What exactly is the cost of poor customer service? TalkTalk provides an answer

What exactly is the cost of poor service?

In the main that question is difficult to answer because conducting experiments in the business world is not easy. Companies do not easily take up experiments that say “lets provide great service to this set of customers and poor services to another set and then lets study the impact over the next three years or so”.  Yet sometimes those experiments happen and we can learn from them.  So let’s take a look at the UK telecoms industry and TalkTalk in particular.

This week this piece of direct mail landed in my letterbox and took me by surprise: TalkTalk (a well known brand) is offering unlimited broadband for £3.25 a month plus line rental.  My first thought was ” So that is the cost of poor customer service!”.  Before I dive into this deeper and share with you the financial cost of poor customer service allow me to tell you a little about TalkTalk.

According to the latest UKCSI survey “Among landline providers BT is the most improved (up 2 points), while Talk Talk is the only telecoms provider to show a significant decrease in satisfaction.”

TalkTalk has been plagued by problems and customer complaints including being billed for services that customers had not asked for and/or did not receive.  And when the customers rang up and complained it looks like those complaints were not dealt with well.  So some of the unhappy customers complained to Ofcom (the regulator).  And after giving TalkTalk several warnings and time to clean up the mess Ofcom has hit TalkTalk with the largest fine ever imposed on a telecoms provider.  Whilst the fine is large (£3m) it is nowhere near the maximum (£150m – 10% of turnover).

So the first part of the financial cost of poor customer service comes to £5.5m: £2.5 m is the sum that TalkTalk has agreed to the customers affected and the remaining £3m is the Ofcom fine.  Yet there is more.

When I was teaching the value of marketing and service to a skeptical audience of engineering oriented analyticals I justified investments in these areas on the basis that it improves the customer experience and builds the brand.  And those in turn allow you to charge higher prices, spend less on getting new customers and make higher profits.  Was I justified in making that assertion?  I decided to take a look at the broadband market and the current deals that are on offer from the major players.   Here is what I found (disclosure – I have not done a detailed point by point examination of the functions, features, pricing.. yet where possible I have compared Apples with Apples):

Looking at the table it is immediately clear (at least to me) that if you deliver a poor customer experience though poor service then you pay a financial penalty in the form of a price discount – at least when it comes to the UK telecoms market.  Take a closer look and you will see the following:

  • O2 renowned for great customer service earns £100 more per customer per year – TalkTalk is charging 2/3 of the price that O2 is charging;
  • BT the biggest player in the broadband market and not particularly know for great service yet it can earn £67.50 more per customer per year whilst only allowing the customer to download 10GB of data per month.

The Bottom Line

By providing poor customer service and not dealing effectively with customer complaints TalkTalk has delivered a poor customer experience and tarnished its reputation.  The financial penalty has come in several flavours:

  • compensation to existing customers;
  • fine by Ofcom;
  • higher marketing costs to get new customers; and
  • having to substantially discount the price in order to lure new customers.

Service (how you treat the customer) in its many facets is critical to value you deliver to the customer.  I spelled this out indirectly in the following post which is worth revisiting: “Thinking strategically about customer experience: the five components of customer value”.  In a nutshell, in the informed customer’s mind there is more risk in doing business with a supplier that offers poor service and so the supplier has to offer a price discount and may be forced to do business with price sensitive customers rather than service centred customers.

Last words

Does your business focus on providing great customer service?  Do you treat customer complaints seriously?  No.  Then you may be the next TalkTalk.  Yes, then you may become the next O2.  As always the choice is yours.

giffgaff: where customers are ‘members’ who sit at the heart of the organisation

What makes giffgaff special – worth learning from?

Some customers love giffgaff so much that they are willing to have giffgaff tattooed on them.  If this does happen then it puts giffgaff in the same league as Harley Davidson and Apple – brands that have fans not just customers.   giffgaff won the Marketing Society’s 2011 best new brand award . And in the customer management community some hail giffgaff as representing the future of customer service.  So what makes giffgaff special – different from the pack?

First let me tell you a little bit about giffgaff.  Vodafone, O2, Orange, T-Mobile, 3 – are the main brands that dominate the UK mobile telecoms industry.  giffgaff is an MVNO (mobile virtual network operator) that launched towards the end of 2009 and piggybacks on the O2 network.  And in that sense giffgaff is rather like Virgin Mobile (the first commercially successful MVNO in the UK) and say Tesco Mobile.

So what makes giffgaff special?  It is not one thing, one ingredient, it is the entire recipe – the whole business model and organisational design.  In a way it is like the way that Dell (at the start) rethought the PC industry or Ryanair / Easyjet / Southwest Airlines rethought the airline travel industry.  Let’s start with customers.  It would not be too much of a stretch to say that giffgaff does not have customers – at least not in the traditional sense of customers simply as consumers.  giffgaff has members.  Customers are seen as members who are involved in, contribute to and carry out an array of organisational tasks: provide ideas, get involved in new product development, recruiting new members, serving other members (‘customer services’)……  Many pundits talk about putting customers at the heart of the organisation yet few organisations do that – giffgaff is an exception.  There is a lot of talk about transparency, authenticity, mutuality, collaboration and co-creation yet few organisation do that – giffgaff is an exception.  Finally, giffgaff is keenly focussed on its core customer segment (those looking for a great SIM only deal) and the associated value proposition (cheap calls, texts, internet).  If you want to find out more about giffgaff then I suggest you listen to Tom Rainsford, Head of Brand and Proposition, giffgaff.   For the rest of the post I simply wish to share with you my experience of dealing with giffgaff and why I am an advocate.

My giffgaff customer experience

To sign up with giffgaff you have to head over to their website as giffgaff is an internet only operation: there are no retail stores to visit nor call centres to ring.  The first thing that I noticed was that it was easy for me to sign-up and request a SIM: the task was prominently signposted on the webpage and the task was easy as I only had to supply my name, email and address – five fields in total.

Second, I noticed that giffgaff is great value for people like me – people who already have a phone and are happy to keep using that phone.   On Orange, as a pay as you go customer, I had been paying 20p+ a minute and 10p for text messages.  With giffgaff I would be paying only 8p a minutes for phone calls and 4p a text.

Third, despite the fact that I knew absolutely nothing on phone unlocking, all the information that I needed to get my phone unlocked was on the website.  Better still upon entering the make and phone model the giffgaff website provided a list of companies that are able to unlock my phone.  And each of these companies was rated so I could just turn to the best rated one. 

Within two days I received the SIM card and it was easy to register my SIM card: I simply logged into my giffgaff account, entered a six digit code and then purchased a £10 goody bag that bought me 250 free minutes, unlimited texts and unlimited internet.  Within 30 minutes my SIM was activated and I was making calls and surfing the internet.  The process could not have been easier.

In the process of purchasing the goody bag I noticed that the giffgaff website had an automated top-up facility.  I simply had to activate and specify how much I wanted my top up to be and when the balance on my account hit a low of £3 giffgaff would automatically top-up my account thus making sure that I was never in a position where I had run out of credit and thus could not use my phone.  This grabbed my attention because that was one of the tasks that I hated doing on Orange: topping up my phone and the phones belonging to my two sons.  I still cannot believe how such a small feature delivers such a huge benefit to me: always being able to use my phone and giffgaff doing the work behind the scene.

Whilst I was using the phone I got more suprises in the form of useful information: the giffgaff network regularly displays how many minutes I have left if I have bought a gift pack (a bundled package that expires at the end of 30 days).  If I have bought ordinary minutes then giffgaff lets me know how much credit I have left at the end of calls.  Finally, when I make calls to other giffgaff phones then the giffgaff network automatically informs me that the call was free.  This is the kind of information that I had yearned for and never got from my previous provider.  And it got me thinking: if giffgaff can do this then why did my old provider not do this?

About two weeks later I got another pleasant surprise: an email from giffgaff letting me know that they were sending me an additional SIM card that I could give to a friend.  And on the same day it arrived.  When I opened up the envelope I noticed that I was not simply being asked to get a new customer for giffgaff.  giffgaff had thought through the value exchange: once the SIM was activated then the person using that new SIM would be credited with £5 and so would I.  So I was being rewarded for my effort.  How could I refuse?  My wife switched over from Orange to giffgaff.  And she is delighted with the money that she is saving and how easy it is for her to manage her mobile account/relationship with giffgaff.

At the end of the month I was able to view an analysis of my phone usage via the giffgaff statement.  This took me by surprise because on Orange I simply got a list of phone calls I made chronologically.  On the giffgaff site I got that and I got a bar chart type analysis which I found useful – it helped me to figure out what I had been doing with my phone.  I was surprised and delighted by the thoughtfulness of it: giffgaff is providing me with information and tools that help me to be informed and make better decisions. 

Interestingly enough giffgaff beat me to that as well.  Shortly after this experience I got an email from giffgaff telling me that they had done an analysis on my usage and had a recommendation for me.  So I logged on the website and accessed that recommendation.  The recommendation itself was no surprise but the fact that giffgaff was doing this was and is a delight.  It was something that I had wanted from my previous provider and yet was never able to get.  As a consultant I had advised a major mobile telco to implement this practice, as this telco wanted to improve the customer experience, yet management refused because it would have an adverse impact on revenues and profits because most customers were on tariffs that were too high and costly for them.

Now this might not sound like a big thing and yet it is to me: the language that giffgaff use is a human one and that really connects with me.  The other day I got a SMS message which delighted me both because it was unexpected and because of its simplicity.  Here it is “Thanks for helping to grow giffgaff, you’ve earned ….so far. For more information and to check your recommended plan see My giffgaff at giffgaff.com, cheers!”  I have recommended more than once the companies and marketers use a human language that speaks to connects with customers – that is something that giffgaff is doing rather well.

Finally, I recently took my phone to France and got another pleasant surprise.  On landing the mobile connected to a French network and up came useful information from giffgaff.  I cannot remember the exact words yet the message was clear: we don’t want you to have any unpleasant surprises so lets make clear how much your mobile calls are going to cost.  I was told that I would be charged 38p per minute if I was making the calls and 15p per minute if I was receiving calls.  This is the kind of honest, proactive, information that I have always sought and never got from previous suppliers (mobile networks).

Why am I a giffgaff advocate?

I am adding giffgaff to the list of companies I recommend.  Why?  Simply because they have made my life easier by taking hassle out of it (e.g. automating topping up), provide me with useful information (how much credit I have left, how many minutes I have left, how much calls are going to cost…), talk to me in a human way (the simple friendly informal language), provide more value for money (cheaper calls, texts, internet..), reward me for the contribution that I make to giffgaff and the call quality / network coverage is as good as that provided by my previous supplier (Orange).  Finally, I prefer being called/treated as a ‘member’ rather than a ‘target’, ‘consumer’ or even ‘customer’.  How about you?

How to engage the female customer and deliver the right experience

This post follows on from the last post: If 80% of spend is driven by women then is it not time we had a better understanding of women?

Why should you read this post?  Society is incorporating more of the female values.  If that is not enough then it is worth remembering that women account for / drive 80% of purchases.  And you want to design marketing strategies and customer experiences that work.

What’s The Issue?

Marketing, customer service and customer experience are oriented towards the male ‘achievement impulse’ and male behaviours.  Which means that the female ‘utopian impulse’ and associated behaviours are simply not being addressed.  Let’s take a look at the following diagram:

To engage and build mutually beneficial relationships with female customers requires a different tack as shown in the following table:

Let’s take a look at each of these four codes in a little more detail to see if they suggest courses of action that you can take to better connect with your female customers.

The Altruism Code

The female speciality act is the ability and tendency to put oneself in another’s shoes effortlessly: women empathise on autopilot.  This means that women are motivated to act on another’s pain as they feel it.  It also means that women are open to doing what it takes to cultivate pleasure in others because they feel and can share in that pleasure.  Honesty and transparency matter because they allow women to relax; women pick up inconsistencies due to their ‘whole brain’ radar being to pick up all kinds of detail and nuances.

How can you work with this altruistic code and thus connect with women?  The simple answer is to stand for a purpose/cause beyond selling your product and making money.  Go beyond the functional benefits and stand for something that contributes to a better world for us all: lessen the pain, increase the pleasure.  The authors of Inside Her Pretty Little Head have identified seven ways that you can do this:

  • Position your brand as an ethical brand (my view is that you should just be ethical!)
  • Champion the consumer through your brand positioning
  • Win-win strategies – promotional activity that feeds back to the community
  • Invest in corporate social responsibility
  • Strong communication of altruistic values in your brand
  • Play against the category weaknesses

Lets just look at some examples:

The Body Shop is a memorable ethical brand – it was the first main brand that made a big thing of doing the right (ethical) things including the ‘no animal testing’ claim.

Apple is a great example of a brand that championed the consumer.  As the authors say “From the moment that the woman threw the hammer through the screen in the 1984 commercial, Apple hit it’s target and has stayed on the female radar……. Apple turned the status quo on its head, and offered people a break out of that gloomy vision and into a world of creativity, fun and freedom…”  That is still the case today.

Waitrose has a deeply held and practiced commitment to all stakeholders in the business.  That includes employees (generous benefits, profit sharing, having a say/being heard); suppliers (fair trade agreements); communities (giving back to the communities at store level) etc….

Persil’s ‘Dirt is good’ campaign / positioning is a great example of communicating altruistic values.  Through that positioning the brand is celebrating life and reassuring women rather than making them fearful and perhaps ashamed of themselves.

Orange used to be an example of a brand that did a great job of differentiating itself in a dull category.  It did so with choosing the Orange colour and the ‘future is bright’ positioning.  In recent years, Orange has lost its way – my personal perspective.

The Aesthetic Code

Women want to / are driven to make that world a more beautiful place: the way something looks matters – it makes a big difference to women.

The details matter.  Women can tell if something is not as it should be.  “Women’s minds are trained to notice the things that are out of place – the dirty mug left in reception, the months-old magazine in the waiting room, the speck of dust on the lapel…. they will read this to mean that something’s not right…….Conversely, women also appreciate that detail can make all the difference: it can indicate care taken, thought expended and trouble gone to..”

Women are judged by their appearance and so they have a much stronger incentive to notice the appearance of things.  As a result how things look (aesthetics) matter as much as what they do.

What is the implication for brands?  Ordinary products can be lifted out of the commodity heap of sameness and functionality and put into the limelight simply through great design – a focus on the aesthetics.  Here are two ways of doing this:

  • Selling an integrated aesthetic vision of life
  • Making the functional beautiful / pleasurable.

Gap has managed, at times, to pull off the trick of selling that integrated aesthetic vision of a colourful life through color.  “It was about buying into a world where everything was cheerful and everything was colourful.”

Apple and particularly the iMac is great example of making the functional beautiful and pleasurable.  PC’s used to be the example of a functional product totally oblivious to aesthetics.  Apple came along and totally changed that.  The success of Apple is the proof that functionality and utility is not enough.   It demonstrates the importance of form as well as function: beauty matters – it brings something into life.

Packaging matters to women and is an easy way to speak to the aesthetic code.

Aesthetics is not simply beauty, it is more.  “…everything needs to be in its rightful place, well ordered, consistent… and neat and tidy.”

The Ordering Code

I suppose you can call this the highly practical bit of the female orientation.  It is about the details of life that need to taken care of if life is to work.  Workability allows space for the altruistic and aesthetic codes to come to the foreground: it creates the space for generosity, for flair and fun. “It is not only about practicalities, it is also about helping women to navigate the ‘nice’ bits of organising and planning…”

Women have to grapple with two key issues here. First, they simply have a much broader range of responsibilities – they take responsibility for more and then have to juggle these responsibilities.  Second, women see the details and more more concerned with getting things right for all parties.  For example, when my wife is planning the holiday she takes a lot of time to make sure that it is well planned so that we will all enjoy it.  All the stuff that can get in the way is addressed so that there is nothing to worry about.  Women simply know that attention to detail is a necessity to arrive at Utopia; men cannot be bothered beyond the headline.

How can you, the brand, help women?  How can you deliver a better customer experience?  The first thing is simply to remove the obstacles that slow women down and make their lives harder.  Second, make sure that your internet presence is a strong one – that it speaks to women, helps them to easily do what they need to do.  “The internet is genuinely empowering for women.  It offers women access to lots of information hitherto denied to them…..”.  Think about women, like my sister, who are ‘burdened with young children’: the internet allows her to shop, talk with, get help on a broad range of tasks.  It takes some of the pressure of and it allows her to get more done – including in the half an hour here and there.  The internet allows women to only go offline (into the real world) when they really want to.

Women want great service.  They hold you, the brand, to the same standard they hold themselves to: be thoughtful and efficient.  “Women do not understand why or how you can deliver poor service and still feel good about yourself.  Putting good service at the epicentre of your operation will get you noticed and… talked about..”  The flipside is “…nothing will make a women madder…. in her disdain for your brand than poor service.

Being thoughtful and efficient is not enough.  Women find it frustrating to ask for help and be met with indifference or incompetence.  In Utopia everyone helps everyone else out proactively.  Women want/expect you, your people, to go the extra mile.   They look for and expect genuine communication – the human touch.  Yes, they do want you to save them time.  No, that does not mean that you should cut out the relating stuff: the human stuff.

The Connecting Code

This code is all about the female need to cultivate a strong network of mutually beneficial relationships; “women have a deep and profound survival instinct that requires them to make friends.”  Women strive to draw people together and find common ground.

What this means is that if you, the brand, want to cultivate relationships with women then you are pushing at an open door.  Your female customers are much more inclined to enter into a ‘learning relationship’ with you to use a Peppers & Rogers term. And they are ideal candidates for entering into / participating in communities of shared interest.  This means that you have opportunities in three areas:

  • Create and provide a network through which your female customers can get together;
  • Act as catalyst for generating community of shared interest; and
  • Provide fuel to feed a community or relationship.

Weight Watchers is a great example of a brand as a network.  “The weekly meetings deliver what all good female networks are there to do: they provide support, morale, fortitude, share experience, encouragement, information and strength that comes from knowing that you are not struggling alone.”  Apparently the same applies to the website.

Charities and book clubs (Richard and Judy, Oprah) are great example of acting as catalysts for generating a community of shared interest.

The point to note is that women enjoy and get a lot out of participating in communities of shared interest.  “Any brand responsible for generating that esprit de corps, and building that sense of common ground and shared objectives between women, will be amply rewarded with their participation, involvement and support.”

Conversation (talking, dialogue) is the core ingredient that binds successful female communities.  Women use conversation to build closeness.  Conversation is the fuel that gives life to relationships and the glue that holds them together.  “It is the primary means by which they get to the bottom of what someone is feeling, and the primary means by which they befriend others.”  Put bluntly women love to talk – it is natural for them.  And they love to share what they have learnt with their wide social circle and communities of interest.  They are the ideal brand ambassadors: sources of advocacy and word of mouth marketing. Yet they are not walking advertisements for any old brand.

Women can be exceptional customers – brand advocates and loyal.  The price?  Women are likely only to stand up for brands that have treated them well and/or done something thoughtful.  The opposite is also true: women can be the most vocal opponents of brands that fall foul of their four codes and standards.

Final Words

First, if you do not have a deep interest and affinity for people as human beings (rather than as objects) then you really should not be in marketing, sales, customer service or customer experience in the 21st century.

Second, it is much easier to ride the horse in the direction in which the horse is heading.

Third, I recommend that you read ‘Inside Her Pretty Little Head’ by Jane Cunningham and Philippa Roberts.

The folly of getting customer feedback through automated surveys

I have been an Orange customer for many years and have several usable phones lying around.  This week I decided to let my wife have one of my newer phones so that she can access email on the go.  So I rang Orange to get the phone unlocked.  Call me naive but I did not expect any problems given that the phone is over 2 years old and Orange has made a significant amount of money from me.

The Orange customer services agent (CSA) told me that it would cost £20.00 to get the phone unlocked.  When I asked why given that Orange had more than recovered any phone subsidy.  She simply told me that it was company policy.  To which I simply said “thank you, I’ll see if I can get it unlocked elsewhere” and hung up.

Then I got an automated SMS based survey to complete.  Allow me to share that with you because it illustrates the folly of getting customer feedback through automated surveys. He goes:

Orange: “Thanks for calling Orange at……We’d love your feedback to help improve our service.  It’s only 4 questions and it’s free to take part.  Just reply YES”

Me: “YES”

Orange: “Firstly, on a scale of 0-10 where 0 is not at all and 10 is a great deal, how much did the customer service representative you spoke to care about your query?”

Me:  My first reaction was how the heck do I know!  Do you think I can read minds?  So I simply texted “5” to represent I do not know and this is a daft question.

Orange: “Thanks. Was your contact or query resolved? (text yes/no)”

Me: How do I answer that one.  Yes, I got an answer.  But no, I did not get the answer that I was expecting.  No, I did not feel that Orange treated me right as a loyal customer. So I ended up texting “No”

Orange: “Are you confident that the representative will resolve your query? (yes/no)”

Me: “No”

Orange: “On a scale of 0-10 where 0 is not at all likely and 10 is very likely, how likely are you to recommend Orange to a friend or a colleague?”

Me: “0”

Orange: “Finally, you could the representative you spoke to have improved the service you received when you contacted Orange?”

Me: “She can’t. Orange policy is preventing her from helping me out”

Orange: “As a treat for completing this survey you are now eligible for £100 off Orange Home Broadband! To redeem call 08000790035 – Orange”

Me:  at this point I simply laughed at the absurdity of my ‘treat’!

My take on this

If you want to learn about your customers and cultivate emotional bonds then it pays to have an empathic human being conduct that survey. Here is a great example.  If such a human being had contacted me it is possible that the gulf between me and Orange would be a non-existent and I would be an advocate.  Orange would have given me the ‘treat’ I rang up for (unlock my phone) rather than push a marketing message (Orange Broadband) at me and call it a ‘treat’.  In fact it is this  automated ‘treat’ that has left me more distant from Orange then the call centre representative – she was simply doing her job.

The purpose of the Orange survey (and many others like it) is to assess and control the performance of call centre agents.  But how exactly do you figure out whether the issue is with the policies and practices that the call centre agents have to follow or with the call centre agents themselves?  I am not a happy customer yet I am clear that is not the fault of the call centre agent.  My unhappiness is with the fact that I have been an Orange customer for nearly ten years and still got treated like a number.  Why should this matter to Orange?  Because I will be moving my entire family of Orange.  And I will do my best to get one of Orange’s VIP customers to move as well.A

Automated customer surveys really cannot capture the rich nuances that customers have to share. If you take a look at my interaction you will find that I struggled to answer some of the questions and in the end simply made things up.  The danger is that business decisions might be made from ambiguous answers like the ones that I gave.  The richer, deeper, insight is simply not understood and therefore cannot be acted upon.

With so much customer focus why am I not drowning in thank you cards?

On the one hand just about every large UK based corporate is professing  their commitment to the customer.  Some say they are committed to customer service.  Some declare their commitment to customer focus.  A few are bold enough to state that they are customer-centric.  And many are busy improving the customer experience.

So how is it that deep in the festive season that not a single corporate – Sky, BT, Orange, Amazon etc – has written to thank me for being a customer over the last year?  If the customer is king – as is so widely accepted – then does the king not even merit a thank you wrapped up in a Christmas card or email?  Maybe I am just a poor customer and you are a good customer.  Are you drowning in thank you’s wrapped up in Christmas cards?

Think what my experience as a customer would be if I received a thank you card at Christmas.  Just a genuine thank you with no up-sell or x-sell message or offer.  Is it possible that would have occurred as positive customer experience?  For me definitely.  How about you?

Interestingly, the only cards that I have received are from small recruitment agencies.  Whilst they have followed the Christmas ritual they have not done so with heart.  Or put differently personalisation and personal are very different.  Business people confuse the two and at their costs.  Enough on that –  I will write a post to explain the difference.

It strikes me that customer-centricity in the UK is like the fresh fruit in the UK supermarkets:  the fruit looks good yet when I bite into the fruit it is almost always tasteless.  Now compare that with France where the fruit does not look as good yet is delicious.