Graham Webster podcast transcript

Interview with Graham Webster of Telefónica

Speaker key:
MC: Marty Carroll
CMC: Clare Mitchell Crow
GW: Graham Webster

MC: Hello, and thank you for downloading our latest on Customer Experience podcast. Today we are delighted to have the opportunity to talk with Graham Webster, Director of Customer Experience for Telefónica. Telefónica, who I’m sure you know, own the O2 brand here in the UK, and is a truly global organisation, is the third largest telecoms in the world, their revenues were £58 billion in 2008, and approximately a quarter of a million employees. So Graham, thanks very much for joining us today.

GW: It’s a pleasure.

MC: OK Graham, first of all really to start the interview, can you tell us a little bit about your particular background, your personal background, the organisation you work for and your current role, if you wouldn’t mind?

GW: I started off as a civil engineer, did a degree and that, and then went through classic MBA training, and ended up in the telco industry, so I’ve worked for the telco industry most of my life. My business career in terms of P & L, general management roles, strategy roles, operational roles and latterly customer experience roles and I’m currently the Director of Customer Experience at Telefónica O2 Europe on the one hand, and then the other half of me is running the Centre of Best Practice for Customer Experience for Telefónica SA globally.

MC: OK, can you tell us how you made the transition into a customer experience role?

GW: I’ve really been working on looking at customer satisfaction and the drivers of customer satisfaction from about 2001, when O2 was created and it demerged from BT, and I was asked to put in a common methodology for measuring customer satisfaction across the O2 businesses in Europe and linked with that doing the reports for the board, and liaising with the organisations to improve the customer satisfaction and the customer experience.

CMC: In terms of measurement of customer satisfaction, can you talk a little bit about how you currently measure?

GW: That’s quite a complicated area, because we do a lot on measurement. If we take it at the top level, we measure the customer satisfaction index, which is a measure of customer satisfaction overall, and then in relation to their expectations and how close we are to an ideal operator. So we measure that on a regular basis and report back quarterly across all of the businesses in Telefónica. Additional to that, we measure things such as recommendation, so will the customer recommend you to a friend or family, and their score on that on a one to ten basis, and we have lots of operational measures that we measure as well in terms of things such as right first time, and answering issues in the call centre, as well as network statistics, time to answer statistics, repeat calls, things like the call centre, and we try and measure things at the key touchpoints, so we have mystery shopping as well, and that’s complemented by doing ad hoc research and buying published research on looking at customer insights, so that we can get a real understanding of the drivers for customer loyalty and what our customers are saying to us.

MC: OK, you mentioned that your objective is to become the ideal operator in the telco space – how do you define that?

GW: We measure in terms of how close to an idea operator a customer perceives us. Our objective as a strategy in Telefónica is the strapline, “To turn customers to fans”, because we believe that having fans, like football fans, we’ll have customers and fans who are loyal for life to Telefónica, and that works through into the financials in terms of reduced churn and improved profitability.

CMC: In terms of the customer experience, can you tell us anything about how you manage across the different touchpoints in terms, you’ve already talked a little bit about doing the measurement – but how do you manage even the measures that you have?

GW: That varies across the different businesses in Telefónica, if I talk about Telefónica Europe first of all. We start with understanding what our brand is, and our brand values, and we’ve had that in O2 and Telefónica Europe for quite some time, since we demerged. So that’s at the heart of what we start with in terms of the differentiation of what’s important to customers. We then look at designing and creating what we call a customer promise, which are a series of aspirational statements that become immediately delivered to our customers, and we don’t talk with our customers about them, but it’s the focus of the organisation to focus the whole organisation, not just sales and marketing, on delivery of those customer promise elements. We therefore look, when we’re thinking about the design of the customer journey, which are the key touchpoints that we really need to focus on, linked to the drivers of customer satisfaction and loyalty, and how we then design that experience links to how we’re going to deliver that customer promise, or elements of that customer promise, and that throws out of that the actions that we need to take to deliver that, and clearly there’s always the issue of prioritisation of resources and actions in the current budget and the strategic timeframes. So those actions then get managed by individuals within the business, and they quite frequently work cross-functionally, because our belief is that customers don’t tend to think in silos like organisations can do, and we need to work across the silos in the organisation.

MC: So presumably in your role, and your remit, is trying to bring those silos together so there’s an overall customer view?

GW: That’s correct, and that’s done in the individual operational businesses, so each of the operational businesses will have the chief executive and their team responsible for customer experience and customer satisfaction measurement, and they need to own that, because this is as much the strategy of the company as are the financials, and one of the secrets for success of doing this is to have it as the strategy and not have it as an add-on to some strategy or other, and also people don’t get confused and say, “Oh, we’re not doing that this week because we’re focused on the financials, or we’re focused on this, that or the other”, customer experience is not an add-on, it’s a part of a strategy, if you want to make it successful. So in each of our businesses we have people in various different functions, we’ve got responsibility for customer experience, so in Germany there’s a whole customer experience team that works across and supports the functions; in Ireland we have people in the individual functions who own it and get support from colleagues at the Centre, from myself and other parts of the organisation; in the UK we have a team of people who also look after market research and customer insight, and we have people in the segments who are focused on customer experience, so it varies very much on the individual business, and the trick is to leverage all of these people across the organisation in a virtual way, given the nature of the organisation, and the different pace and speed that they want to run at, and share the learning across the business, because Telefónica’s a large organisation globally, and one of the advantages of that is that things happen in some countries earlier than others, so you can look at the customer trends and then see what you’ve done in those companies to respond, and then take that learning and the actions to other countries, to avoid reinventing the wheel.

MC: But that presumably is a significant challenge, with so many people, very different audiences in the different countries as well?

GW: We like challenges, one of the straplines that O2 has is “O2 can do”, and it’s certainly more of a challenge across the whole organisation in terms of Telefónica, but I guess the simple answer to it is that, in order to make this work properly, it has to be owned by the leadership in the organisation and the leadership team, so I’ve spent a lot of my time talking with the leadership team in Telefónica, both at a corporate level and individual businesses, to talk with them about customer experience, to demonstrate and share some of the learning on the financial benefits of customer experience, and it’s true to say that some people get it earlier than others, and some take more convincing, as is normal in most things, so you progress by working with people and encouraging and supporting them.

MC: On that, can I read a comment from Matthew Key, your Chief Exec, following your Q1 results, who obviously seems to be convinced of the need for customer experience. He said, “Telefónica Europe continues to go from strength to strength, outperforming our competitors by investing in customer experience is a means to drive sustainable growth, and emerge from this recession fitter and stronger than before.” From what he’s saying, the implication there is that customer experience is a key differentiator for the brand?

GW: We believe that’s the case certainly, and that is believed across Telefónica. The trick is, turning that into reality as a differentiator when your competitors are also focusing in some markets on customer experience as well as a differentiator, so I think one of the things is, it’s a long journey that we’re all on, and we need to recognise that we continually need to improve in all of the marketplaces that we’re in, our customer expectations rise, not surprisingly, not just from the experiences that they have within their own industry, but from experiences in other parts of their life, that they say, well, it can be done in this industry – why can’t this happen in this industry? So you have to look both within your industry at your competitors, and also try and understand some best practice from other industries, but we’ve been succcessful in the UK in terms of leading our competitors on the customer satisfaction measure for the past few years, and that’s good, that’s been due to the focus and change in focus in the organisation to customer experience, when Matthew Key originally took over as the Chief Executive of O2 UK, and what we’re trying to do as a business is, as I said, to create more fans out of our customers, and in the UK in specific terms they have a target to have twice as many fans as their nearest competitor.

MC: Oh right – “in specific terms”?

GW: Yep, in specific, measurable terms.

CMC: You talked about having different pace of change in different countries, and that’s to your advantage generally – can you talk about any innovations that you see in the industry that might change customer experience, maybe inside Telefónica, or from outside?

GW: I think in terms of innovation, one of the things that’s happened recently that you’ll be aware of is the iPhone, so as an industry I think it would be true to say that most of the mobile operators have really not been successful historically at linking content and mobile devices and the experience together, and then along comes somebody from outside of the industry in the form of Apple, who’s got a good reputation for customer experience, and comes up with a device that somehow is a great customer experience for people, to be able to access music and videos and it’s intuitive, and you don’t need a handbook, and you look at that, and you think, well, we’ve missed a few tricks, as an industry and as a company, so that’s actually changed some of the models, and the reality is that people who’ve taken the iPhone actually use it more, there’s much higher data traffic on the iPhone than other devices, so it’s changing the way that people use the device and their experience of it, and that clearly sets expectations in terms of other devices. Some other things, for example: there’s much more focus that customers want these days on using a multiplicity of different channels, they want to use the channel that suits them, not necessarily the one that an operator may think is more suited to their needs, and they may disagree, so the challenge for us is to be able to deliver experiences that are consistent across multiple different channels, and that’s a really difficult thing to do.

Other things that have changed, continuing to change: onlines self-serve capability, so that’s actually an advantage for the customer, because they can get things quicker than potentially by ringing up the call centre, it’s easier and it actually has a double benefit in the sense it helps the customer, and they see the benefit and it helps us because it takes calls away from the call centre that we’d otherwise have to answer.

MC: You talked about your particular role, Graham, but can you talk about responsibility for customer experience? – I know you said it was at individual units, but the strategy you talked about, that’s set at an executive level, very senior within the organisation?

GW: Yes, the strategy is owned by the board of Telefónica Europe, or the individual organisations such as Telefónica O2 UK, or Telefónica Chile, or Telefónica Spain, so they will all commit as part of their strategy a customer experience and quality element of that overall strategy, and some of them are stronger than others, and in a number of our businesses it is the strategy for the business, in others it’s not as central as I might like it to be in realistic terms, but I’m working on that with the businesses, but everywhere you go in Telefónica there’s been a real increase in the focus on customer over the past couple of years, since we started on the transformation of Telefónica under the customers to fans banner, and it’s really encouraging to see some of the changes that have happened, it shows through in the results in terms of improved customer satisfaction, it shows through in the financial results and the strong financial performance Telefónica’s recently announced in quarter one results.

CMC: In terms of the mobile industry, it’s fast moving and constantly changing – can you tell us a little bit about how you stay up to date with changing needs and research, or how you keep abreast of consumer trends?

GW: With difficulty sometimes; we try and talk with our customers clearly, and get customer insight out of that, rather than just researching customers, so it’s really delving beneath what customers are saying and what the research is saying to get real customer insight. We talk with the suppliers, we do forums and focus groups with the customers, and we buy published research and we share research and learning across Telefónica globally through online forums and online conferences, and Telefónica’s got a facility to be able to do that quite easily, so that’s a good way of doing it, but it is challenging, and one of the things that I think is probably important in this area is the difference between research and insight, and just a brief story on that. Customers used to tell us that our bills were wrong, and you might think at first that you needed to go and fix your bills, that would be an immediate reaction from market research, but if you get behind that, and look at inside what was actually driving that was that customers’ expectations of the bill were for a certain amount, based on their understanding of or perception of the tariff. The bill was actually right, in line with the tariff, what was wrong was their perception of the bill, because our tariffs were so complicated that they didn’t really understand it, so they had a different expectation, a wrong expectation, in terms of actuality, clearly right in their own mind, of what the bill should be. So we had to go and change the tariffs, not the bills, to make them simpler and easier for customers to understand, to reduce that mismatch of perception, so that’s the difference between insight and research, so we work hard at trying to really reinforce the thought process in terms of insight as opposed to just going and getting research.

MC: You’re touching on an important trend there, Graham, which is trying to reduce the complexity in people’s vibes and make the proposition far simpler to perceive. How are you doing that then with in the business besides the tariffs? What other things are you doing?

GW: The tariffs particularly at the moment are really important, because in the recession that we’re in, the value for money driver has come up in terms of importance quite dramatically, and our customers have told us that, in terms of the insight that we get from talking with the customers, what that leads to is that they want simplicity in terms of really clear tariffs, so that they can understand them without lots of complexity and lots of small print; they want control of being able to understand what their bills are, so that they aren’t getting unexpected bills; and they don’t want to have lock in periods of high duration on the contracts, which the mobile industry has historically had, so just finishing off on the tariff bit, because a lot goes with that, that’s what led us to introduce and pioneer in a number of market places the SIM only 30-day contract, so that gives the customer control, so they’re on a 30-day contract; it’s not linked to having a device, and it’s got a simple tariff associated with it, and in Germany we’ve taken that a step further in the launch of a new tariff that’s actually got a maximum sum that anybody pays in the month, irrespective of the usage, and in Ireland we’ve added to that control aspect by giving them text alerts when the customer reaches a pre-set limit that they’ve determined on their spend before the bill comes, so that they’re again in control. But what that means is, to do things like that, and even to do simple things like get the handsets charged in the box in the store, because customers don’t want to go home and charge the phone at home and read the 200 page manual, they want to use it there and then, so what that means is you’ve got to change your processes that work across the functions in an organisation to be able to deliver that really simple thing for the customer, that maybe really complex for you to have to do in the functions across the organisation, and that means then looking at the functions and the processes in the organisation and trying to streamline them as much as possible.

MC: That’s an interesting example, the one you talked about with the text alerts, because I suspect in a business like yours, like any big global business, the pressure to increase revenue over time is immense, so when you talk about something like that, obviously you’re foregoing some revenue, but intuitively you’d feel that customers would reward you with their loyalty, but it’s difficult to measure that, in the longer term.

GW: I don’t know that it’s difficult to measure in the longer term, because we have measured the link between customer satisfaction and churn, so there’s an inverse relationship between the two, but there’s always a tension between the financial aspects, so a couple of years ago O2 UK decided it wanted to reward customer loyalty, and one of the things in the UK mobile industry was that existing customers got a worse deal than new customers, so if you’re an existing customer, what do you think about this in terms of new customers suddenly getting a better deal than you, when you’ve been loyal to the business for two, three, four, five, however many years. We decided to change that aspect from our company in the industry, so we actually went and gave existing customers better deals than new customers, which clearly impacts you on the bottom line, as does, something else that we do, which is actually communicating, ringing up customers, and telling them that we suggest they move onto a tariff that costs them less, so we proactively reduce the revenue from some customers, which hits the bottom line directly, in order that they get on to the best tariff that suits them, and the rationale behind that is that, if they suddenly find out later on that they could have moved to a much lower tariff, and you tell them at that point, or they discover it, they’re not very happy with you when that happens, and they’ll say, “Why didn’t you tell me?”, or “Why have you taken six or seven months to tell me now?”, so that’s not the way that you create customer loyalty.

MC: And indeed unlike your competitors, you have managed recently to reduce churn, which is a key measure for an organisation like yours.

GW: We have, and we’re continuing to try and reduce it further, because it’s an ongoing challenge for the business in terms of looking at each individual segment and taking the churn down for individual customers, and the whole segment overall. And customers’ expectations keep rising, and things that you do for customers that surprise and delight them and take them to a new level, then they want that same new level the next time, so you’ve got to continue to innovate and surprise and delight customers as best you can. At the end of the day, there’s this aspect on the financial side, the finances come through, but what it means is that you’ve always got to prioritise those things that are really important for the customers and that they value most, and deprioritise and cut and cease those activities that are less valuable to customers in order to make the investment that you need, and that’s challenging to do.

CMC: Finally, can we ask – who offers a great customer experience, in your opinion?

GW: I haven’t flown this airline, but I’ve talked with them recently, and talked with them about how they actually design their customer experience, and the detail that they go into it and how they engage their employees, and it’s made me want to fly their airline, even though I haven’t flown them, and that airline is Emirates Airlines, so they’ve got a really good reputation, I believe, in terms of customer experience, so that’s one. There are examples from other businesses with great approaches using small things, not necessarily big bang things, because you’re trying to engage the customer in both a physical way and emotional way with the experience, so when I went on holiday last year, when I arrived at the hotel, the first thing that was said to my wife and myself was, “Welcome to your home for the next couple of weeks”, which is a nice small touch, doesn’t cost anything to deliver, but great suppositive emotion and attachment, and that was from the excellent Hotel Riviera, Riviera Maya in Mexico. Flying Cathay Pacific is one of the few airlines that uses your customer name, like Graham Webster, or “Hello Mr Webster”, during the flight in business class, when it doesn’t happen on many airlines, it’s so easy to do, if you think the airline know where you’re sitting when you check in, you know where you’re sitting, and they put the information together and they use that small piece of information, so lots of small things can be done like this in organisations to really deliver a more personalised approach without doing things that cost a lot of money, and there’s other things that can cost money that you need time and effort, that takes the longer term to recover.

MC: OK, Graham, thank you very much for joining us today, the interview was fascinating, so really appreciate your time.

GW: Pleasure, thank you.

CMC: Thank you.

Back to Graham Webster on Customer Experience podcast