2015-454_sotw_7-16The telecom industry is undergoing a period of rapid change as Internet services change the way media content is consumed and delivered. The media landscape is rapidly converging, with blurry lines between content-providers, streaming services, and traditional telecom companies. The eventual winners of this changed media landscape will be the ones that not only provide compelling content at competitive prices, but also deliver superior customer experiences.

I looked at 15 U.S.- and U.K. based telecom/media providers to determine the state of customer experience and what is currently driving customer sentiment.

While U.S. telecoms aren’t known for providing outstanding customer experience (the average B2C tech company scores .25 points higher on customer sentiment than US telecoms), unfortunately U.K. companies are lagging even further behind when it comes to sentiment scores. As one might expect, both the U.S. and U.K. telecom companies achieved overall negative sentiment; however, there is a drastic underperformance by most U.K. companies.

  • U.S. companies score a -.07 sentiment, almost neutral.
  • U.K. companies score a -.41 decidedly negative overall customer sentiment.

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So what drives this very negative sentiment?

One explanation is perceived value.  The average American spends nearly $1,850 on telecommunication services a year. That’s a steep price tag, and many consumers feel that they simply are not getting enough value for their service. Even the telecoms themselves concede that starting prices are high—Consumer Reports found that 92% of customers surveyed described negotiating for better rates on their contracts, with 46% seeing a $50 or more dollar drop in price.

Part of the reason U.S. providers can afford lower prices is their ability to offer “triple-play” or even “quad-play” options. U.S. telecom providers often package landline, Internet, mobile phone, and television deals for significant savings.

In the U.K., on the other hand, differing companies have dominated separate telecom verticals. With SKY and BT in television and Internet, and Vodafone and O2 as entrenched mobile players, there has been a lack of crossover packages. However, BT has recently struck a deal with EE to provide just that sort of deal. Vodafone has made similar hints about probable moves into broadband and television. However, part of the reason these packages succeed is the extent to which U.S. telecom delivers better customer experience.

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Drivers of low sentiment can be found by looking at the customers’ feedback.  Here’s what you notice when you look at the top-level themes of customer feedback:

  • U.K. and U.S. customers generally speak about the actual product experience around the same percentage (with the exception of TV)
  • U.K. and U.S. customers’ Internet, mobile, and landline conversation topics were very similar

What distinguishes U.K. customers from similar companies in the U.S. is their extremely high rates of customer service comments. These comments are overwhelmingly negative, and represent a trend of poorer customer experience. U.K. customers average over 200% more customer service comments, and nearly 300% more comments regarding follow-up issues.

When looking at the customer service comments for more specific topics, the extent to which U.S. companies over-perform becomes even more extreme.

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In examining cost comments, it is clear that U.K. customers mention the cost of service more often (40%). However, it is not the area that performs the worst in comparison to US telecom companies.  In the areas that that elicit negative feedback such as outstanding issues, resolution time, and keeping-promises U.K. companies average many more mentions at lower sentiment.

  • Rep attitude is mentioned 57% more often by U.K. customers, and underperforms in sentiment by over .6 points.
  • Transfer and Holds are mentioned 86% more often by U.K. customers.
  • Contract lengths and promotional offers are mentioned 126% more often and with lower sentiment.
  • In all areas of customer support, U.K. customers record lower sentiment.

As a result of these differences, churn rates are much higher with U.K. customers. On average, a U.K. telecom customer is 88% more likely to mention churning.

This over-performance by U.S. telecom companies is striking and is associated with better customer retention and improved revenues. One example is DIRECTV, the highest television provider by sentiment and one of the highest performers in the Temkin Experience index for television providers.  DIRECTV customers show remarkably lower mentions of customer churn and drastically improved customer sentiment on rep attitude. This area, which was a resounding area of failure for U.K. telecom companies, was a comparative source of strength for DIRECTV.

U.S. and U.K. Telecom Consumer Sentiment

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As these word clouds illustrate, although some people were frustrated by their reps there is still a good deal of positive sentiment. In comparison U.K. telecom customers are almost universally negative.

After taking a bit to consider our options with other providers, I called back and spoke to another woman (I apologize for not having her name) who was equally professional, and happy to help me! I ended up deciding on DIRECTV.

The rep was very helpful in working out an agreement, I was satisfied with enough to stay.

I am in Minnesota never had a problem with directTV. The guys that answer my calls are friendly and polite and answer my silly questions.

Unsurprisingly, DIRECTV has had growing revenues each of the last 5 years in part to this over-performance in customer experience. In comparison, the entire U.K. telecom industry has had declining revenues in the past 5 years. The divergence in revenue growth by U.K. and U.S. telecom companies can in part be explained by these extreme differences in customer experience.

Of course, comparing U.S. and U.K. telecom providers is basically an academic exercise, since they do not compete for customers. However, these insights are relevant as warning signs for U.K. providers because of the transforming market. As the media environment converges, highly touted brands like Netflix and Amazon are now competing for the same dollars as the traditional telecoms. For example, Netflix now consumes 35% of downstream Internet traffic, prompting many customers to downsize their cable TV packages.  Worryingly for telecom companies, these new competitors often possess better customer experience metrics.

  • Netflix would be the highest scoring telecom company by customer sentiment.
  • Amazon and Netflix were recently touted as the number 1 and 2 companies by the BestBrand Index.

As customer favorites like Netflix post near triple digit growth in Europe, U.K. telecom companies must adapt their service offerings. More importantly, both U.S. and U.K. companies must focus on improving their customer experience.

Research notes: Data collected from Facebook, 7/13/2-14 – 7/13/2015. Companies included in the study: DIRECTV, Dish Network, T-Mobile, Comcast, Frontier Communications, Charter Communications, Three UK, Sprint, AT&T, Verizon, Sky, O2, EE, BTUK, Vodafone.

 


Dheepan Ramanan is a data scientist at Clarabridge. Follow him on Twitter @DheepanRamanan.
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