Fair Exchange: South Africa’s Cellular Network Providers are Holding us to Ransom

October 2, 2013

by Erna George

It wasn’t easy finding an industry less consumer-friendly than South Africa’s financial services industry when it comes to the use of legalese – no, no, no, no. Silly me. It was a piece of pie.

And which is it? It’s South Africa’s mobile communications industry. Yes, the industry that ‘connects people’, ‘helps them stay in touch with the world’.

Just recently (on holiday in our country), I found myself interacting with folk from all four corners of the globe — and all were astounded at what we have to put up with just to ‘connect with people’ and ‘stay in touch with the world’.

Flabbergasted and bewildered

The gentleman from the USA was flabbergasted by our cost-per-call rates, and the Dutch couple bewildered by the slow internet speed despite buying the ‘best bundle package ever’. And, on return to Cape Town, I heard the sad story on Cape Talk about the man who — by simply opening an SMS — was signed up to a service at a cost of R17.50 a day and no correspondence was entered into.

It certainly seems as if South Africa’s cellular network providers are holding us to ransom. Where is the fair exchange in this?

To make sense of it all, I analysed their strategies when it comes to acquisition and retention of customers.

Great at acquisition

Simply put, our cellular networks are great at acquisition strategies, promising to deliver the world to our feet, but retention is less of a strength. Instead, they’re good at locking-in strategies — just consider those two-year contracts and all the ifs and buts and if that then this clauses.

Looking at acquisition in greater detail, there’s a lot of great inbound marketing, with the infectious communication from Ayoba to the Power to You sounding all empowering and positive coming to mind.

Promotional offers abound, driving the consumer to consider a new network or switch from free minutes to a 5Meg bundle at lower rates and more. The offers made to new pay-as-you-go customers makes me excited … and yet I am one of those who has had the same account and the same number from the same network for over seven years. Why?

Well, that takes us to the retention strategies employed.

Speaking in cellular code

Firstly, understanding what you have just bought is like ‘speaking’ sign language to a visually impaired person. Is it minutes or usage or flat cost? Consultants speak cellular code, not any human language.

A colleague of mine is a Vodacom subscriber of some 15 years, since her first phone, and is so irritated that the special offers and free gigs are only ever offered to new clients, or pre-paid customers or those spending R20 000 per month.

Did Vodacom waiver the extra R60 a month for the Android phone she wanted at upgrade? That would be no. The fact that she spends what it would consider a mere R2 000 a month carries no weight. I would guess that, in volume terms, there are far more clients in R2 000-and-less contract value than in the R20k-a-month range.

Horror stories

Why does she not port, I hear you asking? While some have had success at this, the number of stories of those who have had a nightmare doing so is alarming. Case in point, a colleague’s number was ported to the incorrect provider and then lost in the maze for more than seven days — an experience I’d prefer to forego.

The same colleague then found her mobile blocked from making international calls (from South Africa). On calling her newly chosen provider, it requested a R5 000 deposit to enable international calls; of course, actual billing would be over and above that. This deposit (with no interest) would be refunded when she terminated her contract (when, of course, she would have probably forgotten about this).

Silly me, I thought the contract fee was the cost for connection!

A mystery

What exactly do we get beside the actual minutes we pay for? No one understands the contracts or how the costing or data usage when roaming works. Paying for data-roaming usage is another misnomer. You get charged across two months; the actual cost is a mystery, so claiming for business becomes laborious.

Contacting the various call centres is like navigating a mine field. Firstly, you hope to get through to someone who understands your problem, then you have to cross fingers they speak consumer and not cellular (that is, I want to know the costs, not the usage).

Where is the commitment to me? Where are those promises made at acquisition?

Continue to confuse

While the Financial Services Board has required financial services companies to demystify their world for clients, the world of mobile networks continues to confuse. Yet, we sign up and sign away hundreds or thousands as mobiles and 3G have become a way of life.

I compare this to an experience with AfriHost ADSL service. You buy your own modem, hook yourself up online and you are provided a quote upfront for the pro rata amount to be paid for the month. There is a 60-day money-back guarantee and an excellent back-up service that responds immediately and with great service. Twilight zone kind of stuff!

According to the Harvard Business School, increasing customer retention rates by just 5% raises profits by 25% to 95%.

Cherishing current customers

Entertainingly, referrals, social media and word of mouth (from excellence in retention) are often great acquisition strategic levers. But that would require cherishing current customers. Imagine a new competitor was coming in — how would these providers behave then?

Some retention options to consider:

  • Be known for something that excites your target customers. What is your purpose? Why should they keep choosing you? And then live up to this at each interaction.
  • Make the selling process simple and customer service experience exceptional. Simple maths: go above and beyond for existing clients, and they will keep coming back and tell others about you.
  • Stroke the ego of current customers. Make brand messaging personal for clear target audiences; get employees to spend time with customers and delight with the odd unexpected reward; consider loyalty or VIP programmes (but get the programme right — see my previous article).
  • Stop worrying about the budget as, when you find the retention approach that works, the till keeps ringing with little effort from you.

Fair Exchange is a column on business relationships, written by Erna George for MarkLives. Erna is the business director heading up quality research at brand development and marketing insight consultancy Added Value South Africa. She works with diverse brands and categories from FMCG, alcohol and agriculture to financial services and entertainment in countries across many geographies, including South Africa, Mozambique, Nigeria, Kenya, India, Philippines and Brazil.

Read Erna’s previous post: Fair Exchange: Loyalty Smoyalty

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