Why Canada’s wireless industry may have finally shifted in the customer’s favour

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Darren Entwistle's first job in the telecom business was a crash course in customer service.

The chief executive officer of Telus Corp. got his start as an installer for Bell Canada. A university student at the time, Mr. Entwistle would travel to customers' homes to hook up new telephones and repair broken services.

"I got into the truck. I got my list of eight orders and I went into eight homes," Mr. Entwistle says.

"I met customers every single day – day in and day out. And that's the way I grew for this job. It was all about making clients happy, and a couple of the clients were happy enough to write to my boss."

Those face-to-face interactions taught Mr. Entwistle the value of a satisfied customer – a lesson that now defines how Telus competes with wireless rivals BCE Inc. and Rogers Communications Inc. at a time when

customer service is emerging as the new battleground for big carriers.

Consumers have grumbled for years about lousy service, but industry economics may have finally shifted in their favour. Cellphones are becoming ubiquitous. That means new customers, especially smartphone users, are harder to find. New customers comprise a smaller percentage of incumbents' overall subscriber counts, with net additions accounting for roughly 1 to 5 per cent, compared with 15 to 20 per cent between 2000 and 2005, according to RBC Dominion Securities.

The elimination of new three-year contracts will also force carriers to work harder to keep customers loyal.

Of the nearly 28 million Canadians who already own cellphones, roughly 10 million are considered "free agents," not bound by contracts at any given time. The CRTC is hoping its new wireless code will encourage consumers to shop the market more often.

"In 2014, we expect the shift in strategic focus from customer acquisition to customer retention to accelerate," Drew McReynolds, an analyst with RBC Dominion Securities Inc., wrote in a research note.

As the Big Three telecom companies report their fourth-quarter earnings this week and next, investors will pay close attention to their "churn" rates – a key metric that reflects how many customers leave each month. Telus ended last quarter with the lowest churn of its peers at 0.99 per cent for postpaid subscribers. Those customers, which represent the lion's share of its base, pay their bills at the end of the month instead of prepaying for service.

Customer complaints about Telus are also tumbling even though the industry as a whole recorded a double-digit increase last year, according to the Commissioner for Complaints for Telecommunications Services (CCTS).

"I process a ton of customer complaints. You know what customer complaints are? They're gold dust," Mr. Entwistle says. "If they are complaining, they're telling you. They're giving you the recipe; the blueprint for getting it right … What's bugging one client is bugging hundreds of clients."

Mr. Entwistle sees more opportunities to improve customer retention through the use of shared-data plans that allow family members to pool big data buckets for multiple devices and through service bundles. Telus's goal, he said, is to have customers "evangelize" on the company's behalf. As a result, 60 per cent of its performance bonus pool is linked to customer service.

Telus, though, has been honing its focus on customer service since 2009 after raising the ire of consumers and the federal government in the prior year. In 2008, Telus, along with Bell, sparked an uproar when it announced plans to charge some customers for incoming texts. Years later, however, unlimited text messaging is now common in many Telus cellphone plans and the company is considered the envy of its peers when it comes to customer satisfaction.

"One of the things that you'll see at the Telus organization that you won't see at a lot of companies – you'll see the word 'sorry,' " Mr. Entwistle says, adding that "owning up to what you did wrong" is a key part of learning from customers.

But Telus's chief rivals are also eager to make amends with consumers. Rogers, which has lost wireless share to both incumbent and newer rivals, has made resolving customer concerns a top priority this year. The company has long been dogged by complaints about customer service – a problem that troubled late founder Ted Rogers.

"On the customer service side he was deeply unhappy with stories that he would hear around the place about people who didn't get what they wanted from Rogers. He was embarrassed and deeply hurt," vice-chairman Phil Lind told The Globe following Mr. Rogers' death in 2008. "He wanted to fix customer satisfaction. … He was not able to do that."

There is renewed optimism at Rogers about new CEO Guy Laurence, who previously tackled customer loyalty issues at Vodafone UK Ltd. He's already told staff that he is "concerned" about reducing churn, says Rogers' ombudsman Kim Walker. "It seems like a big priority for our new CEO."

Rogers has already seen a 46-per-cent year-over-year decline in customer complaints to the CCTS since July. The company has streamlined its own online complaints process, so the burden of following up on complaints no longer falls on customers.

Also to defuse customer anger, the vast majority of calls at Rogers are now answered in 15 seconds or less and call centre agents are required to take better notes about customer accounts. The company holds weekly meetings to tackle "top 10" irritants and executives are paying heed to customer feedback on Twitter.

Because carriers subsidize the cost of smartphones for new customers, signing up those subscribers can cost the company more than $400 per device, said Rob Bruce, president of communications at Rogers. "In theory, it doesn't cost you anything to keep your customers."

BCE, meanwhile, is also continuing its years-long push to improve customer satisfaction. After CEO George Cope took the helm in July, 2008, he launched a 100-day plan that was designed, in part, to sharpen the company's focus on customer service.

Following an outcry from customers, Mr. Cope announced plans in early 2009 to repatriate some of the technical assistance calls being routed to India. He furthered that commitment last year when Bell opened three new customer service centres in Orillia, Ont. and the Quebec communities of Saguenay and Rouyn-Noranda.

But Bell has also stubbed its toes along the way. Following its purchase of The Source in 2009, it hiked the much-hated system access fee only to see Telus and Rogers axe the charge on new accounts as new-entrant carriers prepared to enter the market.

Then in 2010, Mr. Cope created a new executive vice-president position to focus on "customer operations," hiring telecom veteran John Watson away from Telus for that role. (BCE owns a 15 per cent stake in The Globe and Mail.)

Among the measurable results: Customer calls are down 25 per cent since the end of 2010 compared with the end of 2013. Customer satisfaction scores, meanwhile, are up 40 per cent over that same period.

Internal complaint escalations, meanwhile, have fallen 43 per cent from the end of 2010. That's partly because of targeted investments, including another $100-million that will be spent this year to improve training, tools and systems to bolster the convenience factor for customers. That comes on top of the $100-million spent in each of the last two years.

"Customers have long memories and you have to treat customers well because they don't forget," Mr. Watson says. "There is a moment of truth and moments of truth really matter."