Tortuous times for Telecom

Over-promising and under-delivering is one of the biggest reputation-damagers there is.

If the breach of promise is relatively minor, most of us will forgive an organisation and give it a second, or even third, chance to deliver and meet our expectations.

However, when promises continue to be broken, and serious doubts are raised about a company’s ability to deliver – in any way – our willingness to trust that company plummets.

New Zealand’s largest telco company, Telecom, is in serious trouble in terms of reputation branding.

Its much-vaunted ‘available (almost) anywhere’ television ads used to launch the XT Network has come back to haunt them with significant network outages that have affected hundreds of thousands of customers.

This isn’t a minor blip. The fourth major outage this week has resulted in the resignation of Telecom’s most senior executive responsible for the network’s design and implementation.

Just a days earlier, the New Zealand CEO of Alcatel Lucent, the company responsible for the installing the network, also walked (or maybe he was pushed?) from his job as explanations as to what’s causing the outages continue to elude both Alcatel and Telecom staff.

Not only have these two senior excutive’s lost their jobs, Telecom’s share price has been rocked by the debacle with shares falling a significant six cents.

The big question is whether the technology failures and broken promises will drive significant numbers of existing XT network customers – both private and corporate – to Telecom’s competitors.

Telecom’s initial offer of compensation was almost laughable. It’s latest ‘goodwill’ offer is a substantial improvement. However, the bottom-line is that it delivers what it’s promising to deliver. And at the moment a ‘world class service’ ain’t it!

Interestingly, Telecom’s main competitor in the mobile market, Vodafone, has so far steered away from gloating, which is extremely wise of them. In fact, I heard Vodafone’s External Communications Manager note in a radio interview this week that technology issues are notoriously unpredictable and could happen to any company, at any time. A definite sense of ‘but for the grace of God go we’.

The level of doubt in consumers’ and customers’ minds regarding Telecom’s ability to delliver what they originally promised and get to the bottom of the current problems and fix them is significant. Unless there are answers to questions very soon Telecom can expect to see not only its share price head south, but its market share plunge.

The up-side is that hopefully this whole episode will focus Telecom’s attention in the future on avoiding complacency and working hard to win back both patronage and respect. Their initial response of ‘it’s nothing major’ has long since been scrapped and the level of frustration they are experiencing is clearly evident.

As entrepreneur Bo Bennett says: “Frustration, although quite painful at times, is a very positive and essential part of success.”