With a rapidly evolving technology landscape reshaping the telecommunications industry, customer experience is becoming the decisive factor in whether established operators remain relevant.
Telecoms have long been central to the digital era, providing the networks and platforms that enabled many of the services that transformed how we communicate. Yet many of those same services have also disrupted and eroded traditional telco revenue sources. Over-the-top (OTT) applications like WhatsApp, Skype, Google Hangouts and Viber have captured users with intuitive interfaces and compelling, often free, audio and media-rich messaging.
Where OTTs fall short is in offering a comprehensive customer proposition that incumbent telcos are uniquely positioned to provide. Monthly contracts, pay-as-you-go plans and long-term customer relationships give operators an opportunity to build brands and service portfolios that go beyond a single-function user interface. Telcos can leverage their broad reach and established infrastructure to create omnichannel experiences that customers trust and value. However, current evidence suggests many operators are not yet fully capitalizing on this potential, as recent surveys of customer attitudes toward their providers indicate.
Escaping the perception of being a mere utility requires a customer-centric transformation and the strategic development or acquisition of new capabilities. Consumer expectations are rising quickly and behaviour is growing less predictable, making historical data less reliable for forecasting needs. Compounding this challenge, McKinsey estimated in 2017 that telcos could gain as many as one billion additional middle-tier customers, mainly from emerging markets, by 2025. If operators fail to adapt and meet evolving customer demands, OTT players will continue to chip away at existing revenue streams — and potentially take much more.
Meeting rising customer expectations
Significant progress can be made by getting the fundamentals right and embedding a culture of continuous improvement. Today’s basics include leveraging data-driven technologies to craft more personalized experiences. Personalization improves not only the delivery of service but also how customers perceive it. Recent industry research highlights how consumers increasingly use private channels to discuss and interact with brands. For telcos, this shift toward conversational, private interactions represents both a threat and an opportunity. When operators are seen merely as utilities, it becomes all the more important to invest in interfaces and services that demonstrate a broader, differentiated value proposition.
Diversifying and adding value
Acquisitions and strategic partnerships provide another path to delivering greater value. Despite sometimes being taken for granted, telcos occupy a central role in customers’ daily lives and are well placed to collaborate with a wide range of content and service providers. Mobile networks in particular have a long history of enabling consumer access to third-party content; by taking data seriously and developing personalized offerings, operators can identify partners who share that ambition. Carrier-billed video subscription services are a notable example: forecasts suggest significant growth in carrier-billed SVOD revenues over the coming years. Beyond video, opportunities are expanding in smart home services, Internet of Things (IoT) solutions and personalized transportation services.
The overarching message is clear: telcos must transform if they want to survive and thrive. This transformation may require moving beyond traditional business models to put customer experience at the center. Operators that design new services around customers, use data to create seamless and personalized interactions, and embrace continuous change will be best positioned for long-term success. Staying alert to the next wave of disruption and responding quickly will be essential to sustaining that success.
Editor’s note: Learn more about the research discussed in this article.
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