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October 2007 | Volume 10 / Number 10
Case Study

O2: Willing to Learn

By Erik K. Linask

There are few areas within the overall communications market that are more competitive than the wireless space, and the UK market is the most competitive of all, boasting more handsets per capita than any other market, along with at least seven operators and a number of MVNOs serving a growing consumer population.

The increasingly intense competition, on one hand, bodes well for the subscriber, since it has meant the price of minutes has steadily declined, nearly to the point of commoditization. Operators, thus, are forced to find creative means of enticing new entrants to the wireless market or winning over customers dissatisfied with their service from other carriers.

The irony, of course, is that wireless operators are unified in their position that their greatest problem is churn — yet, they are equally unified in their efforts to attract new subscribers, rather than service existing ones. So, the game is such that each operator gives away as much as it possibly can to attract new customers, while existing subscribers are effectively hung out to dry.

UK mobile operator O2 realized the futility in this approach, and decided it had to learn new ways to solve this dilemma, and so, set out to address the perception that new subscribers are treated better than existing ones.




So, in taking the road less traveled, O2 made the gamble that, with all the customer data it has available, it would be able to cut its competitors off from its defectors. Not only did O2 offer better plans to its existing customers, plans that were on par with what new customers received, but it also added various freebies, offered to subscribers based on their services and usage. In truth, many of these freebies, or treats, were already available to subscribers, but they were not visible to the customer, rendering them ineffective.

Did The Gamble Pay Off?

Well, around the turn of the century, the price difference for minutes was negligible between the four major mobile operators in the UK, but O2 was well at the bottom in churn, which meant it was losing more business than its competition. Over the next 18 months, however, O2 moved swiftly to second place, and that growth has continued since. So the short answer is yes, O2 played a winning hand.

According to O2’s Mark Pollard, a renewed emphasis on personalization and the individual subscriber was a key driver of O2’s success from 2002 onward. In particular, O2 sought to provide enhanced online self-service capabilities to both its consumer and business customers. It made a number of changes to the way it would handle its subscribers, including its Next Best program, which was designed to analyze customer data to determine if there might be a better plan — either lower or higher — or other add-ons that would be useful or beneficial. The idea was that the data had always been available, but had traditionally been used at either end of the contract cycle, not during the course of the term.

This plan was put into effect not only with live agents, but online also, for, as Pollard explained, O2 felt that, if offered the opportunity to do so in a simple and effective manner, customers would be much happier helping themselves through an online portal, rather than having to deal with an agent.

In addition to simply projecting what the best calling plan would be for each subscriber, the idea was to also identify — again based on usage data and preferences — a short list of additional services that would be of interest to the subscriber. Rather than offering a complete list of services, where subscribers would have to identify for themselves what they like, the theory was that a user-specific list would make customers more likely to add services they would actually use. Customers like being offered things they need.

At the end of the day, however, O2 says that, whether they actually add services or not, customers are happier simply knowing O2 has paid attention. And happy customers don’t switch carriers. Notably, even when they modify their plans, O2 does not hold their customers hostage by requiring a new service term contract — unlike other mobile operators.

More Than Calling Plans

In addition to offering better service to its subscribers, O2 was also looking to extend its brand and to engage its customers outside the mobile space. The O2, a multipurpose venue in London, has helped accomplish that. The venue hosts a variety of events, from concerts to sporting events to exhibits and other entertainment. Importantly, the connection with O2’s mobile business is not simply brand awareness, but it provides O2 the opportunity to extend exclusive information and access to its subscribers — again based upon collected data and user preferences.

On an opt-in basis, O2 collects various data from its subscribers, and is able to offer users increased personalization by matching customers with targeted events and information.

As Pollard explained, the entire customer initiative is “about turning customers into fans.” He acknowledged that, while it would be easy to deny, the fact is that everyone makes mistakes, but, “fans stay with you even after a bad experience.”

Pollard added, “Managing the customer experience has its difficulties, but we’re clear where we want to be, and the CRM piece is critical to that.”

Behind the Curtain

Certainly, the theory is sound, but in order to make it work, O2 needed to have the technology to back it up. For O2, the key partner in that respect has been Aperio CI. Too often, businesses have data sets and programs that should work in concert with one another, but because they rely on different sources, or run on different platforms, there is inconsistency, effectively creating an information void, making it virtually impossible to achieve an enhanced customer experience.

“With Aperio CI’s products, we are able to compare an entire product set across the various sets of underlying data, ensuring consistency across not only data output, but also information, planning, and service offers,” said Pollard.

With Aperio CI’s solutions, O2 is able to achieve consistency across all of its data — and, therefore, consistency across all of its customer focused activities — which leads to consistency of experience for the customer.

Furthermore, the introduction of new technology often comes with a steep learning curve, and agents often have a hard time grasping the new tools available. But, because Aperio CI has been able to consolidate as many as 17 screens of data into a single one, the agent training process has actually been one of simplification, says Andy Day, CRM director at O2.

Of course, no technology is perfect — even the android Data, of Star Trek fame, had its flaws — and the complex algorithms that project the ‘next-best’ scenarios can sometimes make a recommendation that simply makes little sense. Knowing this, and understanding that being able to identify those instances would be a crucial part of a positive customer experience, O2 has authorized its agents to make independent decisions and recommendations. The agent-to-customer conversation is 100% scripted, as it is with other organizations.

Aperio CI

The philosophy, the agents, and the applications are all integral pieces to a successful campaign, but, without reliable underlying data driven programs and customer service functions, the rest is somewhat useless. For its part, Aperio CI receives data from more than 100 sources and processes 21.5 data files per minute, seven days a week, assuring the integrity of the consolidated information. It then turns that data around to O2 for use in its various applications and services.

The driving philosophy of Aperio CI CEO Duffy Mich is that, you can never do enough to ensure data integrity, which is why Aperio CI puts more effort into verifying the accuracy of the data than any other part of its operation. It’s also why Mich confidently stands behind the data he delivers. The key, he says, is to keep the process as automated as possible — and for O2, the whole cycle from data sourcing to campaign fulfillment to customer responses to order fulfillment is automated.

Day confirmed, “That’s one of the reasons you want to work with someone like Aperio — you gain an understanding of what good data looks like.”

Back in 2005, it took some six months for Aperio CI to deliver a database that would consolidate previously disparate systems and databases and campaigns supporting different parts of O2. But, with the new platform now in place, O2 is able to run 80–100 different campaigns each month with increased effectiveness. The Aperio solution also allows O2 to perform much more campaign analysis than previously because of the amount of data that is available and, more importantly, useable.

Bill Manager

In addition to changing the way it approaches service offerings for customers, O2 has also significantly upgraded its online billing portal, which allows users to gain new insight into their service usage online.

Aperio’s Bill Manager is predicated on the same underlying principles as O2’s customer service portal — that the underlying data must be consistent. As such, it has been designed with an easy-to-understand dashboard that displays the same data to everyone. In fact, the portal has been designed such that, if a customer is on the phone with an agent, the agent can log onto the user account alongside the customer, so they are, quite literally, looking at the same information — in effect, Bill Manager has been developed as a collaboration tool.

The Web-based tool allows customers — and this is particularly useful for business customers — to view their monthly usage in various configurations, from a business-wide view, down to the individual user. This not only allows better assessments of mobile usage across business lines, but also allows individual users to identify personal calls in cases where they may need to pay for them.

Standard reports are generated each month, prompting an auto-generated e-mail that is sent to the customer for notification, which coincides with invoice delivery. Customers can, naturally, create custom reports as well, and all reports are available in Excel format — because Excel is a ubiquitous format, and allows for data manipulation and sorting to meet various needs.

One of the unique features of Bill Manager — it also relates back to consolidating data into a single database — is the ability to combine pre- and post-paid plans. O2 says this capability on its own has generated considerable new business. Ultimately, this is a tool that can combine wireless, fixed-line, and mobile data all in a single interface, again simplifying the customer experience.

The Lesson

When O2 set out to win back market share it had lost, it had a plan, which turned out be founded on sound theory — superior existing customer service. By creating happy customers, O2 reduces its churn rate, and a natural by-product is word-of-mouth advertising.

O2’s head of CRM Mark Imrie explained, “We knew that in order to be successful against the competition, we had to get the customer service thing right.”

With a solid plan and a committed technology partner in Aperio CI, it appears to have done just that. By focusing on the individual customer, and offering them treats, like free messages or free calls to certain locations, and by providing useful self-service portals, and by making accurate, useful billing available online, O2 has taken the data it has always had available, and built the UK’s best mobile franchise.

And as for the future, the idea is to continue to keep its customers happy. Not that O2 has followed in anyone else’s footsteps in overtaking the UK market, but Day insists that outsourcing is not a consideration as far as customer service is concerned: “We’ll never outsource our call center operation. Customer facing staff should always know what they’re talking about.”

What has truly differentiated O2 from the competition, and resulted in new technology being adopted, new approaches being taken, and, ultimately, new business being won was O2’s willingness to learn and adapt. O2 saw that its approach was not working, but instead of sacrificing its customers, it took a hard look at what was missing, and found it.

– Erik K. Linask is Associate Editor of Internet Telephony magazine.

» Internet Telephony Magazine Table of Contents



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