Smartphone Post-Sales Service

A New Strategy to Win the Battle for Customers

By Terry Steger and Praveen Shankar

time. Smartphone customers, For a growing number of customers, smartphones have more than others, place become as important as their considerable weight on post-sales service when they wallets. Customers rely on these devices to manage their choose a provider. As a result, they are at a high risk of liveseverything from calls defection. and social media to keeping up with news and checking Although smartphones are in at airports. The fast a boom for mobile operators, proliferation of apps and the their technical sophistication possibilities inherent in the can push an organization internet of things make these toward a potential bustor devices even more important at least a dangerous drain to their users. Poor service, on profit. Smartphones are such as slow turnaround for more complex than feature repairs or unavailable loan phones. They are more prone phones, imprint a frustrating to operational problems experience on customers and those issues are more memories for an extended

resource intensive to correct. Post-sales device service needs to be managed as a strategic asset. If it isnt, carriers will find themselves in an untenable position: keeping pace with a soaring business cost while watching customer satisfaction levels plummet and churn rates mount.

A Clear Trajectory and Strategic Challenge

Smartphone Adoption is Exploding

According to Accenture research, more than 84 percent of device sales in mature markets will be smartphones by 2014. The global market is catching up quickly. At the same time, the percentage of mobile subscribers with smartphones is soaringmore than 50 percent of subscribers in 2011 (See Figure 1). Firsttime smartphone purchasers represent a sizable share of the market: More than 40 percent of feature phone owners are projected to switch to smartphones with their next purchase. Nearly 25 percent of smartphone owners are 55+ years old and for many it is their first experience with the device. First-time purchasers will need, want, and expect outstanding post- sales support.

Figure 1. Smartphone users have a higher propensity to contact their operator for service. (Source: Accenture research and client experience)
120% 100% 10.00% 8.00% 6.00% 4.00% 40% 20% 0% 2.00% 0.00%

Percentage of subscribers

80% 60%

mid-2008

mid-2009

mid-2010

mid-2011

Feature Phone % of Subs Smartp hone % of Subs

Quick Messaging Device % of Subs

Operators are on the Front Line of Service

If there is an issue with a smartphone, Accenture found that anywhere from 25 to 50 percent of customers will contact their operator first. Thus, the contact rate for smartphones has climbed 50 percent just in the past two years. Because of the devices complexity, smartphone issues outnumber those of feature phones by two to one (See Figure 1).

Figure 2. Customers are 5x more likely to complain about repair issues than they are about any other complaint driver. (Source: Accenture research and client experience)
Breakdown of complaints received by a major operator by topic:

4% 6%

4%

21% 8% 9% 10% 10%

Service Costs will Balloon

Device-related issues are the biggest complaintand the most costly to resolve. Customers are five times more likely to have this issue than any other type of complaint, including service and tariffs (See Figure 2). Large operators typically handle more than a million repair complaints each month. Adding to the mounting service challenge: a quarter of smartphone users have never updated the devices software which will boost the volume of no-fault-found complaints. Costs to operators will quickly climb with the need for more care agents, repairs and exchanges. In contrast to simpler devices, many smartphone repair issues cant be resolved through standardized or automated solutions such as take11%

17%

Retention Repairs Call Disputes Admin Poor Experience

Service Issues Tariffs Payment Queries Contact Setup Service Restrictions

overs. Device issues will often require the high-touch care of a technician. A customer may report, for example, that a battery is draining too quickly. However, the issue could be with the battery or some other aspect of the device. Diagnosing the root cause of power and many other issues (e.g. malfunctioning keys) via phone or remote is difficult and error prone. Currently, a skilled technician interacting with a customer in person

is still the highest quality solution. Without changes in support models, the increase in customer complaints will drive exponential growth in costs.

Contact rate 4

Customers Will Defect

Because smartphones are so central to their owners lives, customers will demand fast resolution of any device issuewithin 24 to 48 hours, including access to a loan phone. If the service experience falls short, the emotional agitation will drive down customer satisfaction levels and spur defection to competitors.

Despite its importance, the customer service experience is confusing and fragmented. Customers have an enormous choice of channels and escalation paths and the experience between these choices can be radically different and not always positive (See Figure 3). Rarely are customers given a clear sense of the options available and which channel will most efficiently address their service need. Several, such as online forums and manufacturer support, arent even controlled by the operator.

Figure 3. Smartphone users have an enormous range of choices for customer service. Device Manufacturer
OEM Tech Support
Co nta

Operator
OEM Website Website FAQs Web Support

Browse fo Resolut r ion

On Ar line ran D ge iag Re nos pa is ir /

Operator Store

ser s e U AQ ws s / F Bro nual Ma

ct

Wa

OEM Retail Store

rra

nty

Sup

Visit Bra nd e.g. App ed OEM Store le Geniu for Help s Bar

por

re elp Sto is & H Iniagnos D r e t en Call C

p/ Hel

air Rep

nt me ace l p / Re

Telephone Support

Device Issue

Home Insurance

Insurance 3rd Party Insurance

Re Ch port ec Fa k P ul oli t & cy

ugh Home cement thro Seek Repla covered) f (i surance Contents In red ove sC i t l Fau ty n ify Ver arra W n Operator i

Search Fo for Com rums / Social N mon Re e solution tworks Sp s e Te ci ch ali nic st al InHe Sto lp re

Internet Search

Other

Insurance Providers

3rd Party Support

st ciali elp Spe nical H Tech

3rd Party Store

3rd Party Retailer

Post-Sales Service as a Competitive Weapon

Todays telecommunications industry is highly competitive. Devices are ubiquitous and it is increasingly difficult to differentiate on the basis of tariffs. Pricing innovations in voice, text and data plans are often easily matched by competitors. One exception, all-youcan-eat plans, is growing in popularity but will encounter network and other technological boundaries that cant easily be crossed. A more powerful source of differentiationand one that is underutilizedis post-sales service as part of a customer-experience focused strategy. Companies as varied as Dell, Apple, Starbucks, Nokia P&G, and Lexus have achieved notable success in competitive markets through a holistic approach to the entire customer experience. For mobile operators, postsales device service is a crucial element of that experience. Instilling customer confidence in the operators ability to quickly and effectively resolve devicerelated problems turns an inevitable cost into a corner stone of customer retention prowess.

Making It Happen a Holistic View

Post-sales device support is more than an operational or logistics question. Its power lies in meeting specific customer expectations and needs. For example, customers will want to choose the channel that best suits them. When a device has a problem, some customers drive immediately to a nearby store. Others may contact a call center or seek support online. Because customers seek service in different channels, troubleshooting and support must be consistent and standardized. Costs can be optimized, however, if approached strategically. Customers may demand that technical support be provided in stores and service centers. But these costs can be contained by providing support in a sub-set of retail locations. All stores in close proximity of each other dont have to provide the same level of support since customers can be directed toward nearby stores that do.

Operators, however, often tackle postsales service issues on an ad-hoc basis. Seeing the big picture is essential to align diverse elements such as supply chain partners, IT infrastructure and management systems to deliver a competitive customer experience at an optimal cost. Accenture has defined these seven dimensions of that holistic view:

segmented service and reverse supply chain processes need to be in synch with the desired customer experience and the costs of its delivery. For the physical and tactical dimensions of service support, Accenture has developed an operating model to deliver cost-effective, high-quality service (See Figure 4). A common set of systems and knowledge, such as diagnostic tools and device history data, anchor the model. Shared services, the control tower, align efforts across channels. Effective execution of returns and repairs buttress the cost picture. As repair issues rise, powerful forecasting and planning capability in B stock allocation can significantly reduce possibly nearly eliminatethe need to use new inventory.

1. Configuration
The configuration of the network, asset structures and capabilities must reflect the best balance between costs, speed and the resilience needed for the postsales service strategy. For example, a single repair center serving multiple geographies and/or operating companies can support a low-cost strategy. However, the centralization comes at the expense of speed and can thwart delivery of the desired customer experience. Similarly,

Figure 4. An operating model to deliver cost-effective, high-quality service experience. Consumer Business User

First Level Support Common core systems and data diagnosis tools; user / device history data; RMA / swap order generation; warranty validation; knowledge base Walk in Center (Retail or Dedicated) Point of sale education / set up Post sale education Remote diagnostic Triage and diagnosis Software updates L0 L1 repair (limited) Swaps in store Value added services Web Support (Self Service, Community) Device usage guides Post sale support guides Walk in center locator and scheduling Chat w / technical care or convert to live call Remote diagnostic and take over options Software updates Call Center (Cust Care + Tech Care) Proactive support Level 0/1/2 care Escalation processes Device / OEM / OS specific technical care teams Remote diagnostic and takeover Software updates

Control Tower After Sales Strategy Customer offers Policies TEP / Insurance Trade off analysis Marketing Linkage

After Sales Supply Chain Reverse forecasting and planning OEM collaboration Training and certification 3PL management Analytics Metrics tracking Early warning detection Active knowledge base management Repair device quality

Returns / Repair Execution Triage and disposition Swap order management (exchange by mail) Refurbishment and repackaging In warranty repair (and refurbishment) Out of warranty repair (if offered) Insurance / Third party management

2. Organizational Effectiveness
For most mobile operators, decision making and accountability for postsales service are spread across the organization. As a result, efforts can be highly inefficient and diffused. Accentures operating model places the effort under a single executive (with our without a direct reporting relationship). Centralized accountability speeds decision making and assures the best investments are made to support the desired postsale service experience. Centralized accountability also helps make tradeoff decisions that might not be easily negotiated among organizational silos. For example, devoting an additional ten minutes at point of sale to help customers set up email accounts and access the internet can reduce post-sale call center contacts. But such an effort may fail if reduces the time devoted to sale. Training professionals across all channels assures consistent quality of the customer experience. Effective training also reduces costly errors such as no-fault-found issues. These can be identified early in the service process if technical professionals are skilled in diagnostic techniques and tools.

4. Information Technology
Information technology is the bedrock of the operating model and the control towers that drive it. IT systems provide end-to-end visibility on key processes and foster standardization. Portals, for example, can be used to diagnose device issues and track repair and delivery. Analytics can create a warning system to identify problems early on. IT systems also play a central role in effective reverse supply chain forecasting and efficient warranty validation.

7. Corporate Assurance
Corporate assurance efforts help manage supply chain risk and sustainability issues to reduce an organizations exposure to environmental, social and safety disruption. Reverse supply chain risks, for example, need to be identified with mitigation strategies in place. Risk management efforts should also integrate with the companys sustainability strategies to support regulatory compliance with recycling and disposal of electronic waste regulations.

5. Performance Management
Diverse functions must be aligned to achieve the targeted results. Placing post-sales service under the auspices of a single executive and having metrics at the heart will help achieve that alignment. Metrics and incentives should be harmonized across the organization to achieve post-sales objectives. Also the metrics and its targets should balance the objectives of cost reduction, customer satisfaction, retention and revenue increase so that the organization steers in the desired direction. For example, retail objectives should not only focus on sales, but also target improvements in postsales customer experience and reduce no-fault-found complaints through preliminary diagnostics.

3. Business Processes/ Management Practices

A structured set of activities, practices and policies can harmonize operations. For example, to ensure that technicians devote their time to high-touch hardware issues, all channels of service support should provide rigorous technical care leveraging automated tools. An automated diagnostic tool can stratify the issues and help in route the handsets to the appropriate support centers. The service operation can also become an entity with full P/L responsibility. As such, revenue can be generated from value-added or differentiated activities (e.g. premium repair) and using post-sales customer touch points for marketing efforts.

6. Collaboration
Collaboration across the value chain can improve the post-sales service experience with powerful results in contact center support, repair, reverse logistics, takeback and recycling. Customers, for example, are annoyed when having to make multiple contacts to resolve an issue and explain the problem each time. If an operator needs to refer a customer to an OEM, that link should be established so that the customer and the details of their issue are quickly transferred. Additionally, integrating OEM design and manufacturing with the reverse supply chain of the operators will help identify and fix the root causes of issues more efficiently.

Change Behavior to Propel the Effort

Changing behavior by embedding the customer experience strategy in the organizations culture is crucial to achieving long lasting success. Without this behavioral change, the effort is at risk. It will suffer delays and produce underwhelming results. The crux of success: change behavior from functional actions to crossfunctional mindsets in parallel with changes in structure, processes and systems. A cross-functional management approach with appropriate organization design, governance structure, capability management and reporting architecture becomes the heartbeat of the organization and focuses it on delivering the desired customer experience. To achieve behavioral change, each role in the new structure needs to be assessed in light of required capabilities and individuals should be rotated into new roles based on their abilities. Custom training and targeted recruitment should be leveraged to fill the skills gaps. Roles, responsibilities and expectations must be clearly defined and communicated across the organization. As discussed above, placing the post-sales service under a single executive and aligning the effort through performance metrics and incentives can create a fine-tuned crossfunctional effort that delivers results. Tying post-sales service strategy to corporate strategy and lining up backend support to deliver a competitive customer experience is a large undertaking. But soaring service costs can be more than an inevitable drain on profits. Post- sales service is a new weapon in the battle for customers. Approached strategically, these costs can be harnessed to drive customer satisfaction up and churn rates down.

10

About the Authors

Terry Steger is a Senior Executive in Accenture Communications, Media, and Technology consulting practice. He has 18 years supply chain experience in supply chain strategy and transformation for communications carriers and consumer electronics manufacturers. Most recently Terry has led a multi-year supply chain transformation for a major North American telecommunications carrier. Based in Dallas, he can be reached at terry.w.steger@accenture.com. Praveen Shankar is a Senior Manager in Accenture Supply Chain Management consulting practice. He has 12 years supply chain experience in global supply chain transformation, strategy and planning. He has worked across the Communications, High Tech, Life Sciences and Manufacturing Industries. More recently he has led a supply chain transformation program for a large telecom operator with operating companies across the globe. Based in London, he can be reached at praveen.shankar@accenture.com.

About Accenture Management Consulting, Operations

Accenture is a leading provider of management consulting services worldwide. Drawing on the extensive experience of its 16,000 management consultants globally, Accenture Management Consulting works with companies and governments to achieve high performance by combining broad and deep industry knowledge with functional capabilities to provide services in Strategy, Analytics, Customer Relationship Management, Finance and Enterprise Performance, Operations, Risk Management, Sustainability, and Talent and Organization. Accenture Operations consulting services help clients develop more dynamic, innovative and high performing Supply Chain and service operations capabilities to enable rapid response to changing customer demands and market opportunities.

About Accenture
Accenture is a global management consulting, technology services and outsourcing company, with more than 246,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the worlds most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$25.5 billion for the fiscal year ended Aug. 31, 2011. Its home page is www.accenture.com.

Copyright 2012 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.

12-1436 / 11-5228