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Building an Effective Total Customer Experience Model for Telecom Operators

Article by on May 28, 2009 Editor's Pick 11 Comments

Is your company delivering an effective total customer experience across multiple touch-points and channels? Most companies aren’t. They are using conventional approaches that drive departmental or functional silos in delivering inconsistent and disintegrated experiences; demand more and more resources in order to stay in line with competition; and deviate away from achieving designated business targets.

How do companies deliver a consistent and integrated total customer experience, which aligns with corporate objectives, and with the best use of limited resource? One new and unconventional way is to start building a TCE (total customer experience) model by mapping touch-points and associated channels across entire customer lifecycle, assessing the current effectiveness of touch-points’ experience, and optimizing resources allocation among touch-points and channels by target objectives.

In this article, I am going to demonstrate the beauties of building, assessing, and optimizing a TCE model, with the data and insights generated from the global mobile communications customer experience research1 co-organized by CustomerThink and G-CEM.

Telecommunications service is big business. So big that almost every marketer is jealous of the scale, scope, budget and size of the business that telecom operators handle year after year. The recurring revenue seems to be a lucrative model to keep cash flowing in, too. However, if you are a telecom operator, you see the story differently. You see a rapid erosion of your core business, caused by commoditization of products and services, fierce price wars, continued investment to keep pace with new technologies and even the emergence of virtual operators.

Common Challenges of Telecom Operators

Telecom operators in different countries and markets face different challenges and threats. Nevertheless, the challenges below may be the most common pressing concerns for telecom operators nowadays.

Telecom operators may try very hard to earn extraordinary Average Revenue Per User Per Year (ARPU) from high-value customers, to drive ARPU from low-value customers, and to drive up Value Added Services (VAS) revenue and margins. Despite the fact that they have spent tremendous resources to implement their winning strategies, ARPU is still decreasing.

Telecom operators may have the most innovative loyalty and retention programs, highly competitive prices, structures and plans, and deliver best-in-class services to their customers. Although they get pretty high satisfaction scores, churn rate is still increasing.

Telecom operators may have the largest market share in their own region, but that makes them particularly vulnerable to low-cost operators. Both customers and employees feel no differences between their brands and their competitors’ brands. They struggle to build their brands but just don’t know what to do or how to do. Their brands are big but empty.

Telecom operators are adding more and more product and service offerings for their customers; and these customers are experiencing and perceiving them through new and emerging touch-points and channels, especially through social media. Managing such a dynamic and complex mix of channels is a nightmare. It creates inconsistent customer experiences across channels.

Limitations of Conventional Approaches

Without an integrated approach, you are always working independently as departmental or functional silos and delivering inconsistent experiences. Without a quantifiable approach, you are not able to measure, and thus can hardly manage or improve the effectiveness of the customer experience. Without a pragmatic approach, you may build an extremely detailed customer experience process model, good-looking on surface, but taking you nowhere in execution.

How do you manage these challenges? You need the following: a management system that provides you quantifiable metrics to measure results; a scientific approach that clearly explains the relationship between satisfaction, buying behavior and referrals or word-of-mouth; sound and solid management principles to correlate customer experience and your brand strategy; and a systematic framework and methodology to design and monitor effective customer experience delivery across multiple channels and touch-points throughout the entire customer lifecycle.

In short, you need to manage using a TCE (total customer experience) approach.

Build a Quantifiable Total Customer Experience Model

Figure 1 shows a simplified version of the total customer experience model for a mobile network operator. Mobile communications customers experience their entire lifecycle with mobile network providers by interacting across numerous touch-points (denote T1 to T30) at different stages (i.e. Image, Activation, Usage, VAS, Pay, and Service). The respective touch-point experiences are delivered not by single entity, but by various channels (denoted by C1 to C27), under various functions or departments (F2F, Call, Online, DM, Media, Marketing, and Administration, etc.)

There is no single department or function that can claim total ownership of the entire customer experience. With a TCE (total customer experience) model, companies are able to visualize how to deliver and manage an integrated and consistent experience for customers across the matrix of multiple touch-points and channels.

Customers experience you and your brand as a whole, not by different departments or functions.


Figure 1: A Simplified Version of the Total Customer Experience Model of a Mobile Network Operator

Assess the Importance Levels of Touch-Points and Channels

The importance levels of each touch-point / channel in driving customer retention and customer referrals are identified. The orange stars denote the touch-points that are important to retention and referrals; blue dots are important to retention only; green dots are important to referrals only; and the grey dots are unimportant to both retention and referrals.

Not all customers are created equal. Treating all your customers equally implies that you are not optimizing the resources you allocate among customers. Similarly, not all touch-points and channels are equally important. Some are more important in driving satisfaction, some are important in reflecting brand differentiation, some are important in driving customer retention or referrals. Some may not be important at all.

As shown in Figure 1, the importance of each touch-point/channel will guide telecom operators to allocate resources differently, and effectively, in optimizing customer satisfaction, brand differentiation, and loyalty.

Not all touch-points / channels are equally important, so allocate resources differently.

Optimize Total Customer Experience by Target Objectives

Different companies have different strategies and priorities, even in a highly competitive and “me-too” industry like Telecom. It is not a wise move to copy your competitors, even if they are considered “best practice” in your industry with similar corporate objectives—their target touch-points may be different from yours.

For example, the Service experience (i.e. touch-points denoted by T25, T28, T29, and T30) delivered by IVR (C8) of the Call channel, the touch-point experience General inquiry (T25), Reporting loss (T29), and Complaint handling (T30) delivered by IVR are unimportant to retention and referrals; the touch-point experience Extra service subscription (T28) delivered by IVR is important to retention and referrals. Only by focusing here, can a mobile network operator manage and optimize the total customer experience by target objectives, in this case, driving retention and referrals.

Telecom operators have been talking a lot about delivering a consistent and branded experience to their target customers, at multiple touch-points and channels, across the entire customer lifecycle. But until they can manage the Total Customer Experience (TCE) with an integrated and quantifiable mechanism, delivering a consistent and branded experience will be lip service rather than real action.


1. The global mobile communications customer experience research was co-organized by Global CEM and CustomerThink. The survey began on March 4, 2009 and ended on May 6, 2009. A total of 2,361 valid responses from 25 countries were collected. The guiding principles and the tools for design, execution and analysis of this research are based on the U.S. patent-pending Branded Customer Experience Management Method invented by Global CEM.

In this article, we use China Unicom as an example. China Unicom is the second largest mobile network operator in Mainland China, with 137 million subscribers by March 31, 2009.

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11 Responses to Building an Effective Total Customer Experience Model for Telecom Operators

  1. Graham Hill May 30, 2009 at 12:54 pm #

    Sampson

    An interesting post. It shows a detailed breakdown of which touchpoints a customer uses through which channels. Interesting, but I don’t think it shows the customer experience (CEX). The CEX is made up of much more than the sum of the indiviual touchpoints a customer experiences. Two things in particular are completely missing from this and similar reductionist approaches.

    Firstly. CEX design starts with understanding what jobs the customer is trying to, what outcomes they are trying to achieve and how they use their mobile telephone to achieve them. If Sprint is anything to go by, many of these touchpoints with the call centre would have been due to a litany of earlier service failures. A failed billing enquiry leads to another contact, and another, and another. All these touchpoints would have been critical for customer retention, but the customer would have been better off without needing to have them in the first place. Just showing the touchpoints a customer uses is useless as a guide to the customer’s desired CEX.

    Finally. The Service-Dominant Logic currently sweeping trough CEX design thinking starts with recognising that knowing what jobs the customer is trying to and what outcomes they are trying to achieve provides a foundation to understand how value can be co-created with customers. Mobile telephony only co-creates value when it helps a customer to do a specific job and achieve a desired outcome. This value is co-created during actual usage points, not simply during notional touchpoints. Everything else is non-value-adding muda. Without understanding jobs & outcomes and the value that is co-created during usage points, CEX designers risk further ossifying the many broken touchpoints that mobile telcos have built up over the years.

    The best CEX designers today are no longer the traditional CEX designers (the ones who have written all those books on your bookshelf) but service designers like the UK’s live|work and Engine. These are the people we should be looking to for guidance about how to create the sort of CEX that customers rave about.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  2. Bob Thompson May 31, 2009 at 12:11 pm #

    Graham, I like the new thinking about designing products and experiences around the jobs customers are trying to do. And customer co-creation is a great concept which I also endorse.

    You also make a great point that some parts of interactions, particularly service transactions, may be unnecessary and should be eliminated, not optimized. Bill Price says around 40% of contact center work supports “dumb contacts” that should be eliminated.

    However, I think you push your point too far in critiquing Sampson’s work.

    First, much of the touchpoints that Sampson analyzes clearly are necessary and valuable: like activation and usage interactions that drive retention and/or referral.

    Second, Sampson’s work is backed up with solid research. Frankly, much of the new customer co-creation thinking seems more like a good theory searching for validation. Where are the proof points for what you are saying?

    Let’s not throw the “baby out with the bathwater.” CEM didn’t replace CRM, and customer co-creation doesn’t replace CEM.

    Surely new thoughts searching for validation aren’t grounds for discarding other approaches that clearly do add value and have evidence to support them.

    Bob Thompson, CustomerThink Corp.
    Blog: Unconventional Wisdom

  3. TianLiang LAU May 31, 2009 at 7:44 pm #

    It is a good post by Sampson. Coming from Banking industry to Telecom industry, I see changes for Telco in coming years as convergence taking place. The convergence may not have the capability of full replacement but overlapping of services and role is undeniably real. As a traditionally much more shielded industry (less licenses issued by any country in any region) trying to get into a relatively more open banking industry, telco players must up their game. The are pros and cons that both sides have inherited. At the end, I believe that Customer will decide. So management of Customer Experience is absolutely critical.

    One main areas that the banks have been doing channel management (and customer management through these channels), Sampson’s post in this area is so true – “Not all touch-points / channels are equally important, so allocate resources differently.”.

    I believe more telco will start to see the benefit of segregating their transactional operation and selling/consulting operation such that it can be managed via a mix of different channels.

    Good article. Thanks.
    TL Lau
    Orbsoft.com.sg

  4. Graham Hill June 1, 2009 at 4:02 am #

    Bob

    As you rightly point out, CEM has not replaced CRM (nor was it ever likely to), Customer Co-Creation won’t replace CEM and P2P business models won’t replace Customer Co-Creation either. Each extends and improves on previous stages of CRM’s evolution. Each evolves out of the shortcomings and missed opportunities of previous stages. And that is how it should be.

    The whole point about looking at the jobs customers are trying to do, the outcomes they are trying to achieve and the telephony products they currently hire is to understand what customers really need. At the simplest level, this provides a foundation for lean six sigma type activities to get rid of waste. If existing touchpoints don’t contribute to what customers need (and would willingly pay for) and don’t contribute towards something the business must do to deliver value to customers, they are ‘muda’ and should be removed as such. “Don’t automate, obliterate” as Michael hammer said. But the much bigger benefit of the jobs/outcomes approach is that it provides a foundation for customer-centric innovation. Why have activation as a touchpoint when phones could come pre-activated, just like credit cards do and bank loans do. It is the same basic process. But telcos rarely think about their customers and even more rarely outside the box. Far to much CEM work, like the CRM that it followed, is about companies and brands, not abut the customers who create them.

    Where is the good solid research you refer to about Sampson’s work? A market research study of a few thousand customers hardly counts as the published, peer-reviewed, research that I recognise as good solid work.

    I am not sugesting that we throw away all that we have learned about CRM and are learning about CEM. But I am suggesting that they (including Sampson’s approach) has serious flaws that new approaches, like, but not limited to Co-Creation, will improve upon through methodological evolution. That is why companies like IBM are investing thousands of their staff in the development of new co-creation thnking around Service Science.

    It is my hope that each stage in the evolution will help create products, services and experiences that are a better fit for customers. Almost anything would be an improvement over today’s broken telephony customer experience. Just ask Sprint!

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  5. Sampson Lee June 1, 2009 at 8:22 am #

    Graham, Bob, TL,

    Thanks for all the inputs.

    I can understand that it’s difficult to get a full picture of the model application via an article or one single research study, and it’s not my objective to go point by point to explain the details and application of the model in the article. In the same token, I have also read some, but not all blogs and articles regarding customer co-creation; still, I may not have full details to conclude whether it is a universial approach for everyone. To me, I see the possibility of applying customer co-creation with some other methods or approaches at different stages of CEM.

    We introduce the TCE model by end of 2008, in fact, I would say it’s the market response and customer feedback to help us keep reinforcing and fine-tuning the model. So far, we have completed our first pilot project with one of the major credit card issuers in China by building a TCE Model covering the entire customer lifecycle from card acquisition, card usage, to service and maintenance across multiple touch-points. Right now, we are working with some other banks and telecom operators for their own pilots and TCE evaluation. Our licensed partner in Europe will also start two pilot projects next month.

    At some stages when we are allowed to release some more details of these pilot projects, we hope we could share with CustomerThink’s community.

    Thanks for the feedback again.

    Sampson Lee
    The Effective Experience

  6. Bob Thompson June 1, 2009 at 12:16 pm #

    Graham,

    Where is the “published, peer-reviewed, research” to support the new approaches you advocate? I would love to read these reports.

    Thanks,
    Bob

  7. Bruce Temkin June 1, 2009 at 8:14 pm #

    Firms can definitely gain a great deal of value from doing a structured touchpoint analysis like the TCE model that Lee discusses in this article. If you understand how each touchpoint impacts loyalty, then you’re much more likely to focus your energy in the right areas. Companies often invest a lot of money in lowering their phone queues, when this tends to have little impact on overall satisfaction and loyalty (first-call resolution, on the other hand, is a whole different story).

    At the same time, these process-oriented approaches can sometimes be too incremental; assuming that the correct answer is some version of the current touchpoints. In my blog, Customer Experience Matters (http://experiencematters.wordpress.com/), I’ve discussed five disruptive customer experience strategies as a way to break from the mold of this incrementalism.

    But everything should start with a deep(er) understanding of customers. I’m not loving the “jobs and outcomes” terminology, since companies should go even even farther in understanding what motivates their customers. Some of the best breakthroughs can come from uncovering latent needs through ethnographic research.

    My advice is to establish some ongoing processes like TCE and pick a few areas where you look to blow-up the status-quo.

    So instead of debating which idea is better, let’s discuss how to combine the best of both concepts.

  8. Graham Hill June 2, 2009 at 12:59 am #

    Bob

    There are literally hundreds of conference presentations, academic journal papers and business articles on e.g. Service Dominant Logic and Service Science, both of which are founded on customer co-creation of value.

    Here are a few conferences and special editions of journals to get you started:

    Otago Forum, New Zealand, 2005
    IBM Service Science Management and Engineering Conference, USA, 2006
    Special edition of Marketing Theory, 2006, dedicated to Service-Dominant Logic
    Otago Forum 2, New Zealand, 2008
    Special edition of the Journal of the Academy of Marketing Science, 2008
    International Symposium on Service Science, Germany, 2009

    There are also a growing number of government/university/industry collaboration groups, e.g. at the University of Cambridge Institute for Manufacturing, who are actively working out how to best apply customer co-creation, often in the guise of Service Science, to solve manufacturing and service companies’ customer-facing problems.

    These same collaboration groups are also discussing redeveloping university degree courses around the disciplines of service science, management, engineering and design. That means customer co-creation is poised to be a core part of many new university graduates’ basic training.

    Customer co-creation is going to play a big role in the future of customer-centric business. In fact my definition of customer-centric business is ‘co-creating value with customers’. It’s time to rethink how we operate customer-centric businesses. The old ways are not going to be enough any more. And that means looking at the tools and techniques we apply to improving business operations too.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

  9. Graham Hill June 2, 2009 at 4:51 am #

    Hi Bruce

    You are obviously right about combining the best of the CRM, CEM and CCC worlds to create a stronger solution for creating mutual value for customers, companies and potentially, other stakeholders too. That was one of the points I was trying to get across – and obviously failing – during my initial comment.

    Like the terminology or not, the jobs/outcomes approach does develop a detailed understanding of customers’ needs. It uses a combination of qualitative interviews, observation and ethnography, and quantitative customer scoring to identify the best opportunities for innovation in products, services and experiences. These are often important needs where companies are not providing matching solutions at all, or needs where companies are providing much more than is required (usually at great cost). As you point out, current standard practice is absolutely no guarantee that it is best-practice, nor that it is a value-adding activity, nor that it makes a good starting point for CEX improvement. That goes for mobile telephony too, as we have seen with the activation example.

    Jobs/outcomes provides a structured way to document customers needs that avoids the confusing ambiguity of older approaches like VoC. The term ‘latent needs’ is a good example of that ambiguity. See Lance Bettencourt’s article Debunking Myths About Customer Needs for further explanation.

    I had never intended this to turn into a partisan debate, merely to point out that current touchpoint-based approaches to CEX design have already been improved upon by design thinkers using new customer co-creation models. Companies like UK design agencies live|work and Engine Service Design. We need to be learning from the best, even if they are outside our traditional domain of expertise.

    Graham Hill
    Customer-centric Innovator
    Follow me on Twitter

    Interested in Customer Driven Innovation? Join the Customer Driven Innovation groups on LinkedIn or Facebook to learn more.

    Further Reading:

    Lance Bettencourt, Debunking Myths About Customer Needs

    live|work

    Engine Service Design

  10. Ray Brown March 18, 2010 at 7:31 pm #

    Well Sampson your article has certainly stirred up the “big guns.” I’m a business coach (and I’m old) so I need tools to cut through the “stories” I hear from sometimes 10 concurrent clients (mostly mid-tier businesses with “issues”). The best tool I use is “Content/Context” which helps me chunk up or chunk down as required from – what are the stories to what’s really going on here. In this discussion there is lots of “content,” all of which has merit, some of which I don’t understand etc The real point is – what is the “context” in play here. My guess is that it’s a new cross funtional/cross silo business category of work looking for best practice and some appropriate language. I think of HR and Finance before best practice was established and it became “normal” to have one system across a business for both the categories of work now universally known as HR and Finance. The arguments about the fundamentals are past, the industry language has been agreed and we are now focussed on the right people, doing the right work and progressively getting better at the processes. I am working on a project that I think will contribute to this important debate so I’m looking forward to discussing this with you all in the weeks and months ahead.

  11. Sampson Lee April 6, 2013 at 6:25 pm #

    Ray,

    I created the TCE (Total Customer Experience) Model in 2008. For private discussion, you could contact me via LinkedIn.

    Sampson Lee
    [ LinkedIn ]

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