Our research into 47 global operators reveals divergence in telcos' levels of digital customer engagement. In this report, we examine three strategies that emerge (Digital Nascent, Multichannel and Omnichannel) and the key factors for success, drawing on lessons from case studies in banking, retail and hospitality.
Customer experience is at the centre of telcos’ digital transformation efforts
Telecoms is one of many industries that are transitioning towards becoming more digitalised businesses. More specifically within digital transformation, the need to be customer-centric, and improve customer engagement, has been a crucial theme in telco digital transformation efforts. This is exemplified by Orange’s CEO Stèphane Richard who recently claimed that users needed to be “at the core of systems”.
As revenue growth in the industry continues to decline and telecom operators’ core services become commoditised, customer experience remains as one of the few areas operators can differentiate themselves from their competitors and maintain relevance with consumers. This places greater need for operators to make customer engagement a priority.
The way in which telcos engage customers has changed dramatically in recent years through the growth of different channels and touch-points a customer has access to. This is often contributed to the rapid adoption of smartphones and tablets, initiated by the launch of the iPhone in 2007, and the speedy adoption of social media platforms like Facebook (launched 2004) and Twitter (launched in 2006). Customers now expect businesses to be digitally savvy, knowledgeable and “joined-up” in their interactions with them.
There is no shortage of commentators and technology providers extolling the virtues of a more customercentric focus, urging operators adopt an omnichannel approach. By integrating online, call centre and bricks-and-mortar store customer experiences – through omnichannel capabilities – the promise to operators is that they can deliver joined-up customer experiences: simultaneously improving the effectiveness of telecoms marketing by building a ‘single-view’ of the customer, reducing time spent on resolving customer service issues, and preventing data from getting stuck in specific siloes.
But are these investments in technology (and the considerable internal resource implications) really a priority for operators or just another example of technology vendors pushing operators to spend more on expensive capabilities that they will never benefit from? Our survey suggests that those operators who have built omnichannel capabilities are reaping the rewards. However, operators also appreciate that success is not just down to implementing fancy systems: it’s also about what you do with them and having the right skills.
Telcos’ benchmarks come from within and outside the industry
Although most telcos are investing in their efforts to digitise the customer experience, it may not be obvious where they should be concentrating their efforts and what targets they should be aiming for. For this, there is a need to determine what the relevant benchmarks are when it comes to best-practice for digital engagement, how well they stack up and how they should seek to close the gap.
Telcos are looking to learn from outside their industry as customer engagement is a domain that all businesses constantly seek to improve. Digital natives, companies such as Google, Facebook and Netflix that started off as digital businesses and did not have to make a transition from legacy practices, are often leading the way when it comes to offering customers a truly digitized experience. However, for a telco, it may seem like an unrealistic dream to replicate their efforts, therefore telcos often look for best-practice examples from other industries, which are undergoing a digital transformation and still have the burden of legacy services, systems, processes, people and infrastructure. These industries include finance, retail and media.
Nonetheless, when comparing telcos’ digital customer engagement to these industries, many different measures suggest that telcos are lagging behind. When looking at cross-industry Net Promoter Scores (NPS), telecoms operators come out at an average of 11% compared to an average of 50% for retail (which leads all industries). The next worst industry, insurance, has an average score of 23%, just over twice that of telecoms.
These statistics suggest there is room for improvement, but in which specific areas do the most critical gaps exist and how should telcos go about changing this?
So, STL Partners has attempted to answer two questions:
- What should telcos be aiming for?
- How well are telcos measuring up to their ambitions in digital customer engagement?
To address this, we created an online tool to benchmark telcos across various metrics in three domains related to digital customer engagement: commerce, marketing and sales & service.
The Digital Customer Engagement Benchmarking Study5 took place in two phases. The first phase was focused on commerce and took place over July and August 2016. In the second phase, the scope was expanded to include marketing and sales & service and took place in April and May 2017. In total, 70 respondents from 47 telecoms operators took part in the study.
For the purposes of this study, operators are categorised into 2 ‘peer groups’:
- Mature Market: Medium-high income per user, predominantly post-pay, developed fixed infrastructure
- Mobile First: Low-Medium income per user, predominantly pre-pay with limited fixed infrastructure
Figure 1: Respondents by region and peer group
Source: STL Partners
- Executive Summary
- Characterising operators’ digital customer engagement strategies
- Commerce: selling more digitally and selling digitally more
- Telcos’ online channels are still not being used enough by customers and prospects
- Revenue benefits from online channels are relatively lower
- Leveraging digital channels to upsell customers is one way to help drive online revenue
- Data use is the key differentiator for a successful digital commerce approach
- What is best practice for commerce?
- Commerce Case Studies
- Marketing: this time it’s personal
- A (good) personalised marketing approach is more likely to secure returns…
- …but most telcos’ marketing still uses traditional customer segmentation
- What is best practice for marketing?
- Marketing Case Studies
- Sales & Service: Delivering the promise
- Customers of the Omnichannel operator group are most actively engaged on digital channels
- Online service engagement requires adequate channels and functionality
- Omnichannel operators add value to customer service by ensuring complete visibility of customers
- What is best practice for sales & service?
- Sales & Service Case Study
- Figure 1: Respondents by region and peer group
- Figure 2: Mapping operator digital customer engagement strategies
- Figure 3: On average, less than 20% of total sales are from online channels
- Figure 4: Variation between average telco and best performer across online sales
- Figure 5: ARPU tends to be higher for customers who purchase their core package on offline channels
- Figure 6: Mature Market operators have higher online attachment rates than Mobile First
- Figure 7: Most operators are offering at least one online channel for upgrades
- Figure 8: Omnichannel operators out-perform in digital commerce
- Figure 9: Our research shows a link between the levels of personalised marketing and online marketing conversion rate
- Figure 10: Most operators are not using personalised marketing techniques
- Figure 11: On average, most customer interactions are not contextual
- Figure 12: Online marketing conversion rates are at 31% across operators
- Figure 13: A minority of purchases are being scaled up
- Figure 14: Omnichannel operators excel in app-based customer engagementrst
- Figure 15: Omnichannel operators are ahead in the number of channels a customer can use to raise a ticket
- Figure 16: Omnichannel operators excel in the functionality of their channel offerings
- Figure 17: Omnichannel operators lead converged billing capabilities
- Figure 18: Omnichannel operators are on average twice as likely to have complete and partial visibility of customers compared to Digital Nascent operators