Towards a full fibre CX in the UK

In the UK, the Department For Digital, Culture, Media and Sport (which, naturally, is responsible for defining the country’s broadband ambitions – odd set of things to throw it in with, perhaps, but that’s another discussion) has recently published a swathe of documents setting out its ambition for broadband infrastructure in the UK. The Future Telecoms Infrastructure Review (FTIR for acronym fans).

*SPOILER ALERT* The target it sets is for full fibre – FTTP – by 2033.

Quick reality check – it’s 2018. So why are we getting excited about this? And what does this mean for telco customers?

About 10 years ago, I wrote a feasibility study for BT looking at the different options for evolving its broadband network infrastructure. Make no mistake, the benefits of moving to full fibre are (on paper) significant:

  • Glass is (supposedly) far lower maintenance than copper, so you save a lot in ongoing costs. Although this does assume that some careless water, gas or electricity supplier doesn’t accidentally put a digger through your connection
  • Fibre optic connections can deliver higher speeds over longer distances, so you need fewer things between the end customer and your backbone to propagate and boost the signal. That makes it cheaper and less disruptive to build out – fewer powered kerbside green boxes – compared to copper which needs power to boost, manage and moderate the signal. Ultimately, you can even remove your costly exchange buildings.
  • Fibre optic connections are more stable. Unlike copper which will change its electrical characteristics – and hence the speed you get – dependent on the weather (and we get a lot of that in the UK), fibre should deliver the expected speed come rain, or shine.

From a CX point of view, this last benefit is potentially the greatest. Alongside billing, broadband speeds are the highest source of complaint to UK telcos – contributing to around 40% of all inbound queries. If a customer can reliably expect to have the speed they’ve bought all the time and, more importantly, get the services they’ve paid for delivered reliably all the time, then they should be a happier customer. Win-win.

So, if those are the benefits, why on earth haven’t BT been throwing all their money into rolling out fibre already? Let’s take a step back for a moment and look at a few reasons why full fibre is not necessarily the land of milk and honey.

  1. Access to communication services remains fragmented and prone to change, based on the relationships between communications companies. As the current situation with Virgin Media illustrates, customers can still lose access to TV channels, or other subscription services, through no fault of the technology delivering comms to their house.
  2. There are a lot of things between the computer, or TV/fridge/thermostat/baby monitor, in your house and the service you’re consuming which affect the quality of that service. The comms technology between your premises and the nearest exchange or cabinet is only one of these. The parts of the network where your data shares the road with other people’s data can become congested, even if the first mile to or from your house is clear. Think of it like driving down your private driveway to get to work, only to join a big traffic jam as soon as you hit the main road.
  3. More of those things which affect your speed exist inside your premises. Poor customer premise equipment (routers/hubs), dodgy internal wiring, or just pesky solid walls weakening your wifi signal will all stop you from enjoying the speed your fibre connection can deliver.
  4. It’s actually really expensive to lay a completely new network in the UK. Typically it’s around £1000 per address passed, so for the 26 million or so households in the UK, that’s an average of £26billion, before you even get to the business premises. At that sort of cost, it’s not exactly surprising that rollout has been slow and pragmatic thus far. While the savings in ongoing maintenance may ultimately pay this off, it’s a hard cheque to write.

Given which, it’s not surprising that the UK has spent time trying to squeeze more out of its existing infrastructure. Or “sweating the copper” as it’s been termed (don’t blame me for that one, I’m only borrowing the phrase).

So, at a point when copper broadband technology looked like it could only deliver 24Mb/s, and as HDTV was the new consumer fashion, of course it was easy to justify arguments to move off copper as soon as possible. Today, however, with innovation enabling copper to deliver over 500Mb/s, the picture is not so black and white. Whether the industry has done itself any favours by referring to this as “fibre broadband”, is another issue (and one which CityFibre, among others, would argue strongly).

Copper will still struggle to hit these headline speeds in various scenarios, so it can’t be the answer everywhere, but it’s done enough to justify its place in a mixed technology rollout; Allowing higher speeds to be delivered more cheaply and quickly (in theory) where viable over copper and focussing on full fibre in other areas.

From a CX perspective, as I wrote about before, if I can get the services I want, should I care whether the circuit going into my house is glass, or copper, or coaxial, or 5G or satellite? Certainly in an industry landscape where disagreements between communication companies can cut off subscription services and the number of providers of those services is ever-growing, having a particular infrastructure connecting my premises is just one of a number of factors.

So, what’s good for customers in this initiative?

The key will be in the new products and services which full fibre infrastructure enables. Whether it be through autonomous, self governing vehicles or smart cities, or wider availability of public wifi, IoT, plenty of new and disruptive technologies will emerge to take advantage of the higher bandwidth and 5G. Even in the short term, the convergence of fixed line and mobile data will enable greater simplicity for customers and extra benefits, should telcos choose to pass this on.

It’s fine for Government to set lofty ambitions, but if it doesn’t disrupt the things which inhibit achieving them, it’s no real help. The detail around the FTIR do seem to address some of these inhibitors. In particular changes to Streetworks (digging up roads to lay the fibre) should make this a more straightforward process. Moving away from a situation where a telco has to submit lots of individual approvals and encouraging Councils to look at the strategic picture when reviewing these plans can only help. More could be done to automate this process, there’s still a lot of manual hand-off in it but hopefully this is mitigated by the opportunity to work on larger plans.

Funding is another of those inhibitors. That £1000 per address figure will still loom large in the minds of telcos. One can argue about the rights and wrongs of Openreach being part of BT, or not, but it doesn’t change the need for investment to get infrastructure delivered. There is still work to do for the infrastructure builders to find ways of reducing this cost, whether that’s through new technology or process improvement, but seed capital for the investment cannot harm.

It will, however, be interesting to see how this plays out in the newly competitive infrastructure market. There was some simplicity in the time when a single infrastructure provider would be asked to deliver a network which all could then use. However, with more telcos now wanting to build and own their own network infrastructure, the risk of funding going to multiple organisations all building fibre in high demand areas and still leaving unprofitable locations untouched will need careful monitoring.

For customers, too, this may create problems and make customer choice more difficult. If part of the decision a customer has to make revolves around who owns the infrastructure and, hence, which services they can subscribe to, this may sustain a degree of complexity for the customer which currently revolves around the speed which Openreach can deliver – and whether Virgin Media also supplies them.

For telcos, gaining or retaining revenue streams will also be a challenge. If those new services are delivered by new companies, the ability for a telco to form a relationship with the service provider and gain a slice of the revenue is not guaranteed. Telcos came to the party on Netflix quite late, in some cases, at a point where many people already had subscriptions direct with Netflix. Forming a viable rival content service is an expensive and complex challenge, but it will be very difficult to recoup the investment (subsidised or otherwise) if you’ve not found ways to increase your ARPU or share of wallet.

The impetus added by Government – both in the public sector and private sector – to push with a clear focus on full fibre will help unblock many of the issues encountered so far. But telcos, Councils and service providers still need to put in the hard work to ensure this momentum isn’t lost or the CX opportunity fumbled.

Gavin Patterson, CEO, to leave BT: OK then cleverclogs, link that to CX!

BT have announced that Gavin Patterson will be stepping down as CEO of BT Group.

Given the disquiet from numerous, high profile institutional investors about the share price (which is at a 6-year low at the time of the announcement) it’s likely he left before he was sacked.

His time in charge has been very interesting for the Group, overseeing the acquisition of EE for £12billion, the further separation of Openreach, numerous restructurings, especially in the business and enterprise space, and the launch of BT Sport – in particular with some significant investment in rights packages, and £4.5billion spent on the English Premier League football and UEFA Champions League at the peak of that.

The continued troubles of the Global Services division, in terms of financial performance, haven’t been well addressed and 2017’s Italian accounting scandal where over £500million was lost haven’t helped either.

But during that period, other telcos have found it not to be plain sailing – Talk Talk suffered significant problems with cybersecurity, when vast amounts of customer data was hacked. O2 have experienced various wobbles from Telefonica and considered pulling out of the UK market, with their sale to Three being blocked by the regulator. Orange pulling out of the UK market altogether via merger with T-Mobile

So what was it that brought Patterson’s tenure to an end and, as the title asks, how is this related to CX? Hold my beer.

BT is unique among UK fixed line telcos in that it has a Universal Service Obligation. That means it is obliged to offer a service to every address in Great Britain. Other telcos can pick and choose what service they offer to which geographies, but there is a certain level of service which BT must offer to everyone. Initially, this was nothing more than PSTN – fixed line voice – but in recent years was extended to include broadband “at speeds that permit functional internet access”.

The definition of “functional internet access” – ie how fast is fast enough – is a subject of constant discussion. And very contentious discussion, for as long as a significant number of people remain stuck with comparatively very slow speeds.

For BT, and Patterson, irrespective of how fast their lucky, full fibre, customers could get their internet access to go, the argument was always going to be won or lost on the basis of how slow their bottom-end customers’ internet was.

Particularly after the investment of £millions by the Government in BDUK – which was intended to deliver high speed broadband to almost everyone – the fact that thousands of customers were stuck with internet speeds still measured in Kb/s not Mb/s was always going to shape the discussion.

Sure, there are mitigations: There’s a reason those final few thousand customers have still got slow internet – it’s very, very expensive to provide them with faster connections – in excess of £1000 per address. And, actually, even when they’ve got access to faster connections not enough people actually upgrade to the high bandwidth services to come close to delivering a return on investment.

But those arguments, however valid, weren’t going to win. So, I suspect what has ultimately cost Patterson his job is not connecting with what customers actually expect from BT (pun intended).

However much people might have liked to complain about Sky’s monopoly on sporting rights and price rises, actually there was some advantage in having one service to subscribe to, to get all your sport – if that was your thing. The need for BT to enter that market – at a cost of £4.5billion for European and Premier League football alone – was probably not a high priority in the minds of their customers.

Especially not for those customers whose internet connections weren’t fast enough to actually be able to subscribe to the TV services offered.

It’s a little facile to argue how much faster the country’s average broadband speed could have been if that £4.5billion had been invested in the network, given BT Group’s structure with Openreach, but given that the Government budget for all phases of BDUK was around £1billion, the comparison is there to be made.

As companies like Amazon, more readily associated with content provision, enter the UK sports rights competition – with suggestions that Netflix and other content providers may join in the future – was the step into content provision it the right move, at the right time for BT? Probably not. Their subscriber base for their TV service in general, let alone for the premium sport offering, never got to the point where it was challenging Sky. And that strategic decision was squarely Patterson’s.

A similar argument could be made about the EE acquisition. Was the country sitting, twiddling its collective thumbs waiting for BT to offer a bundled mobile service? Or was this a defensive, inside-out decision by Patterson, based on perceived need for a viable mobile capability and a sense that it needed its own network – some years after selling off O2?

As CEO of a company like BT you need to be able to make bold decisions. At a time when some of the core areas of its historic revenue streams were in jeopardy (such as call charges, as IP voice loomed on the horizon), some kind of content provision was always going to be a part of that. As was mobile. However they were, so far, expensive gambles that didn’t pay off.

And it has allowed the conversation to stay rooted on the traditionally weak aspects of BT: the digital have-nots; the perceived poor customer service; the newbuild home owners waiting months for their phone connection; the network operators having to wait months or years for a new ethernet connection (which itself led to the biggest fine Ofcom have ever issued for the deemed consent issues).

BT’s mission statement under Patterson was “Number One For Customer Service” and, as its NPS scores illustrate, it wasn’t getting close to delivering this – arguably due to the distractions of Sport, TV and mobile. The numbers were changing, slowly, but not in a way that was changing the conversation or addressing what customers expected from BT.

Arguably one of the final nails in the coffin for Patterson was the 2017 accounting scandal in Italy. Not just in terms of the lost money, although pretty much any company would notice £500million disappearing, but in brand reputation. For all the adverts starring Ryan Reynolds, complete with knowing winks to camera, Jeremy Renner and other high profile celebrities, there is a perception that BT is the SAFE choice, not the EXCITING choice. It may not be flashy, but at least it’s going to be reliable and work. If I can’t buy anyone else’s service, at least I can get something from BT. The fact that they lost so much money was (excuse the mixed metaphor) the last straw for many – erosion of one of the final brand values for BT.

So, there. Customer experience is about knowing what your customers want and delivering it. Gavin Patterson’s focus on diversification into new markets wasn’t what most of his customers wanted or expected. His pursuit of this, at the expense of deprioritising the services his customers did expect (decent broadband speeds, reliability) impacted the company’s bottom line, its share price and, ultimately, his job.

 

Carphone Warehouse – the CX lessons

You’ve probably seen the news that Carphone Warehouse have recently issued a profit warning and are expected to close 92 of their high street stores. At first glance that could just be another example of harsh trading environment in UK retail – the same as killed off Maplin, Toys R Us, BHS, Ultimo among others.

However, for Carphone, there are probably a few other factors which have led to this. To understand them, we need a quick history lesson.

Carphone started in the late 1980s, but flourished in the 1990s, at a point where the mobile market was new and experiencing significant growth. At that point, the only way to own a mobile was to purchase one – with a SIM – from a network operator. Carphone was a huge disruptor to this market, providing consumers with a brokerage service where they could directly compare networks, handsets and contracts.

As well as this indirect sales route, their other key innovation as a valuable customer experience was providing expert advice about the handsets and technology. At this point, mobile phones and networks were moving to GSM and then to 3G and opening up all sorts of new possibilities beyond voice calling and simple text messaging. As with any new technology, a key element of the experience for customers was guidance and support in understanding it and making choices that reflected their need.

So, what changed for Carphone? As I mentioned in a previous post, one of the key ways to deliver a good customer experience – and hence drive positive business results – is to ensure you are delivering what your customers need and expect from you. Critically, Carphone didn’t evolve their CX to keep up with the evolving needs of their customers.

The mobile market has evolved considerably in recent years. It is now a much more mature market, characterised by:

  • largely saturated in terms of penetration so now driven by churn, not growth
  • more stable technology – less need for customer education. Apart from the ever increasing bandwidth available from 3G to 4G and, imminently, 5G, the capabilities of the networks are largely stable.
  • Platform based environments – instead of needing the features of each handset explaining, the operating platforms – iOS or Android – are now the key ecospheres. There is always “an app for that” and, combined with bandwidth improvements, the key evolution is now about the quality of content that can be delivered (higher bandwidth allowing better definition etc) and the innovative services available over those platforms
  • Longer life of handsets – while manufacturers are constantly releasing new handsets, with the stabilising of the technology and platforms, it is no longer the case that you HAVE to upgrade each year in order to be able to do all the latest things. An iPhone 5 will still let you use social media, navigate or order an Uber, or a meal.
  • A more educated, knowledgeable customer base

This results in one of the key business propositions which Carphone had no longer exists – or certainly not to the same extent. The need to provide expertise and guidance to support their customers through a buying decision has largely evaporated and, as a consequence, a key driver is diminished.

While this spells trouble for Carphone specifically, it can be noted that the group has diversified from this already – establishing Talk Talk as a broadband provider in the UK, as well as the 2014 merger with Dixons to form Dixons Carphone and the move into MVNO with the launch of their iD branded mobile network.

So while the health of the group overall may not be critically impacted by Carphone itself, this does show how a failure to provide a CX which keeps pace with the needs of the marketplace can impact a business. If Carphone are going to return to profitability, they will need to revisit the needs of their customers and identify an innovative experience that will satisfy them. And they need to keep revisiting this to ensure it stays relevant.

If not NPS, then what?

Previously, I looked at the pros, and cons, of NPS as a tool for measuring your organisation’s CX. Today, having slain the dragon, I’ll try to help you rebuild the tatters of your CX life and identify what you should be doing if not NPS.

What was the problem again with NPS as a measure? A good question, I’m glad you asked. To recap, NPS is usually a very broad metric of customer response to a specific question and, as such, it bears little relation to actual business performance. Just because Company A has a higher NPS than Company B, you’d expect it to be… what? Larger? More profitable?

That’s clearly not true. BT Group has an overall NPS of around 15 and yet is a larger company than 3 (NPS of 27) or Vodafone (60). Similarly, BT TV has an NPS of 13 yet has far smaller reach than Sky (-5).

As an industry, telecommunications is ranked 16th out of 20 for NPS, lower even than Insurance (32 v 54 overall) and yet it remains a profitable industry.

To understand how to measure CX, we must first understand the impact it can have on a business. To do this, let’s look at some statistics:

  • 42% of B2C customers purchase more after a good customer experience
  • 52% of B2C customers stop buying after a bad customer experience
  • 24% of customers continue to use a vendor for more than 2 years after a good experience
  • 39% continue to avoid a vendor two or more years after a bad experience
  • 87% of customers who have a good experience will share the story with their friends (just under half via social media)
  • 95% of customers who have a bad experience will share the story with their friends (over half via social media)

So the picture starts to build. For starters, the underlying trend and business impact is that a good CX will lead to customers buying more, becoming loyal, repeat consumers and encouraging their friends to do the same.

And it seems that the negative consequence of a BAD experience is greater than the positive effect of a GOOD experience. Getting things wrong will turn more people against you for longer, whereas getting things right will impress fewer people and for less time. Some statistics suggest it will take twelve positive experiences for a company to recover from the impact of a single negative experience.

A good customer experience, then, is not an end in itself, it’s a means to a well performing business. The measure of a good customer experience is the measure of a successful business. And that has always has been about financial performance:

  • what is the churn rate of your customers?
  • what is your ARPU?
  • what is your share of wallet?
  • what are your customer service costs?
  • what is your underlying profitability?

If the purpose of a good CX is to have a financially successful business – and the way to achieve financial success is through good CX – how is this achieved? Again, there are a number of statistics about what customers want from a business, for example:

  • 69% of customers attribute good customer service experience to quick resolution of problems
  • 89% of customers get frustrated if they have to repeat their details to multiple representatives
  • 75% of online customers expect a response within 5 minutes

But here is where the real work comes in. Not all companies are the same. They don’t all target the same customers, or customer segments. Their services are not all identical. It is vital to understand what YOUR customers want from YOUR company, not what theoretical customers want from a theoretical supplier.

There are two key questions:

  1. How is your customer experience defined?
  2. Does it meet what your customers expect from you?

Defining a Customer Experience

Some companies are (arguably) today a brand before they are a vendor. An Apple fanatic is very unlikely to switch to Android unless something very drastic happens. An Omega watch enthusiast is unlikely to give it all up and switch to Tag Heuer just because of one bad experience. The driver of a Jaguar won’t switch to Dacia without a significant change in circumstance. But an environment like this is a rarity and one that is earned over a long period.

More relevantly, a quad-play telco customer who follows Premiership football is unlikely to switch to a provider without TV & sport offering

Apple, Bentley or Omega’s customer experience is far more than a single transaction. It’s more, even, than a full user journey from identifying a need, through purchase to ownership and in-life service. These brands have earned that status, built that customer experience, through a combination of their product, its price, knowing what their customers want and having processes in place to deliver it. In some cases, like with Jaguar, this reputation will keep the company going even when the product itself falls below the established, and expected, standard.

The quad-play customer won’t be watching Everton v Huddersfield on a Sunday afternoon just because of Sam Matterface.

Which leads on to:

What your Customers Expect From You

Your customer experience is a result of everything your company does, not just how much you charge for delivery, or how fast your call centre responds. It includes the company’s products, prices, processes and – increasingly now – its social responsibility position.

Apple, Jaguar or Omega customers don’t buy them because they are cheap. Xiaomi, Dacia and Casio customers don’t buy them because of the great after-sales service and reliability.

While statistics like those, above, can provide general trends on what customers want to see, to feel they are getting a good experience – no successful corporation sets out to provide slow fault fixes to customers or intending that issues have to be handed off to multiple agents, or to offer a poor service – it is important to understand how your customers see you and what they want from you, in order to be able to offer the right customer experience.

Talk Talk Group make few bones about being a value B2C telco. There is not a high degree of automation in their back office and it’s recognised that their customer service can be slow. They tend not to compete on high bandwidth services to consumers.

Real sport fans have, traditionally, taken Sky subscriptions and Sky capitalised on this to offer quad-play telco packages, adding mobile, fixed and broadband. BT Consumer has lived on its position as the “monopoly” (or Universal Service Obligation) supplier to try to appeal to everyone – starting with traditional telephony and recently entering the TV and sport market. It’s products are relatively expensive in the marketplace and this is not always reflected in the services received. This has allowed other players to steal a march on fibre broadband (Eg City Fibre) or mobile (Three, Voda) or content (Sky and now new entrants like Amazon or Netflix). And yet BT has several million residential customers.

Perhaps this is reflected in their relatively low NPS. And for TTG, they remain a significant player, despite an NPS of -30.

Understanding the expectations of their customers is a key business driver for both of these companies. No company can afford to watch their financial results decline, irrespective of their NPS score’s trend, and then start to ask the question of where they are failing their customers.

Next time we will look at how true CX insights are achieved and how this can be used to drive business transformation.