Since the widespread adoption of smartphones and social media, methods for engaging customers and customers’ expectations from the brands they interact with have changed considerably. Customers now expect more real-time interactions. Simultaneously, with telcos converging in their services and prices, the main differentiator between telcos is now customer experience. Consequently, many telcos are putting customer experience at the heart of their digital transformation initiatives.
Net Promoter Score (NPS) is a standard indicator across industry for measuring customer experience. However, with an average NPS score of 29 compared 56, 45 and 37 for logistics, consumer brands and financial services respectively, telecoms, as an industry, is relatively behind in customer experience.
But, what does it look like within the industry? STL Partners recently conducted research benchmarking operators’ digital customer engagement. We received 70 survey responses from 47 global operators.
From our survey results we clustered operators into three categories based on their customer engagement strategies:
Strategy: |
Digital Nascent 26% of respondents |
Multichannel 29% of respondents |
Omnichannel 46% of respondents |
| Digital infrastructure (number and breadth of online channels for commerce and service) |
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| Data use across channels and services (and levels of integration) |
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Commerce – telcos are underusing their digital sales channels
Traditional bricks-and-mortar stores dominate sales with one-third of survey respondents stating that online sales account for less than 10% of total sales. Moreover, whilst averages are low, there is considerable difference between telcos globally. For example, on average, 20% of renewals of core subscription packages are conducted using online channels, however for the best-performing telco this is more than double at 42%.
Marketing – telcos are still using basic customer segmentation
78% of operators admitted to having a limited view of individual end-users. Consequently, interactions with customers and service recommendations are not as targeted and relevant as they could be. This is a significant block to telcos becoming more digital in their customer engagement and affects their customer relevance.
Sales & Service – online channels lack functionality, despite ambitions for ‘self-serve’
There is significant variation between operators in self-service channel offerings. Omnichannel operators generally excel in the provision of online channels like Facebook and apps, whereas Digital Nascent operators are stronger in offline channels like telephone/call centres. However, despite offering various online channels, telcos lag in their levels of functionality, for example, on average, only 26% of operators’ customers using online channels to raise tickets.
The key differentiator for omnichannel is proactive use of customer data to personally engage customers
Omnichannel operators most successfully use their online channels to make sales, having on average twice as high a proportion of sales coming from online channels compared to their multichannel peers.
Our research shows a strong correlation between how personalised marketing is, for example the proportion of communications with customers that are based on previous interactions, and online marketing conversion rates. Omnichannel operators excel in this area with their classification of customers into broad, well defined segments, rather than more basic customer segmentation, 3 times higher than digital nascent operators.
Omnichannel operators are strong in sales & service too. Omnichannel operators generally offer more online channels for completing different service requests, for example they offer Facebook and apps to raise tickets 2.25 times more than digital nascent operators. Where Omnichannel operators truly differentiate themselves is their active engagement of customers with digital channels. Omnichannel operators have 2 times more complete or partial visibility of their customers compared to their Multichannel peers, and 3.75 times more than Digital Nascent operators. Because they actively use this visibility to engage customers they have 2.7 times more customers actively using their app compared to customers of digital nascent operators.
What should telcos do next?
Operators adopting an omnichannel strategy reap the benefits of customer engagement more than any other strategy. However, before embarking on omnichannel, telcos need to ensure they are able to manage their digital channels effectively and provide customer with adequate information and functionality. Below are some recommendations for achieving this:
- Develop more online channels across the domains of commerce, marketing and sales & service
- Ensure that these channels are functional and encourage customers to engage with them
- Develop more complete visibility of customers
- Increase customer visibility and use of data to personalise interactions with customers
Read our latest analysis and insights on our telco research hub here.