Telcos face challenges in being loved brands

Loved brands create strong emotional bonds with their customers, through a set of values and beliefs
that customers can identify with and incorporate into their daily lives. In theory, businesses with loved
brands have a range of advantages over others, which over time create significant financial benefits.

Business advantages for loved brands

Source: STL Partners

Like other businesses, many telcos strive to build strong emotional engagement with their customers. However, over time, telcos have found it increasingly difficult to realise this ambition.

How are telcos brands viewed by their customers?

In developed markets, telcos have generally become more functional than attractive. While the main services (voice calls, internet access) remain essential, telcos are no longer making a transformative difference in their customers’ lives. Therefore, they are perceived by customers like water, electricity or gas utilities.

There will always be some customers that have a poor opinion of telcos, particularly if they have had a recent bad experience. However, in general, telcos are not disliked, especially after the recent steps taken during the COVID-19 lockdowns, but they are no longer loved by their customers.

Brand affinity remains relatively strong in developing countries, where telcos are still able to bring new and transformational innovations to market.

What strategies could telcos adopt to succeed going forward?

It is critical for telcos to recognise that they now exist in a new environment where their relationship with their customers has significantly changed. Their core service is no longer seen as transformational or making a radical change in customers lives. Therefore, they need to create new ways to increase relevance and drive an emotional connection.

To create this emotional connection, telcos must develop a clear and consistent vision with purpose and values that are right for the new environment. They must do more than simply “dress for the interview,” and all actions must match the brand image they are creating, so as not to be superficial.

Telcos must prove to their customers that their new positioning is real. While consistency is important to building and sustaining the brand vision, its only valuable if the vision fits to the current market environment and customer expectations. As outlined above, telcos must first adapt to a changed environment and then focus relentlessly on this new position in a very clear and consistent manner.

STL Partner’s May 2022 report How can telcos be loved? offers looks at how TELUS, O2 UK, MTN, Telstra and Orange illustrates how a telco can successfully adapt to the new era and build strong emotional bonds.