Macquarie Telecom Group announced its results for the fiscal year ended 30 June 2018 last Wednesday. In contrast with the some of the recent poor results and negative sentiment in Australia's telco sector, MTG boasted a full year revenue increase of 6 per cent, cementing a fourth successive year of strong profit growth.
MTG CEO David Tudehope ascribes much of the company’s success to its customer focused approach. A day prior to MTG’s announcement of the results, Tudehope was awarded ACCOMMS Communications Ambassador 2018. During his acceptance speech, Tudehope called upon his peers to do more to improve the telco industry’s appalling customer service record.
Of course, a focus on customer experience (CX) is not the only reason for MTG’s impressive results. MTG Chairman Peter James said that consistent execution of strategy and investment in the megatrends of cloud and cybersecurity were also driving factors, for example.
However, the importance of CX was further illustrated in the MTG investor presentation, released on the same day.
“Our continued focus on providing a great customer experience is core to our service offering and differentiation,” MTG said.
According to MTG, its net promoter score (NPS) is +70 for Q4 FY18, an impressive leading score in Australia.
NPS, which measures customer loyalty on a scale of –100 to +100, is calculated using the familiar, single question: “how likely is it that you would recommend this company to a friend or colleague?” A score of greater than +50 is considered excellent.
Between Q4 FY14 and Q4 FY18, MTG said its NPS increased by 50.2 per cent. Over the same period, customer retention and cross-sell went up 7.3 and 3.3 per cent respectively.
MTG said that the larger telcos have Q4FY18 NPS scores of between –2 and +11, while smaller telcos score between +45 and +58. Leading ASX-listed companies generally score between +45 and +58, MTG said.
“Growth in our NPS is good for our investors,” MTG succinctly added.
Meanwhile, Telstra's results have been less sparkling. The nation’s largest telco reported a net profit decline of 8.9 per cent for FY18, identifying the National Broadband Network (NBN) rollout and increased competition in the mobile space as key factors.
As Fifth Quadrant has noted before, the Australian Telecommunications Industry Ombudsman (TIO) annual report for FY17 revealed that 158,016 complaints had been made during that financial year, a 41.1% increase on FY16.
The TIO report found that complaints about the NBN surged 159.3 per cent in FY17 to 27,195.
“The supply chain for the NBN is complex, and complaints about services delivered over the NBN can be multi-faceted,” Ombudsman Judi Jones said. “Problems can arise with retailers, with other intermediaries, and sometimes the problem can be with the residential consumer’s or small businesses’ equipment.”
Although this may be true, it is NBN itself and telcos that become the target for complaints, as the numerous other big players get lost in the fog.
Yes, the NBN is indeed complex and has been sullied by unending political debates and back- and-forths on technology choices. But even when telcos have an apparent slam dunk on their hands, they're still capable of stuffing it up.
In June, Optus Sport obtained exclusive rights to broadcast every World Cup match in Australia, but after five days of disastrous coverage, thousands of complaints, and a call from then-PM Malcolm Turnbull, Optus threw in the towel and let SBS take over.
After eventually giving all users a refund, Optus CEO Allen Lew said that the farce had undoubtedly had a detrimental effect on the Optus brand.
If social media is any indication, the damage was severe. Facebook and Twitter were flooded with irate users bemoaning the spotty coverage and Optus' failure to take action faster.
"We believe the brand is stronger than just one event over three days, we will recover and show Australia we can be a credible multimedia company,” Lew said in a press conference.
Hey football fans, if you really want to get Optus’ attention, make sure you include #SackAllenLew in your tweets. That will really get their CEO’s attention if it starts trending #socceroos #optusfail #pleaseRT— Oz Football Gossip⚽ (@OzFootbalGossip) June 18, 2018
Finally on my TV through the SBS/Optus World Cup app through my partner’s phone and eventually allowed me to cast. Thanks for the tips everyone. What an absolute mess around. #OptusFail— Ben Williams (@BenitoWill) June 17, 2018
We’ve discussed before how vilification is a serious issue facing brands these days. As noted by our own Steve Nutall, following the VW emissions scandal where the market value of the company fell around 40 per cent (AU$10 billion).
In addition, Fifth Quadrant’s auto arm ACA Research polled 1,000 Australians and found that almost a third of those who were considering buying a VW had become rejecters of the brand.
Then, as now, we propose “empathy mapping” as one of many useful tools for getting inside a customer’s head, isolating the problem and coming up with a remedy.
Optus has since upped the ante, and now plans to offer Aussie viewers the English Premier League, Champion’s League the Europa League, the 2020 Euros and the 2022 World Cup.
So far, so good. The EPL and Champion’s League coverage has begun without any major hitches, but the real test will come with the big tournaments in 2020 and 2022.
In addition to the troubles in NBN and media streaming, there is the issue of declining average revenue per user in the mobile space. It is thought that this will only get tougher for the sector with the arrival of the aggressive TPG to the mobile space and its potential merger with Vodafone.
"TPG's past behaviour as an aggressive player is important for us," Australian Competition and Consumer Commission chair Rod Sims said last Thursday. “Having a new entrant desperate to gain [market] share can offer better deals to consumers, so there's a process and balance to be weighed up here."
As the Australian telco sector becomes more competitive, the importance of CX will only heighten. Telcos will do well to follow the example set by MTG, and sharpen their focus on delivering great CX.
Fifth Quadrant conducts research that empowers companies to improve their CX. To learn more about how Fifth Quadrant can assist your organisation, contact us today.