Ofcom is currently consulting on new arrangements to notify customers at the end of their contract period. Think this is just about consumers? Think again. It will also affect those supplying SMEs with 10 or less employees. The new regulations could have far-reaching consequences for B2B service providers in both the UK and elsewhere.
What’s being proposed
The UK regulator, Ofcom, is proposing that service providers supplying landline, broadband, TV and mobile services will have to notify customers when their contract period is coming to an end. This will affect service providers supplying both consumers and small businesses with 10 or less employees.
These proposals are in response to the fact that 20 million customers are now out-of-contract in the UK, on contracts with less favourable terms than current ones or whose contract has an automatic price increase included at the end of the contract period.
To remedy this, Ofcom proposes that companies should have to warn customers when their contract is coming to an end, inform them of any changes to their service or pricing, and let them know what they could do to save money.
The notifications would have to be sent in the customer’s preferred method of communication (text, email or letter), 40-70 days before the contract ends. For customers already out of contract, service providers would be required to send a one-off notification so they are aware.
What this means for UK B2B service providers
UK B2B service providers need to consider if they are able to identify which business customers are affected by this proposed regulation. Can they reliably identify SMEs will 10 or less employees? This raises a whole host of problems such as how will they know if the company has grown or shrunk and is therefore inside or outside the regulation?What counts as an employee? What channel will you provide the notification in? What if the customer complains that the channel you selected is not, or is no longer, their preferred channel of communication? How will you manage the situation where one service in a bundle comes out of contract?
If B2B service providers are forced to offer these notifications to microbusinesses and the self-employed, how long is it before large enterprise customers start demanding the same? Are you really going to tell an enterprise that spends millions with you that it can’t have a service you provide to a consumer on a £10 a month package?
Inevitably this means both for ease of use, compliance and commercial reasons you are going to have to provide this service to all your customers, and you are going to have to use a range of channels to issue the communication in.
There’s a huge opportunity and incentive
Currently, service providers rely on customer laziness and inertia to retain out-of-contract customers. It’s a strategy that’s worked. Some service providers have played the system by building in automatic price rises at the end of contracts, hoping that customers won’t notice and will simply continue paying. It’s this level of cynicism and hubris that has led to Ofcom taking action.
But what if instead of punishing customers for loyalty you proactively worked on retaining them? Show them the value you’ve delivered, demonstrate you understand them and how they’re using your services, suggest the best deal they could get? You could even go a step further and move out-of-contract customers proactively to the best deal you have available to meet their needs.
By taking the short-termist view of punishing loyal or lazy customers, you inevitably fuel churn when customers discover you’ve been overcharging them. It might be within your legal and contractual rights, but it is wholly negative from a customer experience perspective and makes a mockery of your claims to be customer-centric. It communicates that as a service provider you cannot be trusted because you are only interested in yourself and not your customers. It trains customers to be wary of you, and undermines the relationship.
By getting ahead of this and taking a more customer-centric view of end-of-contract arrangements, service providers can differentiate themselves and reduce both churn and dissatisfaction.
What this means for B2B service providers elsewhere
Don’t think that just because you operate outside the UK this isn’t going to affect you. Regulators always keep a weathereye on one another and inevitably proposals by Ofcom will come onto the radar of other regulators.
What’s more, service providers operating in the UK will have to adapt to these proposals. They will change how they think about end-of-contract arrangements, and will build capabilities and experience to engage with customers more effectively at the end of contract. Such service providers will start applying this thinking to other properties in their group because they know it will differentiate them. Slowly this thinking will diffuse through the industry.
In any case, these proposed regulations are based on good business sense. By learning from UK experience, B2B service providers outside the UK can apply key elements of the proposals within their own business in order to gain competitive advantage.
Done well, these proposals can minimise churn and improve satisfaction, and are a key building block in establishing trust between service provider and customer. What’s sad is that the industry has failed to reform itself, continues to pay lip service to customer centricity and carries on with shady practices that destroy relationships. Reform is long overdue.
Saying goodbye nicely is good business sense
My last touch with T-Mobile (now EE) was such a good one it left an indelibly good impression of grace and professionalism. They couldn’t supply a service I wanted. They were regretful. They told me I was valued and they’d love me to come back anytime. They made it easy for me to leave. Years later I still remember how they dealt with me.
However, I will never go back to my large UK broadband provider (I’m not naming them to spare their blushes). Not only did they increase my charge as soon as I came out of contract, but when I asked to renew, the CSR was so rude to me I cancelled my service. They made moving service provider painful and left a lasting bad impression. None of this bad impression involved the quality of the service they provided, it was all about how they dealt with me as a long-standing customer. I would rather go without Internet than pay those people a dime ever again. I have told all my family and friends how bad they were. I now speak about this experience (and name names) when I speak in workshops and at conferences. This is not good business sense from them.
In today’s dynamic market, saying goodbye is rarely forever. You want customers to reconsider you when their contract comes up again for renewal in 12 to 24 months . Leaving a lasting good impression is simply good business. Paying attention to the last 30 days is now as important as paying attention to the first 30.