poor customer care are two of the main reasons customers cite when switching providers. The stakes are high in this ultra competitive industry where the monthly average revenue per user, or “ARPU,” ranges from $48 for wireless carriers to over $120 for cable and satellite providers. The costs of losing and replacing customers can add up quickly. In 2008, customer churn cost one of the nation’s largest wireless carriers the equivalent of $2.8 billion in lost revenue and forced it to spend an additional $800 million to replace the lost subscribers. 

Five to 10 years ago, companies entered the market in one category (i.e. a wireless company sold wireless services). Now increased competition has muddied the market with companies offering bundled packages across multiple services. In fact, 73 percent of products are now bundled. The complexity of service packages makes selecting a provider more difficult for consumers and increases the need for knowledgeable, well-trained Customer Care Professionals, or “CCPs.” More than just order takers, CCPs are relied on to decipher the service plans and help customers select the most appropriate offering.

The communications market faces some major customer challenges and there’s no easy fix. Many companies are now realizing the solution lies in getting to know the customer and delighting an individual with high-quality service. Outsourcing customer care has been the solution of choice for the past 20 years and now is no time to stop. It is, however, time to switch to the right outsourced partner. Virtual customer care centers offer on-shore, high-quality care at a low cost.

-          Top talent: Home-based CCPs are among the top 2 to 3 percent of the most effective, mature and experienced professionals in the nation.

-          Customized skills: Work-from-home CCPs are hand-picked according to a company’s unique needs. For example, CCPs with previous experience working for a wireless company can be located, hired and trained within weeks – not months.

-          Happier customers: CCPs consistently deliver higher customer satisfaction scores than in-house staff. Companies with at-home CCPs report an average customer satisfaction rate of 81 percent versus the 74 percent delivered by typical brick and mortar facilities.

-          Increased revenue: The average order size is 20 percent higher for companies using home-based CCPs. This up selling ability is critical for companies needing to grow through expanding its share of wallet within an existing customer base.

-          Lower cost: With higher performing employees, lower recruiting and hiring costs, faster training and lower turnover, outsourcing to a virtual contact centers can save a company up to 25% on overall service costs.

Communication companies are now in the customer service business whether they like it or not. To succeed, they must make customers feel wanted, respected and valued. Partnering with a virtual contact center allows executives to focus on their love for technology, while knowing their customers are being protected and fostered by the most qualified professionals available. So, get connected with a home-based center now - it’s a smart call.