Smartphone innovation is changing customer care economics

Telecoms.com periodically invites expert third-party contributors to submit analysis on a key topic affecting the telco industry. In this article Daniel Deeney, CEO of AetherPal, explores how the advent of the smartphone has both increased the complexity of customer care and significantly enhanced the scope of self-care.

The smartphone can legitimately claim to be the economic saviour for mobile operators around the world. Prior to the launch of the first iPhone in 2007, the industry was obsessed with finding the next ‘killer app’ that would reverse the trend of voice and SMS commoditisation and falling revenues. Mobile data became that app and the smartphone became the must-have consumer gadget. In its latest results (Q1 2015), Apple announced it had sold more than 61 million iPhones worldwide. Android is also the most widely used smartphone OS on the planet, driving healthy revenues for the likes of Samsung and LG.

Mobile operators around the world are focused on making the evolving smartphone experience as rewarding for consumers as possible. But this process has become increasingly complicated due to a variety of different factors, and it’s set to put operators’ existing customer care operations under increasing strain. This has important implications for operators looking to maintain healthy profitability.

Complexity causes confusion which increases cost

Most of the world’s leading smartphones, including the market-leading iPhone and Samsung Galaxy handsets, are on their fifth or sixth generation. The healthy succession of new devices brings its own challenges however – particularly to device users themselves. Smartphones are getting smarter and more and more complex. Advancements in chipset capability is enabling richer new applications and services. The pervasiveness of Wi-Fi means that new devices make use of multiple radios that require multiple settings. For operators, activating and supporting these services for tens of millions of subscribers on an ongoing basis, is becoming increasingly expensive.

Operators must also deal with growing fragmentation in the OS space. According to IDC, Android currently represents more than 80 per cent of the global smartphone market. There are currently about ten versions of the Android operating system in existence and each one differs in terms of the services and applications it can run. This has created a multitude of different feature combinations per Android device, which in turn is becoming a massive challenge for customer care agents to keep on top of. Last year, OpenSignal estimated that there were approximately 18,000 distinct Android devices in existence.

And then there’s the technical proficiency of smartphone users themselves. The fact that smartphones are now replacing basic feature phones – not only in most developed markets, but increasingly in emerging markets as well – means that the devices are increasingly being used by less technologically savvy users. These consumers, as with the rest of smartphone users, must navigate new devices with varying operating systems, settings and capabilities. The result is clear – operators need to brace themselves for an increase in customer care inquiries and requests.

Customer care bills set to soar

By scrutinising real operator data, we were able to calculate the real financial impact that smartphone evolution could have on operator care costs over the next five years. On average, large UK operators face a 20 per cent increase. Operators in the US and Germany face a rise of 17 per cent and 13 per cent respectively. That means that UK operators will need to find another $91 million, on top of existing costs, if they are to deliver a positive customer experience between now and 2020.

The reality is that finding this extra money is easier said than done. Most operators around the world are looking to preserve flat customer care budgets as they continue to face price and regulatory pressures. That’s not to say that operators aren’t placing huge importance on customer care – many appreciate the pivotal role it places in creating market differentiation and brand strength – it’s just a question of having to balance the books.

Something has got to give

Economic reality is driving operators to review their customer care strategies. The aim is to find ways of providing the right information, to all customers requiring assistance, at a time of their choosing. The traditional care model has been based on call centre provision, in which trained agents are on constant standby to field questions and resolve issues. The problem with call centres is that they’re expensive and increasingly being dominated by rather basic questions and queries. This is leading to longer call waiting for operator customers and rising levels of dissatisfaction – not hallmarks of a positive customer experience.

This is not to say that smartphone innovation is calling time on the call centre –far from it. It does mean however that operators must do more to encourage their customers to try and proactively seek out solutions to problems themselves – especially the more basic issues. This means ensuring that sufficient information and processes are easily available to them, courtesy of a comprehensive self-care operation.

Self-care is not just about reducing costs

In most circumstances, mobile subscribers prefer not to call their operators’ call centre. If instead they could access a self-care application direct from their device and follow a series of intuitive processes to resolve their particular issue, they would.

Operators are off to a good start in this respect: many already preload devices with a branded “MyAccount” app so that subscribers can monitor their data usage, access their bill or top up their prepaid balance. But by adding self-care functionality to these apps, operators give their subscribers the means to fix their device themselves. They don’t need to know their handset’s model number or which version of Android it’s running – and they don’t need to contact customer support and potentially wait in line until an agent is available.

Operators can also use embedded customer self-care functions as a way to proactively identify common and recurring subscriber problems on a particular type of handset. For example, if a significant number of customers use their self-care app to resolve a problem with configuring email on a newly-launched device, an operator can use this data to anticipate other subscribers having to deal with the same problem. It can then send a pre-emptive notification containing instructions on how to resolve it to each of its subscribers with the same device.

It is essential that operators invest in delivering these self-care capabilities now, especially as it’s currently just smartphones creating customer care cost pressure. Device innovation certainly isn’t slowing down – moreover, operators have the cost of supporting tablets, wearable technology, connected cars and other connected devices to contemplate for the future.

Daniel has over twenty years of experience in building, growing and investing in technology companies in the communications market. Prior to Aetherpal, he was a founding partner of New Venture Partners, a leading venture capital firm with $700 million under management. At NVP, he worked with companies and entrepreneurs in fostering innovation and building new ventures, while investing in and managing a portfolio of companies. Before joining New Venture Partners, Daniel was with its predecessor organization, Lucent New Ventures Group. Prior to Lucent, he held a variety of senior positions at Venator Group and Mobilemedia Communications where he played a key financial role in the firm’s IPO. Daniel is currently on the venture advisory councils at Verizon Wireless and Sprint. He holds a MS in Management of Technology from the Wharton School at the University of Pennsylvania/Penn Engineering, an MBA from Pepperdine University.