Vodafone Australia chief executive Bill Morrow has said the company did not anticipate the rapid penetration of smartphones in Australia, admitting Vodafone “missed the ball”, but promising that 2013 will bring significant improvements for customers.
In an interview with Business Spectator's KGB, Mr Morrow said Vodafone Australia's strategy for winning back customers is based on improving service — through measures such as bringing call centres back onshore — more so than seeking to woo customers with lower rates.
But in reflecting on the company's struggles he said Vodafone did not keep pace with the rapid move towards smartphone use, contributing to the fact that nearly a million customers fled Vodafone and a loss of some $800 million for the company in 2012.
“I don't think Vodafone saw that coming, as many others didn't, and it just got ahead of them and it was an issue at about the time that they started to do the merger between Vodafone and '3' and so there were lots of things going on within the management team and, quite frankly, we missed the ball,” Mr Morrow said.
While insisting that “that's all changed”, Mr Morrow said Vodafone in the last year has extended its coverage, doubled its network speed and halved the dropped call rates as part of a capital expenditure plan costing the company more than $1 billion.
“This is going to be a significant improvement year for our customers,” he said.
Vodafone Australia hopes that by taking such measures as bringing its call centres back to Australia from abroad it can win customers back with a focus on improved service rather than on lowest price.
“I don't think price wars are healthy for anybody,” Mr Morrow said. “When it comes right down to it, most people aren't considering just price in their decision.”
He admitted that onshoring customer service does contribute to a structurally higher cost base compared to competitors such as Telstra, but he said the move makes sense for customers and there is a hope that by making the customer service process easier to use, it will also be cheaper if customers will be able to resolve issues in one phone call instead of multiple calls.
“You can get far cheaper labour rates when you go over into some of these developing countries,” Mr Morrow said. “But what's interesting, when you actually look at the statistics about providing that customer care, is that they may not call back a second time, so in a way that role is part of the cost that you would have if you don't have that quality level of service... But we're not doing this for economic reasons. We're doing it because it makes sense for our customers.”
Mr Morrow said phone companies in Australia have a lot of work to do in restoring their brand and should look to Australian banks for best practices.
“None of the three carriers [in Australia] are really doing well from a brand image perspective,” he said. “I think the banks went through this period where there wasn't a positive view on their industry and they're turning that around. And in fact we've looked and studied a couple of the banks out here and some of the move that they've made and I think they're good practices and you'll probably see some more of our actions that will follow some of them.”
Among the take-aways from the banking sector, Mr Morrow praised banks for localising the customer service experience.
“Some of them even have a call centre action in the back where if you call, they'll recognise your phone number and they'll route you to that specific bank in that local suburb and you'll talk to somebody on the line. The next time you visit they'll say 'oh yea, I talked to you on the phone' and that's a very personalised service, very uncharacteristic of a lot of retail banks around the world,” Mr Morrow said. “I think it was just a best practice and something we all ought to be thinking about.”
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