Today's medical profession has come to acknowledge the benefits to patients from the placebo effect. We all tend to recover from ailments more quickly when we believe our treatment to be efficacious whether it actually is or is not; mind over matter is the key. One could even put the case that placebo is the driving force behind our voracious desire for consumer brands.
We all tend to convince ourselves of the superiority of the international brand regardless of the reality. After all, we need some justification to put up the dosh – so to speak. We even put up with the acknowledged deficiencies of the top brands as 'in the round' they offer a quality synonymous with the image we wish to present. For top brand manufacturers these market values represent the holy grail, the golden vision, the shangri-la of their marketing mission.
One could even argue that the mobile phone industry's relentless growth can be attributed to this phenomenon, in part, due to the insatiable consumer appetite for the latest, coolest smartest phone with which to be seen. But therein lies a misconception, whereas many of us are all willing to spend over the odds for the latest must have phone, when it comes to our service provider, we take a very different view. We're not bothered about the brand, the image or the logo. After all, these are only visible when advertised. What we are interested in is service and tariff regardless of our chosen handset. In the same way that a driver of an exotic German or Italian performance car will not boast of what fuel they have in the tank but look for reassurance that the price they paid at the pump was competitive. Of course the hard working marketing departments of both MNOs and MVNOs will bundle service and tariff into what they label the 'value proposition' in the hope that it will take on a placebo of its own. We will continue to use the service believing that we are getting value for money and if we believe then well, you know the rest. The problem is that this is all fantasy because in the mobile telecom service industry placebo isn't working.
Now I suppose at this stage of my ramblings I should come clean and confess that for many enjoyable years I have been performing a business consulting role which has enabled me to talk openly with most of Europe's MNOs and several major MVNOs. It may come as no surprise to you that its generally acknowledged that customer churn remains high, as does dissatisfaction and mistrust. No doubt, at this point there will be numerous marketing execs eager to point to their churn reduction figures with indignation and I dare say they have some grounds. However, I am referring across the segments, both customer and geographical and am also disregarding the impact that one or two multi-app phones might have had in helping sure up the figures!
The problem is that even placebo requires proof; without proof of benefit placebo is worthless. If customers don't have proof that they are on the best deal they will lose trust. You can forget loyalty as that will disappear the moment a perceived cheaper tariff is placed before them. Of course this mistrust of ones provider can be abated somewhat by continual personal communication with the customer, which is for the most part difficult to justify financially for customers smaller than corporates. In fact, most of us only hear from our providers at bill time and at end of contract and on each of these occasions we are invariably left with the same question; 'are we paying too much, are we on the best deal for us?' The trouble is we don't know, we were sold our package by a sales person and now we are expected to trust that we are not paying more than we need. In today's financial climate this uncertainty is one of the major causes of poor customer loyalty and general mistrust of service providers.
Over the past few years a logical response to this dilemma has been successfully experimented with by a small number of operators and service providers across Europe with excellent results. This response is commonly known as Tariff Optimisation or Best Plan Advice, also known as Tariff Review Service. This is not to be confused by offering tariffs based on customer usage profiling, which looks at usage patterns and trends and points customers in the direction of a particular package that meets that profile. No, Tariff Optimisation is simply the re-billing of customer usage data, against varying suitable tariff packages, to accurately establish which one is simply the cheapest over an agreed period. The customer is presented with the results and invited to select their preferred option on offer. No guessing which one they choose! This is true tariff transparency and the customer is now in no doubt that they are on the best package for them and in a stroke, trust is reborn.
Now, given current technology on the market this service can be delivered from between 0.05 and 0.15 euros per subscription per annum. Hey presto! The perfect solution, or so one would think.
The problem is that Tariff Optimisation is slowly but surely raising the lid on a particular cold sore deep within the mobile telecom service industry. In essence, this is not about the mistrust of the service provider by the customer, but the mistrust of the customer by the service provider. This mistrust, is all centred around the fear of ARPU reduction. Average Revenue Per User is the financial benchmark on which all service providers measure their business. The single most important business objective for any industry executive, is to contribute toward increasing ARPU. Any initiative that threatens that objective, even in the short term, is a forbidden zone. But, as a growing number of providers are beginning to recognise, their fears are misplaced. All of us are guaranteed to consume more, when we know we are on the best deal. Current figures from early adopters, seem to bare this out. Likewise, we are all suckers for an up-sell when we are feeling good about our provider!
However, apart from the results on the ground, Tariff Optimisation could represent an important step for the industry as a whole. As service providers begin to shift, from an 'anything goes' approach to increasing user revenue, to a more transparent approach of proof of value and a real acknowledgement of responsibility toward the customer. Of course, unlike the title suggests, Proof and Placebo are not at odds with each other, but are together, the cause and effect of improved customer service, which is one sure way of really reducing those churn figures!
