Transforming Telecoms With the Customer in Mind

By Harry Keir Hughes, Deborah Affleck May 2019   |   Article   |   14 min read   |   Email this article   |   Download
Telcos have missed opportunities to transform in the past. 5G represents perhaps their last chance to reinvent their business as tech companies. Understanding customer pain points, developing new propositions and transforming the operating model around this will be crucial to success.
Transforming Telecoms With the Customer in Mind

Telcos need a revolution in their business model if they are to survive in a world dominated by Google, Apple, Facebook and Amazon (GAFA). The stark truth is that they should have transformed five or even 10 years ago. With the advent of 5G and all the excitement that it promises, this is perhaps their last chance to reinvent their businesses as tech companies before they all go under the sand. To do this, they must really start listening to their customers, using both big data and thick data in intelligent ways to understand the context behind purchasing decisions. This then needs to inform new operating models that give customers what they want, when they want it.

Profitable companies are customer-centric

Of the top 250 companies analyzed by the Drucker Institute, Apple, Intel, Accenture, 3M, Procter & Gamble and Nike are at the top of the pile1.

And on closer analysis, it’s the customer-centricity metrics that differentiate these leaders from the competition.

Telcos should take note. Many are losing the brand battles against digital leaders.

During the corporate expansion in the ’80s, ’90s and ’00s, telcos generated the consumer excitement necessary to build massive wireless and broadband networks. Now, staring wide-eyed as competitors fight them to the bottom on prices, and with digital leaders and chip makers taking advantage of their now seasoned business model (“dumb pipe company” is a prescient term used to describe many of them), they must remain humble and really start to listen to what their customers are saying behind closed doors.

To listen, they must tune their ears beyond the bagpipe shriek of big data — the natural battleground of the GAFA behemoths — and gain actionable, agile insights about their customers through “thick data” — finding the “why” behind customers’ touch points.

If they can do this, they will move themselves up the service value chain and have a fighting chance to return to the top of the Brand Finance index.

A revolution in the telco brand experience

In 2018, Vodafone’s brand value fell 14% while familiar names such as BT, Movistar and Deutsche Telekom drifted downward 2. Connectivity alone has lost its luster, and gone are the days when simply improving the speed and quality of a network kept consumers happy. Today, the on-demand nature of big tech services and applications has made telco consumers much more experience-aware. They expect the world, and they usually get it. Everything from the movies they stream to the dishwasher detergent they use is offered at the touch of a button, wherever they are in the world. These individual experiences that they get from titans like Netflix and Amazon have raised customer expectations exponentially.

As we wrote in the report “5G: A threat to telco?” telecoms operators might be banking on the coming rollout of 5G, but most won’t be able to afford it. To monetize the data shunted across their pipes, they must change their business model. Building ecosystems around the “internet of things” (IoT) or focusing on specific industries or services is one way to climb up the value chain. Merging with content providers to own the data is probably the most lucrative avenue — again, if they have the money in the bank. What is sure is that telcos must reinvent themselves beyond their traditional roots as carriers. As Australian Telstra CMO Joe Pollard said in 2016, “We need to evolve from a telco to a techo — we need to be a world-class technology company empowering people to connect.”

In any of the scenarios mentioned, the vision for transformation must come from what the customers are really saying, not just what leaders and knowledge groups within the company think they want. Traditional analysis of big data such as viewing habits and call time must be complemented with the context that helps companies understand customer motivation and pain points.

Many telcos placed a number of bets on a wide range of technologies and ventures that they felt would bring their customers convenience and ease of use across the customer journey. These discussions took place in the boardroom, with data based on what their competitors were doing in the space. They invested hundreds of millions of dollars in video content rights and acquired IoT ventures in health care, logistics and manufacturing. They also built a bank of cloud-based services, including storage, web hosting, messaging and collaboration software. But they failed to determine what their customers really valued and the customers’ underlying reasons for their behavior online and off. Without this holistic view, they forfeited the opportunity to innovate toward higher value, which only depressed earnings further.

In summary, customers’ aches, pains and desires must be front and center, and to get this point of view, leaders cannot just huddle around a table and think that they are creating magic. Customers must be listened to before strategies are laid out. This design thinking is an outside-in vision in which front, middle and back offices all work together to provide a personalized and seamless customer experience. To get there, telcos must leverage their granular big data along with thicker, experiential data that contextualizes the user journey across all touch points.