The threat of ‘text-to-switch’ - time for telcos to up their customer engagement game

Telecoms.com periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Karen Wheeler, VP Country Manager at Affinion UK, assesses the consequences of Ofcom’s latest attempt to put more power in the hands of UK mobile consumers.

Recently Ofcom announced new plans to implement a ‘text-to-switch’ service, in which consumers will be able to switch mobile phone provider with a simple text, in just one working day. The plans have been presented in attempt to remove the hassles that have been long associated with switching; allowing customers to avoid awkward phone calls, making the process both quicker and efficient.

But, as consumers rejoice, if approved and implemented (a decision will be made by Autumn 2017), this could present a mammoth challenge for providers. In research conducted by Ofcom in 2016, it was revealed that the main reasons that consumers avoided switching mobile phone provider is the ‘difficulty and hassle’ of the process as well as the counter-deals current providers offered them, that convinced them to stay.

With switching made simpler, the chance of defections can only increase. For this reason, it’s important for telco providers to start preparation early, and seek new ways to extend customer engagement and drive retention. They’ll have to fight harder to keep customers loyal.

Capitalising on new technology

There’s no denying that mobile phones are entrenched in our lives. In its Global Mobile Consumer Survey 2016: UK Cut, Deloitte reported that an impressive 81% of UK adults now own a smartphone. But while consumers typically feel attached to the phone brand they have – you only have to look at Apple – they often fail to connect to the provider that operates it. Indeed, research we recently conducted with Oxford Brookes University on the Connected Customer confirmed this, revealing that mobile phone providers had the lowest overall customer engagement scores, scoring only 64 out of 100. Ofcom’s announcement only proves the urgency in which mobile phone providers need to think outside the box to increase their levels of customer engagement.

As technology excels, breakthroughs like new hardware, AI (artificial intelligence) and VR (virtual reality) and other advances present the perfect opportunity to do so. In fact, this was one of the main points from this year’s Mobile World Congress event in March. Fewer phones were showcased and instead, the focus was on capitalising on technology and how providers can use it seamlessly to engage with consumers. This is something that providers are often failing to do. The rise of technology presents an opportunity for telcos to improve relationships with their customers by introducing services outside their typical offering. Technology is not a barrier to the customer base; instead it can make things easier and more personalised for consumers.

A provider that’s making progress in this area is O2, which recently announced that it’s developing AI technology to allow customers to check their monthly data, bill date and add new services, without speaking to a person. Although on the surface this might seem like a reduction in customer engagement, this process makes things significantly easier for customers. O2 is looking to meet consumer demands, and is recognising that many people already use mobile apps to manage their accounts out of convenience and don’t want a complicated, lengthy phone call.

The Connected Customer research shows that consumers who engage with their mobile provider across multiple channels, including mobile and online, have the greatest feelings of engagement and loyalty. Unsurprisingly, findings showed that phone is the primary channel for consumers (68%) to engage with their telco operator, followed by online (52%), in store (35%), email (34%), social (31%) and mobile app (29%). The cumulative effect of using more channels leads to greater feelings of engagement and loyalty. Consequently, the introduction of AI is positive step for mobile phone providers. It allows consumers to self-serve on basic enquiries, at a time that suits them. However, it’s important to note that this should not impact the quality and personalisation of service.

To really engage with customers, businesses should offer a product or service that supports their wider lifestyle and the automotive industry has been leading the way in this area. Mercedes Benz, for example, has introduced an in-car AI assistant that makes suggestions to drivers about route updates, alerts and bases all recommendations upon driver recognition in order to make the experience safer. There’s clearly a thing or two to be learnt here about how providers can support in more aspects of their customers’ lives than is traditionally expected.

Telcos need up their game if they’re to prevent customers switching. It’s a challenge, but it’s certainly one they can rise to. As we wait to see if Ofcom’s plans to a ‘text-to-switch’ service materialise, never has driving loyalty been more important. If providers can successfully engage with customers using new technology, more meaningfully and in as many different areas of a person’s life as possible, it will help them build a more lasting connection. After all, it’s the customer that drives business and with a little rethink or new tactics, increased loyalty is within grasp.

Karen is a B2B specialist with more than 20 years’ experience in the financial services sector, primarily in retail banking and general insurance. In her role as UK country manager at Affinion, Karen provides strategic leadership advice to the UK team and is responsible for driving and delivering UK commercial growth through both new and existing business.