If you’re looking for a true insight into the mobile user experience of the average customer, I heartily recommend you spend a day at the shops. Find a friend who is looking to get a new phone or contract and shadow them as they go through the experience. Don’t say anything, don’t be tempted to jump in and correct the sales staff or offer advice – just sit back and watch what happens on the front line of the mobile industry.
I guarantee you will have an eye-opening experience.
Like many of you reading this newlsetter, I rarely have cause to experience the standard sales channels used by the mobile business – most of my handsets are given to me by manufacturers or purchased SIM free from web retailers. To help me stay connected to reality, I try to go through the real retail process once every couple of months, sometimes on my own, but more often in the company of friends or family who are genuinely trying to get a phone.
My most recent research trip was with my girlfriend. We visited the retail outlets of Vodafone, O2, Three and Carphone Warehouse in the same town in suburban North London. She also spoke with Vodafone’s customer service team on the phone and visited the web-sites of Three and Vodafone.
Let me share with you a few of the insights from this retail adventure:
We’ll start with a conversation from the Vodafone UK retail store. For reference purposes, my girlfriend has been a Vodafone customer for the last 18 months or so, paying about GBP 40 a month for her contract and using a Sony Ericsson W900i handset.
“My contract has expired and I’m looking around for a new deal and a new phone. I’ve been thinking about switching operator. Three can give me the N95 8 Gb for £30 per month…”
Salesperson: “Okay, if you give me your mobile number our computer systems will calculate exactly what you’ve spent with us in the last twelve months. If you’ve spent GBP 300, we’ll be able to offer you a GBP 300 discount on the retail price of any handset in the store. If you’ve spent GBP 200, we’ll give you a GBP 200 discount.”
“Okay, my number is X.”
Salesperson: “Great, so I can see from the computer that most handsets will be available to you free of charge, but the N95 8 Gb will cost you GBP 150 to upgrade.”
“But your advertising in the window says I can get the N95 8 Gb free on a GBP 35 per month tariff. That’s how much I pay for my Vodafone contract at the moment, why can’t I get it for free?”
Salesperson: “That’s right, but you’d have to take out a new number with us to get that deal.”
“Okay, could I then port my old number onto the new contract?”
Salesperson: “No, you wouldn’t be able keep your old number.”
“So, if I keep my old number it’ll cost me GBP 150, but if you set-up a new number for me, I get it for free.”
“Why would I do that? If I have to get a new number, why wouldn’t I just go down the road to the Three store where I can get it for free on a GBP 30 a month contract?”
Salesperson: “The other thing you should do is call 191 and speak to the Vodafone customer service people. If you tell them you’re leaving to go to Three and ask for your PAC code [required for number porting in the UK], they’ll put you through to the elite sales team and they can usually offer you a better deal than we [the retail stores] can.”
– The operator will offer a better deal to a customer who cancels their existing account and opens a new one, even though doing so will cost the operator the additional expense of administrative time, credit checking, line activation and the cancellation process of the existing account. The company has structured itself so that customer are encouraged to behave in a way that costs it more money and generates less revenue.
– The company’s retail channel is not empowered to provide the same deals as the rest of the business. This means the salesperson may be unable to offer the incentives necessary to keep a customer with the company, even though that may mean losing the customer to another operator and even though they know someone in the company is able to offer a better deal to keep their business. If the customer is dissatisfied with what’s offered in the retail shop, they will either churn to a new operator or have to dial the operator’s call centre, thereby creating additional administrative cost.
Let’s move onto O2, where my girlfriend wanted to try the iPhone. She has been an iPod user since the first generation hard disk-based players, uses iTunes as her primary music and video player and frequently buys from the iTunes store. She recently bought a new iPod Nano.
Unfortunately the O2 store didn’t have any iPhone’s on display. In fact, there was no iPhone advertising anywhere to be seen. When she asked if they had any, the salesperson told her that ‘some thieving bast***ds’ had stolen them. Apparently they wouldn’t have any in for another week and even then they didn’t know whether they could risk putting them back on display.
The O2 salesperson then told us he was ‘gutted’, because now he didn’t have anything to do. “Yeah, usually I spend all day playing with the iPhones, but now I’m just really bored.”
This was one of those occasions where you really had to be there yourself to get the full benefit of the experience. It is difficult to find words to describe how unprofessional, rude and poor the customer experience really was. They had no product to sell, no interest in selling it and they swore at their customers. If O2 had ever been a viable candidate, it was now swiftly relegated to ‘joke’ status.
As a quick aside, it is worth considering whether these problems are limited to the UK? My girlfriend is American and we often contrast the difference between customer service in the UK and the US. In both our experiences of travelling and living in the different countries, we generally find the US to be considerably better at looking after customers.
However, the mobile industry seems to buck this trend. I encourage you to read this article and view the video clip about Verizon Wireless. A customer performed an informal poll, calling Verizon 56 times and asking the same two questions on each occasion, primarily related to pricing.
Verizon gave incorrect information 93 percent of the time. Only 1 out of the 56 sales staff was able to answer both questions correctly. More than half of the salespeople failed to answer either question correctly.
There was only one right answer for each question, but the customer received a total of 22 different responses.
He has entitled his article and video clip: ‘How Bad Can a Cell Phone Company Get?’. I thoroughly recommend you take a look.
Now, back to the situation in the UK. The Three store was interesting. Personally I found it the most engaging sales environment. It was less cluttered and there were actual live devices to play with, albeit hidden behind security barriers which prevented a lot of the features from being accessed.
My girlfriend was considering a few different options: either she continued paying about the same amount each month and went for a ‘shiny’ (her words) handset like the 8 Gb N95 or she went for something very basic, like the Skype handset, and cut her monthly subscription by about half. A third option, somewhere in between the two, involved cutting her bill by a smaller amount and opting for a mid-range phone like the Sony Ericsson K850i.
One of her biggest frustrations in every shop we visited was the inability to hold the products in her hand and actually play with them for a few minutes. This was particularly acute with the K850i. She was attracted by the 5 megapixel camera and believes Sony Ericsson handsets to have the best picture quality (she’s had two in the past – the K700 and the W900 – both of which she’s been quite pleased with). However, the Three security case was positioned in such a way that it was impossible to try the partial touchscreen which runs along the bottom of the display.
This restriction meant it was impossible to unlock the handset – all that could be seen on the screen was the wallpaper display.
After politely refusing to let her hold a K850i for herself, the salesperson gave my girlfriend some interesting advice. “I was in the computer business for many years and, frankly, I wouldn’t go near touchscreen technology. I definitely wouldn’t try a partial touchscreen – no way!”
He then pointed her to the benefits of the N95 8 Gb, explaining some of the things it could do. Although my girlfriend said later that she didn’t much like him, I actually thought his sales technique was quite good: he asked her what she wanted to do with it, what kind of job she was in and generally tried to understand what her mobile needs actually were.
However, there were some interesting moments. When she asked about the original N95, which was positioned next to the 8 Gb version and available ‘free’ on a less expensive monthly tariff, he told her: “You know, I really wouldn’t sell that handset to you. Even before the 8 Gb version came out, I couldn’t bring myself to sell it to people. You’d be lucky if it lasted 6 hours before the battery expired.”
This is quite a revelation from a company that doesn’t see the value in issuing a ROM update to existing N95 users (see my previous article ‘Without the mobile user experience‘ for more on this).
The pricing for the 8 Gb version of the N95 was as follows: a GBP 15 subscription got you 300 flexible any time, any network minutes or texts per month (e.g. 200 minutes and 100 texts or 175 texts and 125 minutes). An additional £15 a month subscription paid for the handset and 150 video calling minutes.
When my girlfriend asked whether she could get the handset without the video minutes, which she didn’t think she’d use, the salesperson told her that wasn’t possible. He explained it was the company’s way of making it look like the handset subscription price was actually giving her something for free. When she insisted she really wasn’t going to use them, he said: “Well, you never know, this is a handset you can grow into – who knows what you might want to do with it in a year’s time…”
While I was doing my best to stay out of the conversation and still listen to what was being said, I also noticed this gem on Three’s 8Gb N95 specification sheet:
Unfortunately my photograph came out a little blurred, but if you look closely you’ll just about be able to make out the compass symbol, alluding the device’s built-in GPS, identified by Three with the caption ‘GPRS’. Exactly what you need when you’re trying to fix your position on a hike: just switch on your trusty General Packet Radio Service!
I also witnessed another, very angry customer who came in to protest that he’d bought a Skype phone specifically because he didn’t have a PC with internet access and was now unable to set-up his account because it required him to have an email address. “I don’t do email,” he said to the bewildered Three representative, a girl in her 20s who was having difficulty believing there was anyone left in the UK who didn’t have email. “I told you when I bought it: I don’t do the internet, I don’t have a PC and I don’t want one. I just want Skype, but unless I have an email address it won’t let me it set-up.”
– Sales staff still sell on the basis of their personal preferences and prejudices rather than what’s right for the customer.
– The salespeople are often very savvy as to where the genuine value is in their offers and are quite happy to tell people when they think their company is trying to pull a scam. It’s unprofessional, but for some reason the sale team seems to think it helps them establish trust with the customer as an individual.
– An 18 month, GBP 30 mobile subscription will cost a minimum of GBP 540 over the lifetime of the contract. Do you know of any other industry which expects a customer to part with this kind of money without having the option to hold the product in their hands?
– Three has stopped referring to handsets as being ‘free’ and instead advertises them as ‘GBP 5/10/15 etc. per month’, as an additional fee on top of the basic tariff.
– Three, despite several years in business, is still struggling to get to grips with the difference between the Global Positioning System and General Packet Radio Service. This crazy world of three and four letter acronyms is tough enough for customers as it is, the last thing the industry needs is to start using them incorrectly on their own literature.
Finally, a short visit to Carphone Warehouse, which I suggested she might like to try because they are supposed to offer independent advice. This was probably the fastest exit of all the shops we went to. There were no real handsets on display and, when she enquired about the N95 8 Gb, she was told they could only do it on O2 and the minimum tariff was GBP 50 per month. “Oh, and I couldn’t sell you one anyway, as we’ve never been sent any of those,” added the shop assistant.
Later that evening, after checking out some reviews online and watching a video demonstration on YouTube, my girlfriend signed up with Three through their web-site and chose a Sony Ericsson K850i. Her main motivations were the quality of the camera, the reduction in her monthly tariff and the GBP 30 discount she would get if she used a ‘refer a friend’ voucher I’d given her.
She will be cancelling her account with Vodafone and her subscription will drop from GBP 35 per month to GBP 15 per month. She will also pay an additional GBP 5 per month to have the K850i and another GBP 5 per month for unlimited internet access.
For a total of GBP 25 per month, she now gets unlimited Skype calls, unlimited instant messaging, unlimited internet, 300 any network, any time minutes or texts and another 300 minutes for calling other Three customers. This compares with the 275 minutes, 100 texts, no internet access, no Skype and no instant messaging she was getting from Vodafone for GBP 35 per month.
Her conclusion, in her own words: “I got the discount and didn’t have to talk to another sales assistant. For that, I’m grateful.”
As a result, the mobile industry has had to more than double the services it provides to her, but has lost at least 30% of her existing monthly revenue, subsidised the cost of a new handset and incurred an unknown amount of administrative charges through dealing with her enquiries in an inefficient manner.
In the US example, we have a customer who has been so incensed by an operator’s inability to give him the correct pricing that he’s compiled an article and created a video to vent his frustration.
This isn’t a problem limited to operators either. There is a growing trend among disgruntled customers to publish their problems in video clips. Check out this one about Nokia.
So how do we connect the reality of these poor customer experiences with the reality of what’s hapenning mobile business?
– The current structure of operators selling subsidised handsets through high street retail stores is reducing revenues, raising costs and creating an administrative burden. At our 2007 MEX conference Nokia’s Global Head of Retail Marketing, Cliff Crosbie, summed it succinctly when he asked the industry executives in the audience: “After spending billions of dollars on R&D each year, why does the mobile industry entrust a ‘Saturday boy’ with a hangover to be its interface with the consumer?”
– Customers will continue to make purchasing decisions based on price when they have no other information to go on. How can you differentiate on services or device experience when there is no way to try these things, even in a retail store equipped to provide those demonstrations?
– The complexity of tariffs, special offers and contractual conditions is creating an environment in which customers can only connect with the true value the operator is prepared to offer by ‘cheating’ the system or doing their own research. This business is crying out for transparency.
– The operator’s share of the overall value equation is rapidly diminishing and is being sustained primarily by sharp practice and leverage of a dominant market position. Which company is going to be brave enough to refocus on creating genuine customer value through honest pricing, clear communication and great service?
The founding principle of our MEX conference is to help companies see the world through the customer’s eyes. From retail environment to graphical user interface, MEX explores all of the elements which comprise the mobile user experience. Join the industry’s leading minds for two days of debate and knowledge sharing in London on 27th and 28th May 2008.