I’ve recently started working closely with several multinational mobile network operators (MNOs) in different regions across Europe, the Middle East, and Asia-Pacific that are all facing similar threats to their business.
Fierce pricing competition from new entrants and business models are eroding margins. These margin pressures have a dual effect of increasing the relative cost of traditional customer service and support channels (e.g. call centers and stores), and decreasing the lifetime value of fickle consumers ready to switch to aggressively priced new service options.
Ironically, network operators remain the largest revenue generators at the center of the tech industry’s value chain. The nature of their business also means that they have retained direct relationships with broad customer bases, and extensive proprietary data sets on customer behavior, location, and purchase history. These incumbent advantages imply that MNOs have an enormous opportunity to ‘fight back’ against industry trends, and most notably through building digitally-native customer journeys and experiences.
A 2017 study from the World Economic Forum and Accenture indicates that operators’ share of telecom industry profits have decreased from 58% in 2010 to an expected 40% this year.
The big winners have been content aggregators and distributors. This explains network-content consolidation plays like Comcast’s takeover of NBC Universal, Verizon’s acquisitive spree of AOL and Yahoo!, and AT&T’s recently approved bid for Time Warner. It also explains the surging profits and market value of content aggregation businesses like Facebook (Newsfeed), Amazon (Prime Video), Apple (iTunes), Netflix, and Google (YouTube).
At the same time, as industry profit share has flowed away from operators and towards content aggregation and distribution businesses, the most dominant of those same content players (i.e. the ones that managed to avoid being swallowed up by their network partners) have moved to aggressively integrate backwards up the value chain.
It may already be too late to fight back. Research from 2016 indicated that the majority of consumers were ready to switch their mobile network to one of their favorite tech companies if available, and that the proportion skews higher as you increase customer segment value. Whether it be Facebook’s Whatsapp, Google’s Hangouts, Microsoft’s Skype, or Apple’s Facetime, tech giants that have come to be trusted by consumers with delivering innovative, convenient digital experiences are eating up OTT voice and data services and commoditizing the networks which power them from below.
The convenience and cost of digital experiences has translated into a tight correlation between the prevalence and usage of digital channels, and higher levels of customer satisfaction, loyalty, and lifetime value. This relationship has been observed across industries from financial services (e.g. PayPal vs. wire transfer) to travel (e.g. Priceline vs. travel agent).
Telecom is no exception. 2016 studies by Cap Gemini and McKinsey & Co. both showed strong correlations between the proportion of customers that use digital channels for service and support and customer NPS. In an era increasingly defined by digital accessibility, it is simply cheaper, faster, and more convenient for consumers to transact and interact over digital.
The mobile experience is central to a cheaper, faster, and more convenient customer journey, and will play a critical role in redefining what it takes to open a new account, upgrade your data plan, or pay your phone bill.
In the U.S. market, Verizon can leverage real-time account balance and usage data from CRM and billing systems to trigger mobile notifications which offer up personalized recommendations based on historical consumption. In one example, a push notification can be used to alert subscribers who have exceeded their monthly data plan allowances and offer them alternatives that may better suit their historical usage patterns.
Rogers Communications, the largest telecommunications firm in Canada, has gone a step further. By using similar data on current and historical consumption patterns to forecast individual users’ likelihood to exceed their plan, Rogers can preemptively warn their customers that they are approaching their plan’s limit. By delivering a utility first with customer value in mind, Rogers can create a welcome touchpoint in their mobile customer journey which ultimately drives to higher rates of subscriber retention and sales.
Back in the U.S. market, Comcast, has been recognized by Accenture and the World Economic Forum for the innovative work they’ve done to capture customer data to deliver better services across their Xfinity X1 platform. Customer-level data captured across mobile, desktop, tablet, and OTT devices percolate throughout Xfinity customer communications to personalize and improve it’s offering. This drives higher levels of customer engagement, which ultimately increases the average subscriber’s lifetime value and volume of ad inventory that Comcast can monetize across its portfolio of media properties.
In Asia, mobile network operators like Telenor’s Malaysian subsidiary Digi can create new lifestyle brands by investing in their loyalty rewards programs. By providing unique location-based services and rewards as in the below example, Digi can make a strategic move to own the customer relationship on mobile, and build their position as an intermediary between the customer and loyalty program partners.
As a predominantly pre-paid mobile business, Digi can also leverage their mobile app to game-ify the new customer onboarding experience, and incentivize account credit top-ups and self-service discovery while promoting their loyalty rewards program. The commercial impact of such efforts are to reduce the cost of customer service while simultaneously increasing retention and customer satisfaction
These examples are representative of the ways in which the world’s largest operators are just beginning to reimagine the customer journey in digital terms. Looking forward, it’s becoming clear that we are moving towards a world where the services delivered by branches and call centers today are predominantly digital, and the integration of customer data across every touchpoint unlocks higher levels of relevancy and convenience.
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