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BT’s Customer Call

 Is BT’s CEO missing the point of its customer focus?

 

BT CEO Gavin Patterson sets out his vision for the future: more of the same, but with a shift towards the customer. However, its new customer-centric policy may be a smokescreen for a more aggressive sales strategy, warns Chris Middleton.

LEADERSHIPGavin Patterson may be the new broom at the top of BT, but don’t expect the telco’s latest CEO to sweep away many of his predecessors’ core strategies.

Patterson believes that the path that BT has been following for the past four years has been the right one. “It has served us very well,” he says. “It’s built on three tenets: customer service delivery, cost transformation and investing in the future. They are fundamental to our business.”

Gavin Patterson

BT CEO Gavin Patterson.

That said, he admits that there is room for improvement, and so Patterson will be fine-tuning BT’s approach in the months ahead. “We felt we wanted to refine the strategy,” he says, “and to put a little bit more emphasis into certain aspects, particularly sustainable, profitable revenue growth.”

For Patterson, all of that starts with the BT mission statement, which he defines as “to use the power of communications to make a better world”. He says: “That purpose is a very, very powerful one for us, because it allows us to meet the needs of all our stakeholders, shareholders and customers, our role in society, and the communities we operate in. We are not interested in chasing one-offs, we want recurring revenues, business and services.”

A post-monopoly world

In a telecoms sector that is more complex and cut-throat than it was in the decades when BT was truly the UK’s national telco, it stands to reason that the companies that succeed will be the ones that take their customers – as well as their investors – with them on their strategic journeys.

Consumers and businesses no longer need to choose BT as their telecoms provider, and so the strategic imperative for BT, and for other companies in a similar position, must be to invest in quality of service and improved customer engagement.

“BT’s bigger challenge was to secure its future as the pre-eminent broadband provider in the UK,” says Emeka Obiodu, Principal Analyst Industry, Communications and Broadband at Ovum. ”This should be a stark lesson for utility-style industries that sell products and services that hardly change; strategic innovation is often much more important than product innovation.”

But can BT really be engaged in strategic innovation, when its new CEO has simply promised ‘more of the same’? The good news is that Patterson says his core leadership strategy will indeed be to deepen the firm’s relationship with its users. “Not only is the customer critical to our strategy going forward, but we want to prioritise our existing customers. That’s where we see the biggest opportunity.”

But does Patterson understand what customers want from his company? He cites the example of BT Global Services, where selling more of the company’s portfolio to existing customers has been the priority. “That same insight exists in every single line of business, [including] our consumer business, where we are trying to add broadband, fibre, TV and increasing mobility to our customer base. So it’s the same basic tenet: focusing on increasing our share of wallet with our existing customers.”

Implicit in Patterson’s statement is a suggestion that BT sees its customer relationship strategy becoming even more aggressively sales driven, rather than being about improving the quality of its service and customer complaint handling, for example.

That said, there have been some strategic changes in that regard, such as the increased repatriation of call centre operations from India. Under previous leaders, BT’s offshoring policy was strongly positioned as a cost benefit to shareholders, as opposed to a service benefit to its users. That mindset has shifted with UK customers’ strongly expressed preference for UK-only help desks – an issue that many large enterprises are now facing, especially utilities and banks.

“Customer needs are changing,” admits Patterson. “They are becoming more demanding, and we must step up and step change our performance to respond to that. We have made progress, but we haven’t made the progress we want. There are parts of BT that are extremely good at service, but it’s fair to say we need to do more and we will be investing to make a difference there.”

Benchmarks of success

The key metric will be the firm’s ‘Right First Time’ benchmark, which measures the number of times it is necessary for customers to interact with BT on any given issue. Two years ago, that number was heading in the wrong direction, but in the company’s latest results, published May 2014, Patterson cites a small year-on-year improvement: 1.5 per cent.

BT Sport

The extent of BT Sport’s success was not anticipated, claims Patterson.

Patterson insists that there are mitigating factors to explain why the improvement has not been greater: “Some have been self-induced, such as the lack of readiness for the popularity of BT Sport, which put pressure on our ability to meet demand. But others are beyond BT’s control, such as last year’s bad weather conditions, which made it difficult to deliver on next-day-repair service level agreements.”

Investment is now a priority, he says. “We have been adding extra engineers and extra people into our contact centres, particularly in the UK. We have been providing better diagnostic capabilities into our hub, so we are able to identify what the fault is and I can send the right engineer who will solve that over the phone.”

All of this is now paying off, he claims: “Complaints are trending down across Consumer and Business, and advocacy is up six percentage points year on year.”

Moving forward, Patterson says that there are a number of other priorities for BT, such as being more proactive in its repair programme – for example, by identifying those cabinets that have the highest fault rates and investing in preemptive repairs, as well as by providing engineers with better diagnostic capabilities.

Cost transformation

Alongside Patterson’s strategic emphasis on improving the customer experience, there is a need for cost transformation across the organisation, he says. The company has managed to drive £5 billion out of its cost base over the past five years, but the search for more efficiencies goes on, he explains.

“The way we look at cost transformation is that it goes hand in hand with service,” he says. “We are looking at simplifying our business and moving failure out of the organisation, which ultimately drives service. It also provides oxygen to invest in the business. There are five key investments: fibre, building coverage and take-up, TV, content around triple-play and sports, and mobility, which is a great greenfield opportunity for us across all lines of business.” TS

The Strategist says

That BT’s CEO should take the time to set out his strategic thinking is a welcome development in the company’s recent history, even if it is to say that ‘more of the same’ will be the order of the day. However, the shift in emphasis towards keeping the customer happy is welcome, but will only work if BT tempers its aggressive sales and cross-selling policy with competitive offers, improved broadband installation times, and better complaint handling, alongside its belated move into content provision.

 

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