César Bachelet, Analyst & Mike Cansfield, Research Director, Ovum You Asked How can technology improve customer service?

New technology drives automation
The pressure on telcos to reduce costs as their margins are squeezed is on the increase. Meanwhile, as products and services are increasingly being commoditised, many telcos are seeking to differentiate on customer service. How are telcos reconciling these seemingly conflicting aims of reducing costs while improving customer service?

For many operators, automation is the key to delivering better service at a lower cost. By driving down the number of calls to their contact centres, which are expensive to handle, telcos aim to reduce costs while hoping that the automated self-service options will please customers. One of the operators we interviewed anticipated a 30-40% reduction in call volumes over the next three years. But is this realistic?

Recent advances in technology have enabled operators to automate many processes that were previously dealt with by people. Improvements in voice recognition and call-routing technologies have led to the creation of voice-activated portals, allowing customers to perform a range of tasks, from simple bill enquiries to more complex line-fault diagnosis and reporting. Rising levels of Internet and broadband penetration have led to a parallel evolution of online self-serve solutions, from bill analysis to technical support.

Indeed, many operators envisage a future in which next-generation networks will enable them to deliver next-generation operations, and in which customer interfaces are integrated with back-end systems, thus giving them the ability to directly configure complex services.

But technology also drives complexity
Although the majority of customers will undoubtedly appreciate the convenience of automated systems for routine enquiries, we feel that many will still require the reassurance that if they experience a problem someone will take ownership to resolve it.

We also believe that the number of problems is likely to escalate drastically over the next few years. This will particularly be the case in the consumer market, as telcos extend their reach beyond the line socket into the heart of the home, with new services such as TV over DSL and home networking. The same applies to the enterprise market, as telcos move up the value chain towards managed network and IT services.

Not only do these services represent a venture into uncharted waters for most telcos, but they also conjure up a whole range of customer support issues that didn't exist in the days of fixed voice provision. Will the average consumer be able to face the complexity of configuring a home network or installing the CPE required for a TV over DSL service? As the operator provides the service, its call centre is likely to be the first point of contact if anything goes wrong, even if it is for something beyond its control, such as a set-top box or PC fault.

A struggle to reduce costs

We therefore believe that the new demands placed upon telcos will outweigh the savings made by dealing with more mundane enquiries through automation. The key challenge for telcos in the coming years will be to balance the cost of the increasing expertise required to support a growing portfolio of products and services, while providing these at ever lower prices.

© Copyright Ovum 2006

César Bachelet is an Analyst for the WirelineStrategy@Ovum service, which provides strategic advice to fixed telecoms operators and service providers. Mike Cansfield is a Research Director with over 17 years' experience in the industry, and leads Ovum's Telecoms Strategy practice. He is responsible for coordinating Ovum's research in this area, and managing relationships with several key clients. Ovum