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Stop thinking like a traditional telco and start acting like a retailer
Mobile operators around the world recognise the need to start behaving more like retailers. But how does a company effect such a fundamental shift, and is the market poised to support operators in their efforts to connect more effectively with their customers?
With the convergence of telecoms and media accelerating at pace, network operators need to evolve their business models in order to stay one step ahead of the competition. Intense price competition in telecoms access provision is driving structural change, and the investor community is forcing operators to consolidate their network assets to achieve the economies of scale necessary for sustained growth.
In order to offset commoditisation of voice services and recoup the huge sums invested in spectrum licenses and next generation networks, operators are looking to the opportunities presented by convergence at both service and industry level.
Don’t fight it
To realise new revenue opportunities, however, operators are increasingly having to compete with new market entrants in the form of media, applications and content packagers or aggregators, such as Apple, Nokia and Yahoo!.
So how should operators respond? Attempting to compete directly with this new generation of content packagers would be futile, and is likely to result in massive erosion of shareholder value. Instead, operators need to embrace the market shift and acquire the skills, knowledge and technologies to become a better retail distribution channel for these players, thereby maximising revenues from their part of the value chain. This means developing a retail mindset.
Thinking like a retailer
Thinking like a retailer means adopting a truly customer-centric operation; one capable of tailoring offers to meet customer needs by segment or by event, identifying opportunities in increasingly niche customer segments and delivering with a focus on managing the customer experience.
Since the 1980’s, the evolution of the telecoms industry has seen operators competing first for market share, followed by aggressive cost competition, and ultimately offering bundled services to keep customers loyal. But with an increasingly sophisticated buyer, bundled services delivering low cost voice, video and data access are no longer enough to deliver growth.
The emergence of virtual mobile network operators opened the market to competition from mainstream consumer brands, like Virgin. Alongside that, the media industry has seen the emergence of digital content, turning telecoms networks into critical channels for delivering a lot more than just voice.
Today, the market is changing at record speed, with content providers, major consumer brands and traditional network operators all vying for the same share of mind, and purse, when it comes to the end customer. Network operators have grown up selling their own access services. Their future revenue growth depends, however, on selling third party media, applications and content services, which represents a huge shift in both business and operating model.
What to offer
In order to succeed, and garner a larger part of the value chain, today’s network operators must offer: superior customer profiling and segmentation; product management for multi-sourced bundles, with real time rating; real time decision support for sales and care value optimisation; and optimised contact strategy and use of self service.
The good news for the telecoms operators is that much of what is needed to achieve this is in place today. With a little investment and a sharpening of focus on customer relationships, operators are well placed to offer the packagers localised customer management, billing and a genuine retail channel capability.
Perhaps most importantly, the customer relationships already exist for the operators; it is simply a matter of making the most of them. To make the transition to a truly new model, however, operators must also make a fundamental shift in thinking. They need to give up their aspiration to own the content, and instead embrace the packagers and their portal platforms, and move to a model where they serve both the customer and their business partners in equal measure, allowing customers to consume services from many different providers with ease and security.
When it comes to increasingly sophisticated content providers, the notion of a partnership with an operator is questionable unless the network provider is in a position to add value above and beyond that of commodity-priced connectivity.
The market is full of challenges for today’s network operator, but if an operator can act quickly to assimilate the strategies and best practices of retailers, it creates an exciting opportunity to profit from the emerging converged environment.
Convergys is a global leader in providing customer care, human resources and billing services.
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