Today I have helped a senior to navigate her communications need and was aghast at what has transpired with M1 and I guess the experience will be the same for the other telcos in Singapore – namely Singtel and Starhub.
I would say this is nothing new, as I have highlighted this a few years ago in an article that speaks of the amount of money that Telcos earns through the sheer ignorance of their customers. I will not touch on buying a new phone through contracts in this article because things have not changed when Telcos are still using smartphones to entice consumers to pay more for something you can get cheaper if you buy separately. You can read some of the comparisons I did here.
What I want to say in this article: Telcos have this dilemma that if they don’t act soon enough, they won’t have the consumer customer base to maintain a network. Yet being consumer friendly (at least pocket wise) will also mean there will be a drop in profitability in the short term.
So let me explain.
Today I have a senior friend who is being billed for $170 for her telecommunication needs for 2 mobile lines, 1 mobile broadband and 1 Fiber broadband connection to her home on a monthly basis. It is a lot of money for just 4GB of data allowance for each phone line. And out of the 3 mobile connections, she only needed 1 for her daily needs. She has signed up for a line just because she needed a new phone and they gave the other mobile broadband line for free with promotion but she is now being charged extra to maintain that line.
After listening to what she needs for her devices, I just take a look at the current MVNO (WhizComms, Changi Mobile, Circles Life and Vivifi.me) promotions online. The total package is as follows:
1. Mobile connection with Vivifi.me – $18 for 50GB
2. 300Mbps Home network with WhizComms – $28.90
The total cost of $46.90 is less than 30% of her previous bill. That is a lot of money paid to M1 for services she did not use at all. She will do better to buy something that matches her need and use the money she saved for a better meal, or a well-deserved holiday.
In the end, she left M1 because she is a cash-cow to M1 and lost her totally because M1 took her for granted.
One could be faulted for not being on top of the bills and that I agree but could the Telcos do more to bring more value to their customers in terms of absolute money spent rather than piling tons of data that majority of their customers will find trouble to use up especially during Work From Home (WFH) situations when Wi-Fi is the main connection rather than 4G.
The Telco Dilemma: Short-term gains vs Long-term investments
Now these Telcos may think, if I don’t maximise my profits then how can I maintain the network to serve these customers. For a small country like Singapore the challenge is all the more pronounced. All the Telcos are fighting over the same pie and hope that their promotion can encourage churn to justify their KPI. How much can these Telcos earn from churning? Even with each person having 2-3 lines, there is still a limit. It is like a pyramid scheme where your market is so saturated you cannot earn anymore.
That comes at a cost. By overcharging the customers, they are forcing these same people to go to MVNOs such as WhizComms, MyRepublic, Circles.Life, Vivifi.me… The Network owners will ultimately earn the money but not at the level that they can have if they keep the customers to themselves. It is basic logic. These network owners are selling network access to the middlemen to maintain the network but not enough profit to improve the network in the future.
With shortwave-based 5G technology, the financial outlay to roll out base stations for Stand-Alone wireless network will be much bigger than 3G and 4G (article). Having a business that is feeding the middle man because of inept customer loyalty programs and lack of management fortitude to retain customers in favour of customer acquisition will make it tougher for these telcos to build a better network infrastructure in the future.
The Problem With Singapore Consumers – When Having More Is Actually Not Worth It.
Part of the issue why Telcos are giving out data allowances as though they cost nothing is because they know Singaporeans cannot use up those data except for a small minority that needs the mobile data to be used with their laptops. Some of them do not have home network to save money too (or so they think but is a story for another time).
Giving out more data to customers is the only way they can differentiate themselves to consumers. This method may seem like an excellent solution because Singaporeans have trained Telcos to think this way.
Most will keep saying “Hey for $25 I can get 60GB of data from Company A which is better than the 40GB of data from Company B!” when in fact the customer is over paying both companies for something they don’t use.
Most will keep saying “Hey for $25 I can get 60GB of data from Company A which is better than the 40GB of data from Company B!” when in fact the customer is over paying both companies for something they don’t use.
That is the psyche that Telcos are (mis)using to give the illusion of ‘value’. Singaporean consumers should understand that if they are paying for something they are not using, there is no value at all. The telcos are using the Kiasu mentality against Singaporeans.
And we need to educate ourselves out of ignorance and change our spending behaviour to improve service quality of these Telcos. So buy only what you need, rather than by being swayed by that little bit of advantage. Don’t pay more just so you get more data. Buy a service that covers what you need and a bit more for emergencies. The same applies to mobile phone line time and SMSes too.
It is also time to educate Telcos to give real value, rather than paying them more for something you don’t need. Reward Telcos and MVNOs that are active in meeting your needs with value that goes beyond data and cents.
Where Telcos Can Improve and Hold their Customers: Be Proactive.
I use Circles.Life for my secondary phone line but I am not paid by them to write this. Even though I could have easily switched out my Circles.Life line to another provider that gives me more data for the same amount of money I paid to them. Why not? Simply because they are a MVNO that solves issues PROACTIVELY.
Let me share a story from an acquaintance of mine to show what PROACTIVE means
“There was a short period of time when i had 2 lines and was actively using my new line (singtel) and hardly use my old line which was newly switched over to circles life ($18/m). So for a few months i did not use their data at all. I cant rmbr how long it was (maybe 6 months?) Circles.Life auto downgraded my line from 20gb 18/m to the super basic 2gb plan at $5/m. I was actually surprised that they have such a system in place tbh.” – Naz J.
If you are in her shoes, would you go back to Circles.Life? I would and I did. Circles.Life reduced my bills and match the data given to me during one of their promotions after they took out their reward program (which was unfortunate). They felt that giving out more data has lost its charm, and yet the Telcos are still peddling the same medicine, expecting business to improve.
As they say, doing the same thing while expecting different results is insanity.
So I am glad Circles.Life has done something proactive to impress current customers. Such policies and management practices help the company in the long run and earn more money by keeping their loyal customers.
Here are some points that I hope Telcos can improve on. Switch from customer acquisition to customer retention strategies. The cost of retaining a customer is 5 to 10 times CHEAPER than acquiring one based on the report from Harvard Business Review.
- Actively help your current customers to review their telecommunication needs and strive to give more value to them rather than giving them things they do not need and cut the cost of staying with you. While you earn less than before, but at least you are earning something from your current customers rather than putting the money into your MVNOs.
- Have a responsive customer service team. Holding a POTENTIAL customer for 30 minutes to switch over to your company is NOT giving a customer any reason to switch to you. Yes I am talking about GOMO by Singtel and that’s why I switched out to Vivifi.me within hours.
- Be PROACTIVE to reduce the bills for customers who are not active on your line. Trust me you will earn extra brownie points in the future. This is also applicable to your customers who DO NOT want to re-contract getting new phones. That $150 discount voucher did not persuade me to re-contract in the past because the cost of maintaining the line is too high and so I left for greener pastures.
- Be open to your most influential and knowledgeable customers. I am not talking about influencers at all. Have a proper conversation with them in an open forum rather than sending survey after survey with no improvements at all. Why give lip service when no commitment is shown?
- Have a good rewards program and focus on your RETENTION rate rather than the churn rate. Reward staff that persuades your customer to stay. I have customer service personnel that gave me SIM-Only plans that is worse than the plans being offered on the company’s website. Guess what? I left!
- Stop being a nuisance to customers. If your customer is leaving you, there is a chance that they will come back. But once you place obstacles in front of your customers to CANCEL their line? Guess what…they will cancel EVERYTHING and NEVER come back. I am forced to call 1627 just to cancel M1 line when I am in front of their customer service staff. And another acquaintance has to go to a particular Starhub shop to return their set-top box and that angered him to no end to swear off Starhub. Why are you shooting yourselves in the foot?!
Long Way to Go but is Still Achievable
The era of cheap mobile plans is really a game of attrition. I have seen Mobile 1 (yes that one that shoots me a threat using a poorly worded “lawyer’s” letter) and Grid Mobile succumbed. MVNOs do not have the clout to dictate the cost of mobile connection, but the Telcos do. That said, Singapore’s IMDA cannot allow an oligopolistic market to happen in Singapore and that’s the reason Australia’s TPG is in the picture.
Circles.Life is a shining example of what a Telco business can be. Proactive and adaptive to keep current customers where they are not easily swayed by another 20GB of data from short-lived promotions. A high retention rate means the profit center is maintained too.
After the 2 years, butterfly customers that are attracted to the data allowance will then find another better deal to migrate to. The costs of acquisition will explode to where there will not be enough profit to improve the network.
An example: TPG’s business is not exactly booming because it is not gathering positive reviews from its customers too even though they have one of the cheapest mobile data plan around. You can read this in seedly.
Cheap customers are tough to maintain, and such acquisition strategies will not help Telcos in the long term.
They must strive to give intangible value to their customers that is beyond the data and cents – customers that felt that they are being taken care will stay. Focus on your retention programs and your customers will follow you, like iPhone fans.
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