Telcos can be challengers too

Telecoms.com periodically invites opinion from third party experts on subjects addressing the most important areas of today’s industry. In this post Paul Bowman from Market Gravity shares his insights on how traditional long-term strategies are dead and telcos need to find new ways to innovate quickly.

Telecommunications companies (telcos) are at the heart of digital innovation in other industries such as media, banking and automotive, but are they lagging behind in the digital transformation of their own businesses? Is it really possible to do A while aggressively and boldly pursuing B?

Of course, they are facing their own strategic challenges including increasing competition from mobile virtual network operators (MVNOs) such as Go Mobile and Tesco Mobile.  Broadly defined as non-network operators, MVNOs essentially resell the services of big operators, but often at much lower prices and with more flexible plans. Over-The-Top (OTT) companies like Netflix and Skype are also muscling in on the telecoms industry leaving telcos needing to find ways to avoid customers switching to a better deal.

It would seem long-term strategies and traditional consulting models are dead in the telecommunications sector. However, there is an emergence of traditional players launching new ventures and bringing their services into the digital age. They are building their propositions around the consumer and are thinking and acting differently. By playing to the strengths they have over and above the start-ups, it puts them back in the driving seat. By combining their experience with innovation they have the potential to disrupt on a larger scale.

Challenging tradition

Large telecoms undoubtedly have core strengths that set them apart from the MVNOs and OTTs moving into their space. For example, by using their physical store presence and combining it with an improved digital offering, they can provide what the start-ups cannot – an all-encompassing customer experience that blends the physical and the digital, spans a range of needs and reaches a broad audience. One example of this is the award-winning solution delivered jointly by Telefonica, Orange and Vodafone who recently deployed the first cross-operator ‘Mobile Connect’ service across Spain – the first country in a worldwide launch to the mass market.

Spanish customers can now use their mobile phones to safely and easily log on to any website or application supporting Mobile Connect. The solution was specifically designed and tested in 2015 to respond to consumers who increasingly have to manage multiple online accounts, each with different login names and passwords.

One of the greatest weak spots of traditional telcos is security.  You only have to look at the recent Talk Talk data breach to see how a glitch can seriously damage consumer confidence in the provider.  Network pressures are also a challenge. In O2’s recent data breach, it’s reported that customer data is being sold on the dark web. O2 may be known for having great mobile packages and customer loyalty programs, but network infiltration can do an awful lot of damage to a good reputation. There’s also no point designing fantastic customer propositions if the network isn’t there to support them.

There are a few challenger telcos out there, however, who are certainly disrupting the status quo. Take WhatsApp, for example which offers unlimited phone calls, texting and video messaging across all providers at no additional cost to users. And, as the digital economy goes mobile, Amazon’s highly-efficient two-sided commerce platform is enabling it to compete effectively with rivals such as Apple and Google controlling the leading smartphone and tablet platforms. The company is even entering the mobile market and offering discount to customers willing to receive personalised marketing communications.

But having modern IT systems doesn’t automatically lead to the best customer experiences – and it’s those that build reputations. Telcos must work harder to offer customers a truly omnichannel service where stores, mobile and online experiences are connected, and they have the right data to hand at the right time to offer a connected, personalised service anywhere at any time.

The time is now

Telcos must find and grow new revenue streams; develop new offers beyond traditional bundling packages and be bold in their innovation. For example, as Sky moves into mobile services, it will offer connections to 11.5m customers after striking a deal with Telefonica. The pairing will offer mobile voice and data services through a wholesale partnership with O2, giving customers a ‘quad play’ package which combines TV, broadband, fixed-line home phone and mobile.

Of course, many of the new kids on the block don’t have the capabilities a traditional player has like network, infrastructure and reach. Many simply don’t have the pedigree of employee or investor you’d find in one of the big operators, or don’t offer the breadth of network or the same customer services that a physical store can provide.

O2 has recently launched a concept store in Manchester created by award-winning agency, Dalziel & Pow which puts customer experience at the very heart of the design. The new store has revolutionised the look and feel of a traditional mobile phone shop and is not only selling handsets but helping to teach and inspire customers with new technology.

There are four main elements telecoms organisations need to review and consider to keep up with these fast-paced changes:

Today’s consumers want telecoms options that are built based on the best digital experiences they have anywhere; convenient, easy to manage and use technology in an intelligent way to help them achieve the things they want when they want them. New technologies from apps and wearables, connected cars, to Facebook messenger bots will change the way consumers interact across multiple touchpoints.

But it seems that although consumers like the idea of a truly 100% online service, they’re also quite wedded to the storefronts. There is still a human desire to get some interaction from other knowledgeable and attentive human beings. But those stores must embrace technology too in order to provide a truly integrated omnichannel experience – offering a superior customer experience and faster, more effective service.

Connect it

In conclusion, the market is moving faster than ever before and it’s important to recognise that we can no longer predict the future with any certainty. This hails bad news for strategists and traditional consultancy models. Traditional telcos can transform their business by creating a ‘mission-based’ culture that empowers their most talented people to respond to businesses challenges at pace without letting traditional hierarchy and complex decision making process stifle their innovation. Embracing diversity and collaboration brings together small teams of people from across the business to solve business challenges more effectively. This means that instead of thinking too long and launching too late, telcos can find ways to bring their propositions and new innovations to market in record time. It’s possible to do this in 20 or even 10 days, learning from their customers and staff before they invest significant resources in building and scaling the solution for full launch.

With the emergence of new entrants to sector, in the form of completely new brands and new challenger products and services from the more established players, it’s important for telcos– regardless of size, market share and existing digital capabilities- to stay one step ahead and embrace the technological innovations and digital trends to stay ahead in this competitive and fast-moving marketplace. So they can be famous as an industry for leading the pace of change, not just helping other industries to get there.

Market Gravity was founded in 2009 by Peter Sayburn and Gideon Hyde. They founded the company to help big businesses transform ideas into breakthrough propositions and inject an entrepreneurial spirit into corporate environments. Market Gravity’s clients include Barclays Bank, HSBC, BP, Boots, Argos, Standard Life, British Gas and the AA.