• February 16, 2009
  • By John Klustner, senior vice president, Proudfoot Consulting

Cutting-Edge Technology, Antiquated Service

The telecommunications industry has seen an innovation boom in recent years. Yesterday's cell phones are now MP3-playing cameras and video recorders that can email and surf the Internet, as well as broadcast the old-fashioned "Pick up milk and bread on your way home from work" phone call. However, the processes and technology that define the sector's customer service have not kept up to speed with the dynamic nature of the industry.

Today, the hyper-competition in the telecom marketplace has service providers fighting for market share in an industry with an already high penetration level. Service providers run the risk of losing customers due to service process issues, not product quality. This is especially painful when you consider that customer acquisition costs can be $200 or more, according to one industry source. In addition, a poor support experience significantly reduces the likelihood a customer will recommend a product or service or re-purchase from that same company.

Even if they don't lead to customer losses, service issues can quickly erode profitability as the cost to support a customer inquiry or complaint can cost $2-$11 per contact according to Call Center Magazine. Although telecom companies have spent millions attempting to combat the problem, many call centers still continue to struggle with disjointed processes and other gaps to account for today's demands and complexities.

The acceleration of markets, emerging communications products and hyper-competition create a demand for customer service unlike anything the industry has seen before. Companies need to not only focus on recruiting skilled customer service workers; they must install new or upgraded management operating systems and create a more proactive environment in which these workers can operate efficiently.

Why Six Sigma doesn't work

Many times the very aspects that make Six Sigma effective can reduce its overall effectiveness. It uses rigorous statistical analysis to produce data to identify defect areas, the correction of which produces better quality, lower costs and increased efficiency. While very effective at controlling processes, it is those elements that are harder for Six Sigma to control, such as employee behavior and innovation, which can hinder the long-term success for companies.

High profile Six Sigma failures like Home Depot and 3M show that companies cannot focus on implementing Six Sigma in isolation. These examples prove the need for human involvement in corporate change. Clearly, Six Sigma is a set of process tools that should only be part of a more holistic process improvement strategy. Attention must also be paid to people, innovation and customer relationships.

Capital investments may not be the best solution

A 2008 global productivity study revealed that 60 percent of all communications companies plan on increasing capital expenditure on IT and communications technology in 2008. During this same time period, 49 percent of all communications companies plan on increasing capital expenditure on plants and machinery. 

Current economic conditions make the funding of these initiatives more risky than in the recent past. The global credit crunch has made financing such endeavors either more expensive or more difficult to procure, meaning that the company may need to pull funds from other projects to self-finance these costs.

Also, initiatives involving capital expenditures often take too long to complete and do not achieve results in a short period of time. The best approach to achieve fast results and sustained return on investment would be a more holistic approach. Companies need to focus on the human factor.

The effectiveness of any program depends on behavioral change

Change agents must be mindful of one key ingredient in managing people: Changes in processes or procedures are sustained only when changes in behavior occur. As a rule, people are resistant to change because they are currently operating within a comfort zone. They will wonder what's wrong with the way they perform, especially if they are working within parameters set forth in their initial training.

People who are asked to implement change first need to understand why a specific change is needed and know that they can make a difference within their areas of influence. If properly informed of the rationale behind the policy change, the employees directly affected will be more prone to adopt and implement this change for the long term.

In order for effective sustained change to occur, workers must be brought in from the onset of the project. Their input from being on the job for years is just as, if not more important, than what the statistics say. Allowing employees active input provides them with a feeling of involvement and a sense of ownership of these eventful changes. Also, the results of using a more holistic approach are often immediate, do not require significant capital expenditure, and pay for themselves in a short period of time.

About the Author

John Klustner works as a senior vice president for Proudfoot Consulting, an operational consulting firm. For more than 60 years, Proudfoot has specialized in implementing change to achieve measurable and sustainable performance improvement in client companies.

[For more on CRM amid the economic downturn, see the February 2009 edition of CRM magazine, The Recession Issue.]

Please note that the Viewpoints listed in CRM magazine and appearing on destinationCRM.com represent the perspective of the authors, and not necessarily those of the magazine or its editors. If you would like to submit a Viewpoint for consideration on a topic related to customer relationship management, please email viewpoints@destinationCRM.com.

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