Why do telcos all have such bad customer service?

OK so let’s agree that customer service from the telocs is awful. But why?

It doesn’t have to be this way. I accept they are juggling a complex network of technology; I accept that the people selling to you don’t own the infrastructure they are selling; I can grasp the trade-offs involved. But many organisations deal with similar trade-offs without consistently awful service.

I have complained in the past about Telstra’s customer service, but for the last few days I’ve been stuck in a dystopian nightmare with Optus. A fairly simple task involving my mother-in-law moving house has been dragged into farce by Optus’ completely incompetent customer service.

Anyway, my main aim here is to give some thought to why the telcos are providing such consistently awful customer service. And it’s not just me who thinks so – surveys, again and again, show that customer satisfaction with telco customer service is abysmal.

The first port of call is the simplest. This is a complex beast and it’s hard to get right. That thought is backed by the fact that the awful customer service is a world-wide phenomenon. No company seems to have cracked it. But then again, as we approach the 50th anniversary of the Moon landing it beggars belief that it’s beyond our combined wit if there was a will, and some other organisations based on complex systems seem to manage better. And let’s face it complex systems do not explain sitting on hold for 50 minutes to get to talk to someone.

Then there’s the underlying approach which involves the customer dealing with an entirely faceless organisation. The people you talk to have no identity and there’s no real feedback loop beyond those silly surveys at the end of a call. The person you talk to has no real ownership and there’s little chance of you talking to the same person twice. The fragmented nature of the teams and the systems means that you, the customer or problem, keeps getting bumped around without any impetus for resolution.

The annoying thing about this is that it is certainly true and it is demonstrably solvable. Demonstrably because if you complain to the Telecoms Ombudsman you will get escalated to a team that has oversight and continuity and actually gets things fixed. So it can be done – and the question becomes why isn’t it the starting point rather than last place you get to?

My revolutionary child insists this is an inevitable consequence of capitalism in action. The financial incentive is for the telcos to cut their own cost to customers’ detriment because there isn’t enough competition. This argument seems to be backed by the fact that it is the smaller companies that get the better satisfaction levels (Vodafone tend to come out on top, but it’s not an Everest-like high). That would argue the smaller companies are trying to differentiate themselves partly on service – while Telstra and Optus don’t see a competitive benefit in better customer service, perhaps because they have jointly set the bar so low that it’s hard to see daylight between bar and ground.

Counter-intuitively it’s also arguable, in the capitalism is the problem vein, that the problem stems from too much competition – at least in the context of delivering dividends to shareholders. Companies feeling competitive pressure on profits leads to down-sizing and out-sourcing to cheaper teams. In turn that means poorer service.

Another scenario might be that people buy their service based on two criteria – neither of which are customer service: price and service quality. Most purchases of telephone or internet services start with looking at the coverage available, and the reliability and speed of the service. They then quickly move on to looking at price. Customer service comes a distant third – who is going to buy on the basis of quality customer service at the expense of underlying coverage or speed? The answer is nobody; so telcos will put their effort into speed and coverage first and foremost. The logical extension of that scenario is that it’s simply not worth spending a lot of money on good customer service while you have the capacity to compete on coverage, speed, and cost.

The sad reality of all this is that nothing is going to change until something fundamental changes in the system. As long as Telstra, closely followed by Optus, have the best coverage and speed they will sell on that basis. They will be a some, or a lot, more expensive than the smaller competitors and will not bother to improve customer service because there’s simply no point from their limited perspective. It would take two or three or more services with the same speeds and coverage to force them to start differentiating on customer service and that doesn’t look likely to happen anytime remarkably soon.

Ultimately no matter how you analyse the issue the core of the problem is that there’s no incentive for the telco’s to provide good customer service. In fact the drive for profits in the current competitive landscape means that there’s every incentive reduce expenditure and to shift costs (all those calls and time on hold does cost) to the customer.

A simple approach that actually would have teeth might involve punitive compensation to customers. If profits are all the telcos care about, hit them there to encourage a change in approach. Increasing and real compensation for each day that a problem is not fixed, for each call made, for each ten minutes stuck on hold. But that’s not something that the telcos are going to introduce themselves, that would have to be legislated by, yes, one of the few groups to get satisfaction ratings on par with telcos – politicians.

So if you’ll excuse me now I’m about to make my daily call to Optus. Bring on the revolution, comrades.