Wednesday, November 4, 2009

Telstra Shows Leadership

What is going on? Has there been some sort of outbreak of common sense? In recent times we have seen the big banks reducing and even removing altogether some of their fees. We have seen one bank executive make an extraordinary about face and admit that it was a mistake to close down all those regional and suburban branches over the past 20 years, and commit to reopening many of them. And now, it has been announced that Telstra has decided to abandon its greedy stingy and nasty administration fee for people who choose to pay their bills with cash over the counter.

I was very critical of the company when they introduced the fee a couple of months ago, so it is only fair that I praise the decision to dump it now. Even better, the company will refund all those customers who have paid the fee since it was introduced. The new C.E.O. David Thodey said that upon review it had become apparent to him that the fee was not in keeping with his commitment to return customer service to what he called “the heart of our business”. It is clear that criticism from worried customers has made an impression.

Of course, there were exemptions for pensioners, and the overall impact of a $2.20 fee on others would not have been very large. But it was the impression given, the message sent, by imposing such a fee which really annoyed people. It seemed to imply that customers are nothing more than an inconvenience, and that the company arrogantly assumed that it could dictate customer behavior, rather than respond to customer needs. In that context, the public relations damage caused by the fee far outweighed the $2.20 charged.

It might also seem to be illogical that other telephone companies have charged similar fees for quite some time, without the same level of backlash. But the perception has always been that Telstra is an essential public asset with an obligation to the community. Even after it had been sold into private ownership, a significant number of shareholders were, and are, ordinary “Mums and Dads”, who still see the company very much as a community enterprise rather than just another corporation, despite the efforts of the recently departed Three Amigos from the United States. Charging someone for having the hide to actually pay their bill in cash was viewed as downright un-Australian.

Of course the reality is that the company will find other ways to encourage people to make payments electronically instead of in cash. They might offer a discount for online payments, or even create a whole new service plan with lower prices just for their electronic customers. The net result will be that people paying cash may still end up paying more than people who don’t, but the important point is that customers will be more likely to feel that they have been treated with a reasonable level of respect.

I have said many times that there is far more value for a company in actually delivering good customer service than in spending millions of dollars on glossy advertising campaigns which claim a level of customer service which is simply not reflected in reality. In fact, such advertising is counterproductive and becomes the butt of jokes. So it is a good sign to see Telstra taking steps to deliver on the promise of improving customer service. It is a company which is considered to be an industry leader, and this decision is a small step towards acting like one. With a little luck, the other companies will now be placed under increased pressure to cut their silly fees too.

(Declaration: Leon Delaney is a former Telstra shareholder who sold his holding during the reign of the Three Amigos.)

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