Elementos motrices

RECALL No 18 – Boosting performance in B2B

Change isn’t always a breeze: An interview with Silvia Rapallo

WIND Telecomunicazioni was established in 1997 and operates today as the third-largest mobile phone com- pany in Italy, with 20.3 million subscribers. WIND is also Italy’s leading alternative provider of fixed-line ser- vices, serving more than 2.31 million direct voice and 2.03 million broadband customers.

Silvia Rapallo joined WIND in January 2010 in her role as Microbusiness and SME Marketing Director. McKinsey had the opportunity to talk with Ms. Rapallo about WIND’s strategy to venture into new territory against some steep competition.

McKINSEY: WIND has a reputation as a telecoms attacker with the individual consumer mind. Is the focus on small and medium-sized businesses new? SILVIA RAPALLO: We are perceived as very much a consumer telco, and we’ve been growing in market share as a brand and in terms of acquisitions in the consumer market. The growth in SMB has been more recent. One of the key differences for the business segment is that the expectations in terms of customer experience are relatively high. Our history as a consumer-oriented attacker – focusing on a segment for which customer experience is of relatively less strategic importance – was a challenge we had to address head-on. This was especially difficult given that we faced incumbents like Telecom Italia and Vodafone with strong track records in customer experience in the business market. McKINSEY: Is your vision to really differentiate your SMB service and surpass your competition?

SILVIA RAPALLO: Our strategy is actually more mod- est than that. We’re working to bring our service on par with our competitors’. Specifically, we are trying to close the gap between us and our competitors in terms of acquisitions. Vodafone and TIM are our reference points. They are the two institutional players in the consumer market, but also in the business market. They have basically split the market in two.

McKINSEY: What specifically is WIND doing to attract those business customers that would otherwise turn to Vodafone or TIM?

SILVIA RAPALLO: Customer touch points are our focus. A very important one is the network. Quality in this area is extremely important to business customers, and the whole company has been focused on improv- ing network quality for a couple of years. The general perception is that WIND’s network is inferior to that of our competitors, and one of our goals is to close the 3G gap. Another major area of customer experience is customer care, particularly our call centers. We have launched an optimization of most of our sites, and our work is beginning to pay off. Customer satisfaction in this respect has already risen to the level of TIM, which is the second-largest player. Now we need to close the gap with Vodafone.

McKINSEY: And what exactly is the new perception or image that WIND is trying to cultivate?

SILVIA RAPALLO: Credibility. WIND has a history of being seen as a down-market provider of consumer

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services. A lot has to be done to develop credibility as a provider of quality business telecommunications. If we want to be in that business, we really need to work in this area. This is the job of marketing and the goal of a greatly enhanced customer experience. Vodafone started its SMB business with the advantage of already having a reputation as an upscale brand that was the choice of innovators – even where its consumer business was concerned. It was already in their DNA.

McKINSEY: Enhancing customer experience can take a significant amount of resources. How does WIND com- pete with the more established telcos?

SILVIA RAPALLO: You have a point: our bigger com- petitors have double the advertising budget that we have, and this is a tool that influences customer satis- faction. So we just need to be as smart as possible, and this means optimizing the levers that have the highest impact. For example, we invest a lot in our Internet presence, while our competitors focus more on televi- sion. This careful use of limited resources transfers to other areas as well. When it comes to the network, for example, we are very selective in the areas we develop – much more so than the others, I believe. The same goes for customer service. Our improvement investments are highly targeted. We identify the areas that have the greatest impact on customer experience, and that’s where we invest. One initiative we launched was a certi- fication program for our sales force – getting them ready to deliver quality service to our business customers. It was very specifically focused on improving our acquisi- tion rate and the loyalty of our sales channel, and it had the very positive side effect of increasing the perception and experience of our customer base.

McKINSEY: Have you seen a direct, bottom-line benefit from this improved customer experience?

SILVIA RAPALLO: Yes, absolutely. I see it in the num- bers. Our agents are visiting prospective customers and being welcomed and recognized as professionals. This has led to acquisition gains. We see it less on the inbound side of sales. We don’t yet have a presence in shops, and we believe there is a lot of opportunity there to sell to businesses. We could also capitalize much more on our communications and all the advertising if we developed our inbound sales channels more. We recently launched the e-shop, and activity from this channel is growing. I think this is a sign of increased credibility on the market.

McKINSEY: Since your entry into the business customer market is fairly new, is your customer base rather undif- ferentiated at this point?

SILVIA RAPALLO: A few years ago we did not even dif- ferentiate between our SMB clients and our consumer clients. But for a couple of years now, we have been seg- menting our business customers based on either actual customer lifetime value or some proxy based on that. Our ser vice mode very much depends on that segmen- tation. One way this plays out is in terms of assigning a project manager. Our high-value business custom- ers with complex needs receive a project manager who accompanies them in the migration of their services from another operator to us. As I said, though, this is fairly new.

McKINSEY: How were you able to rally the organization around such a massive undertaking?

SILVIA RAPALLO: For us, there were two big play- ers – apart from the marketing side – that were crucial to our focus on business customers: customer care and the operations functions. The mobilization of both organizations was rooted in the big gap that we were experiencing on the customer satisfaction index. The bottom-line consequences of low customer satisfaction were huge, so it was a priority concern for the top levels of management.

McKINSEY: Now that these stakeholders are on board, how do they all participate in these improve- ment measures?

SILVIA RAPALLO: We have created a structure in which operations and customer care sit down with marketing for biweekly process status updates. In these forums we review the operational areas that have an impact on customer perception, and work together to make improvements. Each business unit has a key point of reference that interacts with the representatives of the other business units. I serve that function for mar- keting, and it is my responsibility to set the level of ser- vice that WIND’s customers experience.

McKINSEY: What would you say is the biggest challenge you face given such dramatic expansion into a new cus- tomer base?

SILVIA RAPALLO: One hurdle has been a shift in orga- nizational mindset to accommodate this new objective.

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RECALL No 18 – Boosting performance in B2B

Change isn’t always a breeze: An interview with Silvia Rapallo

Operational issues had been the top priority for quite some time, and we were more focused on attaching KPIs and KPOs to the operational aspects of our busi- ness than on the customer satisfaction index or cus- tomer experience overall. Everyone at Vodafone has either a customer delight index or customer satisfaction index in all NBOs of management, and this focus is in addition to concentrating on operational issues. It is a matter of organizational maturity. We’re now making good progress.

McKINSEY: What are you noticing as the major differ- ence between improvement efforts on the consumer side and those on the business side?

SILVIA RAPALLO: Achieving a real step change in cus- tomer satisfaction is proving much more difficult, and this is key to our business customers. Any real change takes the time and effort of the whole organization. We represent a relatively small part of the company in comparison to the consumer side. Making operational changes is challenging, but we are able to understand what needs to be done and to act relatively quickly. Our clients’ perception of us vis-à-vis the more established competitors in this market is a tougher endeavor, and just takes time.

McKINSEY: Finally, could you offer your colleagues in other markets who may have a similar agenda any advice on the importance of marketing?

SILVIA RAPALLO: I would first say that it depends on the operator’s phase of life – where they stand in their particular market. If you have just launched a new venture, you may clearly have to focus on building a distribution channel. But if you are also an attacker who needs to establish yourself in the market, developing your credibility is of the utmost importance. You want the type of word of mouth that is going to promote your new objectives, and positive customer experience goes a long way toward achieving that. Sales distribution is obviously extremely important, but that goes hand in hand with a focus on customer experience. An attacker cannot afford any weaknesses in this arena.

Silvia Rapallo was interviewed by Bart Delmulle, a Principal in McKinsey’s Brussels office, Tomas Keisers, an Associate Principal in McKinsey’s Antwerp office, and Alberto Menegazzi, an alumnus of McKinsey’s Milan office.

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RECALL No 18 – Boosting performance in B2B

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