Market Focus -- Telecommunications: Bundled Offerings, Better Retention?

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The recession has had a dramatic impact on just about every imaginable industry vertical—but arguably none has suffered more than the telecommunications sector.

During a time in which most consumers are looking for the best deals possible while simultaneously satiating their need for cable, Internet, and phone service, service providers are scrambling to find the magic solution to keep customers from leaving.

Verizon, recognizing this problem after losing 96,000 digital subscriber line (DSL) customers last quarter, has once again tweaked the DSL bundling package it offers—reducing pricing and offering faster Internet service—in an attempt to reduce churn.

Anand Subramaniam, vice president of worldwide marketing for Mountain View, Calif.–based contact center solution company eGain Communications, explains that many of the telecom providers are shirking customer service simply because they feel they can.

In a study conducted by eGain, 45 percent of North American companies did not respond to emails within 24 hours, and 20 percent of those surveyed ignored emails completely. “Some think they can get by…thanks to the switching barriers,” he says, referring to penalty-laden contracts.

William Hahn, principal research analyst for industry-research firm Gartner, doesn’t necessarily see it in such stark terms. “Customers will go where they want, instantly,” he says, adding that some are essentially daring their providers to stop them. Most mobile contracts threaten to levy penalties if you shift, he says, but those clauses can’t even be enforced anymore. “Unless you have tied that offer to an expensive piece of machinery like a personal computer, individuals can jump for a better deal.”

Hahn goes on to explain that bundling alone is a Band-Aid solution to a long-term problem. “Price in and of itself is not a winning proposition,” he affirms. “Bundling’s very limited…. It’s neither a savior nor a panacea.”

Instead of transforming prices, Hahn urges companies to change the services they offer. In the consumer sector, he says, the new frontier is the so-called digital home, as people are accumulating more devices interconnected with the services they purchase from a telecommunications provider. While the devices themselves may have separate warranties, something that goes awry may not be the fault of one of the individual products but rather the manner in which they’re networked.

“All of these devices are connected,” he says. “For example, you can stop a television show and pick up where you left off on your computer. This is an opportunity for a service provider to coordinate all of that: Guarantee [that] those using cool services like [Internet Protocol television] and online video have a foolproof and smooth go of it—or they won’t use [those services].”

This evolution in offered services, bundled packages, and different billing schematics has led to difficulties in the contact centers of service providers both nationally and globally, according to William Band, vice president and principal analyst at technology consultancy Forrester Research. Still, Band reports, telecommunication companies do recognize the importance of customer service for the sake of increasing retention and reducing churn, evidenced by continued customer-care investments—in the contact center, self-service, and Web self-service—despite intensifying budget concerns throughout the industry. “That primarily addresses how to keep current customers happy, and to do so in an efficient way from a cost point of view,” he says.

While that could be applicable to virtually any industry vertical, Band says that telecommunications is unique in that it also takes into account service provisioning technologies for the back office and network—activating and installing new services while managing service-level agreements—as part of the customer service strategy.

“Customer care and service provision/support are the two domain areas they mush together to be CRM,” Band says. “Telecom operators buy into the concept that they have to make sure all the customer touch points managed are integrated together—from acquisition to service—ensuring that they deliver products, [that] services get activated and billed correctly…[and] seamlessly so.”

As the industry’s prices and products become highly commoditized, Hahn believes it’s essential that telecommunication companies continue to pursue this notion of a complete experience. “In the past, if you charged less than everyone else you could grow market share and crush opponents,” he recalls. “Today, the price bottom is zero…. Fixed voice or Skype can cost you nothing. Carriers need to be experience providers, not service providers.” 

BOX: TOP 4 VENDORS in Telecommunications:     Source: Forrester Research

  • Amdocs
  • Comverse
  • Oracle
  • SAP

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