Transforming Telecom Companies in a Retail World
The recent MVNO World Congress in Amsterdam brought fascinating insights into the changing telecom industry, particularly around the opportunities that lie ahead for Mobile Virtual Network Operators (MVNOs) and how they can they can cement their position in today’s fast-paced climate.
All change please!
The global telecommunications market is increasingly diverse and competitive. As consumers gain more freedom to switch providers, and with many customers already carrying multiple devices to cover different needs, it has become virtually impossible for telcos to succeed based on price alone. Agile MVNOs are responding to this challenge, creating differentiation through enhanced services, strong local presences or niche specialties.
One of the big indicators of change at MVNO World Congress was the market shift around success metrics and customer relationships. Historically, telcos have focused on ARPU (Average Revenue Per User) as a key metric and while this is still an important financial measure, Net Promoter Score (NPS) is now becoming a more widely used metric among MVNOs. Although NPS is a measure more commonly used in banking and retail, it reflects customer satisfaction and therefore the likelihood of retention – something which is vital for telcos to understand. Since the cost of customer acquisition is now so high, and mass attrition so common, measuring customer loyalty and implementing customer retention measures has never been more important.
Creating customer value
It is essential that telcos offer differentiated value to build loyalty and retain customers. This could be through alternative customer experience models, service processes and customer support. At the moment, there is a lot of focus on offering additional services that are more profitable than pure ‘airtime.’ For instance, many telcos now offer tri- or quad-play solutions, as they branch into entertainment and bundle communications services together. ‘One supplier, one invoice, one contract’ is a good proposition for consumers, but of course, it is nothing new.
In our own insight paper, we’ve explored how telcos can become a digital hub for a variety of consumer services – something that could give market leaders a strong long-term position. And, of course, there is the opportunity to drive mobile payments, which MNOs and MVNOs are naturally placed to do. But, there are some fundamentals that these businesses must put in place first – and arguably a number of additional lessons can be taken from the retail sector as they do so.
Reflecting the retail model
Beyond the adoption of NPS as a measure of success, telcos have much to gain by thinking and acting more like market-leading retailers. Telcos need to evaluate and adapt their customer experience; a fast, simple, robust checkout experience, convenient payment options and personalized loyalty offers need to become key elements of telco payment strategies. After all, these are the standards that consumers have come to expect from their retail and digital purchasing experiences.
Whether MVNOs have any physical retail presence or not, they are operating in a borderless omnichannel world and must offer a seamless experience across channels. This means ensuring consistency and continuity regardless of how a customer wants to interact and pay for services.
Telcos are increasingly looking to integrate telecom products and services with loyalty programs, financial services, or other associated products. Many MVNOs that are subsidiaries of retailers can allow customers to earn points as they talk on their mobile phones and use these points in-stores to upgrade their phones or access other discounts or incentives. Connecting loyalty program touchpoints across online, mobile and instore is a powerful proposition.
Understanding tomorrow’s telco customer
Combining behavioral and transaction data across channels can also offer tremendous value. Using this intelligence to build comprehensive customer profiles can empower MVNOs to provide enhanced services to their customers. For example, the ability to analyze individual shopping and telecommunication usage patterns offers the opportunity to power highly tailored incentives and promotions. This can support stronger conversion rates, more repeat business and extended customer relationships. Positive customer profiling can also help differentiate genuine customers from fraudsters, enabling telcos to manage risk and support a seamless customer experience as they expand their service offering.
The other key consideration is around payment preferences. The legal obligations around PCI compliance associated with traditional card-based payment methods remain, while today’s consumers demand more freedom over payment choices, with alternative payment methods (APMs) such as Google Pay, Apple Pay, PayPal and WeChat increasing their market share. Telcos need to reliably and flexibly offer the right payment methods in each market and support them across channels. Cost-effectively connecting to these payment methods, reacting quickly to changing preferences, and understanding the risk profile of each APM is crucial, especially as consumers become increasingly confident transacting through their mobile devices and the demand for APMs rises.
The road ahead for telcos
It is a challenging and exciting time for MNOs and MVNOs globally. To monetize the opportunities ahead, telcos must take on board some of the lessons from other sectors as they seek ways to diversify their portfolios and deliver improved choice and convenience for consumers. Irrespective of business demographic, it is crucial that all telcos consider their digital journey, from an investment perspective, but also from a customer experience viewpoint. Effective investment in the right technologies and partnerships can deliver a competitive advantage.
Cost-effectively supporting the right channels and payment methods will be crucial to meeting consumer demands, as will delivering a frictionless customer experience. Telcos, looking to secure a strong position in tomorrow’s communications world, must follow the route already being pursued by retailers and unite channels, tailor by customer group and look for expert partners who can support their transformation process.
Ultimately, telcos can gain a bigger piece of mobile payments and provide enhanced support through aggregated access to digital services. By utilizing carrier billing, customer data and device intelligence, they can become more valuable to customers and provide the kind of ease and convenience in their daily lives that keeps them coming back for more.
Interested in learning more about our work in the telco industry? Visit our industry page, or view our insight series on the telco payments opportunity.
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