It’s not all in the network
I recently attended a seminar where the research agency Swedish Quality Index (EPSI Rating) presented their customer satisfaction results from the telecom industry. The Quality Index is based on surveys with some 10,000 people rating individual and business consumer expectations and outcomes for Swedish operators, fixed and mobile. Results presented pointed to a major gap between expectations on service and experience of delivery for individual and business customers alike. Here comes the interesting part: both the Quality Index and operators attending think customers are to blame for this gap.
The reasoning was that customers – i.e. you and me – expect too much and operators cannot live up to our high expectations. Agreed, humans are unsatisfied by nature and raise the expectation bar whenever satisfaction actually happens. That’s how we moved from caves to create the Internet. We remained eager for more. In a well-functioning market this satisfaction gap would be an excellent opportunity for a new company to enter the stage and provide people with proper service. Unfortunately for consumers, the mobile operator market is not a very well-functioning one and a brief history lesson on telecommunication markets tells us why.
Most countries have three to four Mobile Network Operators, MNOs, with their own mobile network, antennas and all. Now, history has shown that the order of establishment in time of these MNOs play a major role for their present market share. The biggest player on most national markets is usually the so-called incumbent, the old state-owned telephone and telegraph company who back in the days was the first to provide these services. The second, third and fourth biggest operator usually entered the market in that order after it was deregulated. Being the fifth MNO, or even the fourth, can be very tough because of the high investments needed to build a fully covering mobile network. This entry barrier of investment and years lost to competitors means that telecom markets world-wide has moved from national monopolies to national oligopolies. A few companies enjoy the benefit of nobody else wanting, or being able, to enter the market.
Deregulation has meant cheaper calling rates, more choices for consumers and higher speed of innovation. However, the current oligopolistic situation seems to have the side-effect that customer satisfaction and customer experience is neglected. Customer satisfaction in the eyes of operators is at present often equal to the technical quality of their most sensitive asset, the mobile network. Many operators argue that coverage, call quality and data speeds is the driver for customer satisfaction. I believe this to be true to the extent that network quality is a hygiene factor, just like you would expect the motor of a car you just bought to run well. However, the average car buyer doesn’t worry very much about the exact amount of horsepowers. In a similar vein an average mobile operator customer doesn’t care on the exact data speed per second as longs as the overall Internet experience is good, and as long as you can make a call from places where you’re supposed to. There are however other things beyond network quality that make customers happy. This is where the gap of the Quality Index appears.
As a consumer it’s disheartening to see from the Quality Index study that no Swedish operator appears to walk the extra mile to provide superior customer experiences on the fallacy that people don’t care anyway. The mobile handset industry only a few years ago learned the hard way what happens when people’s thirst for superior experiences is unsatisfied. Apple showed that there was a huge market for experience and design above technology, and virtually revolutionized the mobile industry. Functionality is a hygiene factor in many cases but the product or service experience can deliver dreams and differentiation. As a customer to an operator in most countries there are few exciting experiences available beyond the basic network service and possibly lower monthly fees. Again looking at the telecom market structure it’s unlikely that a new entrant will come and compete on superior customer experience. The question is really which one of the established ones dare to be first and get a good shot at reaping the first mover benefits.
Network quality is no doubt important, but operators must realise that market demand has moved beyond that. Network quality is not a differentiator, it’s a prerequisite. Premium operators should strive to deliver happiness and high satisfaction, because that is what creates loyalty and willingness to pay. Apple’s highly profitable iPhone business is a clear example and there are plenty more outside the telecom industry. It’s time to let consumers have the attention and experience they deserve – and that’s much more than just network quality.