Customer service is key to Broadband profits

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By: Wise Marketer Staff |

Posted on October 14, 2003

The broadband internet provision market in the US is seen as a potentially high profit market, although those profits depend upon providing levels of customer care that outpace subscriber demand, according to a study from market research firm, Zanthus, sponsored by SupportSoft, Inc.

The study, which questioned more than 550 residential cable and DSL subscribers in the US, revealed that almost 70% of the broadband subscribers questioned had called for technical support during the past 12 months, and 40% called more than once.

With the typical broadband customer calling for customer care an average of 1.9 times per year, the service provider's cost of providing telephone support could devastate much of its profit.

Cost of support
For example, a typical broadband service provider serving 1.8 million subscribers would have had telephone conversations with 1.2 million of them during 2002, at an average cost of US$13 per call. At just one call per person, that amounts to more than US$15 million in service costs to the provider during the year. But with an average of 1.9 calls per year, the cost rises to almost US$25 million.

But if a telephone call doesn't solve the problem, sending out a service team or engineer adds an average of US$150 per vehicle trip. Technical support has now become a prime target for automation as a way to cut the cost of customer care.

"Broadband service providers are under intense pressure to cut operational costs. Reducing their customer support burden is an important way to realise immediate and long-term savings," said David Hawley, senior analyst for the Yankee Group. "Operational costs are only one half of the equation, though. Providing consistent, high-quality customer service is key to building customer loyalty and lasting competitive differentiation. The trick is to strike the balance between efficient and effective customer service that meets corporate strategy."

Key findings
Other findings from the first annual high-speed internet support quality benchmark included:

  • Cable subscribers are more satisfied with the quality of support they receive than their DSL counterparts. Some 20% of DSL subscribers reported being dissatisfied, compared to 14% of cable customers.
  • Only five common problems accounted for the majority of both telephone calls and online support searches:
    ·  No internet access;
    ·  Could not send and receive email;
    ·  Password problems;
    ·  Slow connection;
    ·  Repeatedly dropped connection.
  • More than 68% of broadband subscribers seek technical support by telephone but 48% said they would prefer to use online chat, e-mail, or the provider's online support portal.

"High speed data service providers are rapidly adapting to the support needs of their subscribers with new tools and techniques, including self-service options that provide people with more control and choice in fixing their own problems," said Bruce Mowery, vice president of marketing for SupportSoft. "Industry leaders recognise that by creating a great customer experience they can drive increased loyalty, sell add-on services and gain competitive advantage. And just as importantly, they can expect improved profitability through reduced customer churn and lower operational expense."

The research has been made available online (following registration) at SupportSoft's web site.

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