Is Telstra’s Relationship with Customers Changing?

Telstra is Australia’s leading telecommunications company with over AUD$25 Billion (USD$27b) in revenue each year. Telstra was originally Telecom Australia and has been slowly privatised over the last 15 years to become one of the highest capitalised companies on the Australian Stock Exchange.

Telstra has a range of products and services that they sell to consumers, primarily:

  • Fixed home telephone lines
  • Mobile phones
  • Pay TV (Foxtel) including cable
  • BigPond Internet Provider
  • Wholesale division selling access to their network to other Telcos
  • Ownership of Sensis, the White and Yellow Pages owner

Being a large monopoly and then a duopoly Telstra has never been known for their high levels of customer service or flexibility. But has that changed recently?

Gordon Ballantyne
Gordon Ballantyne

Fighting Fund & Gordon Ballantyne

In 2009 the Telstra Board developed a $1b ‘fighting’ fund’ to try and win back consumer confidence as the brand started to experience shrinkage and therefore loss of profitability in their market, especially in the fixed line market.

This fund was dedicate to find better ways to interact with customers, win them back and to become more flexible so that Telstra could own more of the share of wallet with their customers.

To this end they employed Gordon Ballantyne who developed the dell.com business for the European market. In an interview with the Australian Financial Review ‘The Deal’ Magazine (February 2012, pp.16-17) Ballantyne states:

“We need to change the way our customers are talking about Telstra. Sometimes the seemingly impossible is possible – and when there’s a lack of belief and times are tough is when you can drive a change agenda within an organisation.”

Since Ballantyne has been given this fighting fund he has slashed their exorbitant pricing structures and have lured back 1.7 million customers. He is also focussing his people on serving the customer through great pricing and exceptional customer service and this is leading to a higher share of wallet for telco and related services.

So is this all true?

So, are Telstra really putting their customers first? I think they may be! I am a long time Telstra customer mainly because they have the best mobile phone coverage and they own the copper lines to my house. But I have been frustrated with them over the years, mainly because it is so hard to get a deal or bundle your products.

When I moved house a couple of years ago I rang Telstra to move my phone, but also asked about internet and another mobile to be added. Rather than one person being able to do the deal they said they could help but I would need to ring each area separately…way too hard so I kept my existing suppliers and rolled them to the new house.

About 18 months later I had a person knock at my door offering to do a bundle deal, so I took the details, said I would make a couple of calls to existing suppliers and could they come back in a couple of days to do the deal…but I am still waiting for them to show up!

Finally 9 months ago I wanted to add Pay TV. There was no difference in buying it from Telstra or Foxtel, but Foxtel had better sales people so I bought it from then.

But this all changed this week. I got a direct mail offer saying that I could bundle my internet and phone for $88 per month allowing me to move my net allowance from 7GB (which I was hitting constantly) to 100GB – great deal.

When I rang up (only had to wait 30 seconds!) I got the deal details which meant my out of pocket was just $10 per month for an extra 93GB (great success!!). So the deal was done.

I then asked about my wife’s iPhone which was out of contract and was starting to fail. To my surprise she said that she could replace it and have a new one to me in 2 days with a $69 uncapped deal over 2 years! To top it off she then said do you have Foxtel, and then offered me the top package at the reduce rate of $100 per month, a $40 saving.

If I go back just 6 months ago there was no way that Telstra could create a bundle for me in one call let alone give me a great deal that included discounts.

The Strategy

Ballantyne’s strategy is to provide exceptional customer service and to give customers deals so that Telstra can increase their share of wallet and retain customers. After this call I went from just a fixed wire telephone and a mobile phone to:

  1. Fixed wire home phone reduced from $70 per month to $32
  2. New mobile phone contract from $30 per month to $69
  3. BigPond Internet from $0 per month to $56 per month
  4. Foxtel PayTV from $0 to $100 per month

In total now Telstra has 100% share of my telco and related service wallet growing from $100 per month to $257 as well as increasing my total spend by $45 per month, but ‘saving’ me $34 on a like for like basis.

My experience is testament to the other 1.7 million Australian customers who have returned to Telstra or given them more share of their wallet. The strategy is working and it proves once again that by putting the customer first you can grow your market share and revenue even in these hard times.

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