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.

 

Setting the Right Expectations – a CX Cornerstone

The route to the top of Customer Experience in the Broadband market, especially in the UK, has been fought, as much as anything, over headline speeds for downloads as any other feature.

BT offer an 80Mb speed, Virgin trump it with 100Mb. BT counter with 150Mb, Virgin respond with 200MB and so on, seemingly ad nauseum.

In some UK telcos, complaints or queries over broadband speed can comprise upwards of 40% of the inbound calls and queries from customers. Only billing rivals speed as a source of customer dissatisfaction; all other issues are some distance behind.

And, to be honest, it’s not really surprising. With most other goods and services, you expect a correlation between what you’ve been sold and what you get. Buying a backpack or suitcase advertised as “holding upto 80 litres” only to find it would struggle to hold half that volume would lead to complaints, so why not a broadband service that claims to offer “upto 80Mb” but in practise only gives 40Mb?

From a technical, network perspective there are dozens of reasons why broadband speeds vary from house to house, let alone country to country and the purpose of this blog is not to explore them in depth. Suffice to say that – for the most part – in countries such as the UK which rely predominantly on copper connections, the longer the wire – the slower the speed. And the more people using the network the slower any one person’s experience of it will be.

New rules are coming in which will seek to address this head on but, as with many other technology-related laws it remains to be seen whether the intention matches the outcome. I’m sure that nobody involved in the legislation regarding cookies used on websites intended to leave every internet user plagued with notifications taking up the screen every time they visit a website.

There are two key lessons for fixed line telcos to learn here. One is, perhaps, more obvious than the other. The more straightforward-sounding lesson is to be more honest about what the customer is being sold.

The new legislation will help towards this. It is obliging CPs to move away from selling broadband based on a headline “upto” speed and towards an average speed. There will be a formula that CPs have to use to determine what figure they can use for this average speed – based on a distribution curve of what customers currently taking the product receive today; speeds achieved during quiet periods ( weekday mornings) and those achieved during the busy hour (typically early Friday evenings) for customers of the same type as them.

It should go without saying that a customer sold a broadband package on the basis of “average 40Mb download” is likely to be happier with the purchase if he’s getting 40Mb, than if he bought the same thing when sold as “upto 80Mb download” even if everything apart from the name is identical between the two. Set an expectation with the customer that you can, and will, meet is hardly rocket science in the world of CX.

Dig a little further beneath this, though, and things will get a little more complex. Especially in a market like the UK which has such a mix of technologies delivering broadband; where some customers are still stuck on technologies that cannot deliver more than 8Mb, others 16Mb, still others on 24Mb, right the way through to the annointed few with full fibre (FTTH) connections who can get hundreds of MB.

Even worse, millions of premises will be served by more than one of those technologies, meaning someone could be paying £40+ per month for an “upto 24Mb” service when a cheaper, faster service is already available to them. And, to complicate matters further, for some people their speed on the faster service may actually be lower than their actual speed on the slower, older technology.

Still with me? Phew!

So, confidence that this new legislation will guarantee a country full of happy customers, who are getting exactly the broadband service they want and need is, understandably, not quite at 100%.

Maybe it should go a little further? Gas and electricity suppliers have recently been obliged to start telling existing customers whether they are on the cheapest tariff. Maybe telcos should be obliged to provide clear options to customers about the services available, a realistic view of the performance they are likely to recieve, and their cost? For example

  • You are currently paying £40/month for our 24Mb service and you are getting an average of 21Mb
  • You could switch to our £25/month service where we predict you will get an average of 38Mb
  • Or our £30/month service where we predict you will get an average of 72Mb

Certainly, most telcos will have these facts to hand, based on their own knowledge of their network and its performance.

However, this leads to my second suggestion on how to improve this experience. What do these numbers mean, to ME as a customer?

Based on the example, above, I can see that it’s silly for me to be paying more for a service that gives me less. But what does 38Mb actually mean to me? Do I need that extra 34Mb, or will I just be spending £5 a month I don’t need for a 72Mb product?

If you are a quadplay telco, your range of products and options for customers to choose will already be hellishly complicated – different TV packages, sport or no sport, HD, SD, Netflix, on demand, IP calls, PSTN calls etc etc. Asking customers to also choose whether they want 38 or 72 (or 150 or 300 or whatever the future offers) is an unnecessary complication.

Bandwidth does not need to be a primary differentiator. In itself it does not do anything for your customer, apart from a tiny bragging right to their mates, for some people. For the rest of us, bandwidth is a means to an end.

Living on your own, or not interested in streaming ultra-high definition content? You’re unlikely to need more than 16Mb. Ever.

A switched-on family with kids at home? Likely to need to support multiple HDTV streams and HD sport and gaming (and uploading a Twitch stream) and phonecalls? Much below about 60Mb is going to mean someone in the household will miss out.

So maybe the smart way to resolve the customer experience around broadband is to stop making the broadband customer experience about speed and move it to services. In the immediate term, this would remove issues around customers who are paying for an “upto 80Mb” service and only receiving what they’d get from a cheaper “upto 40Mb” service – and eliminate potential cases of mis-selling.

In the longer term, this gives customers a simpler buying experience and, in all likelihood, a simpler in-life service experience. Ignore whether I’m getting 40, 80, 150Mb and focus on whether I’m consistently getting the services I’m paying for at the quality I expect:

  • Do all my Netflix films stream in HD?
  • Does my football match, or grand prix buffer?
  • Does my audio download jitter?
  • Are my phonecalls clear?
  • Do my online games lag?

If the answer is always yes, your customers won’t care what their download speed is and customer satisfaction should improve. Sustainably.