 Pipeline
Publishing, Volume 4, Issue 7 |
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This
Month's Issue: |
On The Horizon |
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Why Customers Churn:
Realities about Experience, Blended Services,
and Globalization |
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By
Lucia Gradinariu and Daniel Parcheta
The latest news: Facebook.com is worth more than BEA Inc, Qwest Communication, and many other infrastructure technology companies! Contradicting what annual revenue sheets may suggest, this news means that a business grown on attracting millions of subscribers around the ordinary act of socialization is perceived as more valuable than one producing the technology enabling such successes. We are compelled to compare the offerings of these organizations:
- The ability to connect a network of thousands of applications providers into a platform for revenue sharing and operational processes versus that of building products for established markets and customer bases.
- The business of services and applications reaching niches for which marketing tools have not yet been invented versus that of continuously improving performance of products and deliveries to maintain and slightly increase the number of customers buying them.
It is not hard to guess the darling of the day! As we have experienced from the past, this network can be very fickle and perception and experience drive value. Subsequently perception has become critically important in today’s multi-channel-delivered, social-networks-influenced, Internet- and mass media-supported information distribution. A highly engineered communication channel can be impacted by the slightest rumor of some kind of advantage or weakness bubble, triggering a massive and unpredictable subscriber migration from one service provider to another. That's something business has never experienced and something that is difficult to achieve by only placing phone calls. The loss of any customer is painful, but on these scales such losses can significantly impact the market capitalization of an organization. This type of churn has created numerous churn programs for communication service providers (CSPs) around the country.
By the nature and history of their business, CSPs serve subscriber numbers comparable with Internet Web 2.0 boomers like Facebook, while working within a business model specific to competitors in a mature market, building high quality production with a high operating cost model. To complicate the model, many CSPs are rolling out strategies to compensate for erosion of profit margins from traditional voice services by operating convergent networks, growing into blended services providers or expanding into emergent markets. The result has created new competitors and increasing market confusion around the role of a CSP, both as competitors in an industry that expands now into Web 2.0, media and unified communications, and as providers to a subscriber base living in a
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Subsequently, perception has become critically important in today’s multi-channel-delivered, social-networks-influenced, Internet- and mass media-supported information distribution. |
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mass media and Internet dominated society.
How is this playing in the streets of Middle America and how this is impacting the customer experience?
Let’s take as example the triple play recently deployed in a crowded neighborhood by a tier 1 operator carving into the customer base of the incumbent cable provider: it certainly simplifies access to voice, video, and data and has higher speed on top! So what happens when it does not work: no phone, no Internet, and no TV! Hopefully there is still a mobile phone working to enable a call to Customer Support (think about quadruple play failure) … And then what? Like in POTS, there is a truck role for on site repair because there isn’t yet a process and systems to communicate to the home and to Customer care the nature of the problem, subsequently a truck role is initiated, an expensive prospect for the CSP and an upset customer, who is living without the services and just gave up his fixed line, his cable operator, and signed a two year subscription to get free access to HD HBO channels for three months! But how critical really is this situation for the subscriber? There is still the mobile phone, the nearby Starbuck’s wi-fi network, and the neighbor’s cable TV.
Another example: let’s take a look now at the mobile operator expanding its business in an emerging market country which lacks fixed line infrastructure and is demanding long distance communications. To beat competition, this new operator in the territory offers vouchers for goods like house appliances or free minutes with each new SIM card purchase. New customers sign up quickly because they want to fit a new TV in their house and take advantage of the free minutes but then they will put their SIM card
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