Introduction
Increasing pressure on the telecoms business model…
Data volumes and revenues continue to grow globally (albeit at a slower rate than before). However, as competition to win market share intensifies, prices are being driven down. As many markets are fully penetrated, the downward price pressure and lower average revenue per user (ARPU) is causing a rapid slowing in global mobile telecoms revenue growth. And, with a high fixed capital and operating cost base, it is unsurprising that telecoms operators are facing a margin squeeze. This situation is clearly illustrated in Figures 1 and 2.
Figure 1: Global wireless telecommunications revenue and EBITDA margin 2012-2016
Source: Telegeography, STL Partners
Figure 2: Regional blended ARPU 2012 & 2017 (USD constant exchange rate)
Source: Telegeography, STL Partners
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…is driving the need for cost efficiencies as well as improved customer experiences
To increase or keep margins stable, telcos face the additional pressure of reducing costs through greater automation and process simplicity. Such a reduction in costs would usually be driven by a reduction in workforce and lower network and IT costs. However, operators are faced with new competitors providing alternate communications services (IM, VOIP, social networking) as well as fierce traditional competition and so must improve the quality of their customers’ experiences.
To illustrate, consider Figure 3, which represents the average “Net Promoter Score” (NPS) for several industries. Telecommunications significantly underperforms relative to other industries, with a NPS of 24 – lagging far behind industries such as transportation and retail. These factors all paint a sobering picture for telcos.
Figure 3: NPS by industry, 2018
Source: CustomerGauge
This situation has created a dilemma for telcos – how can they both reduce costs and improve customer experience simultaneously? This is particularly relevant given the notion that improving customer experience is costly and requires investment in multiple channels.
Figure 4: Telcos traditionally face a trade-off between quality of service and running costs but technology potentially solves this dilemma
Source: STL Partners
One telco that has made steps towards achieving this is Zain Bahrain.
Contents:
- Executive Summary
- Introduction
- Increasing pressure on the telecoms business model
- Zain Bahrain: A simplicity success story
- How Zain Bahrain’s management achieved success
- 1. Understand the problem
- 2. Make basic channel modifications
- 3. Extend digital channel capabilities
- 4. Educate customers
- Key lessons for other operators
Figures:
- Figure 1: Global wireless telecommunications revenue and EBITDA margin 2012-2016
- Figure 2: Regional blended ARPU 2012 & 2017 (USD constant exchange rate)
- Figure 3: NPS by industry, 2018
- Figure 4: Telcos traditionally face a trade-off between quality of service and running costs but technology potentially solves this dilemma
- Figure 5: Zain Bahrain NPS Q1 2017- Q4 2017
- Figure 6: Zain Bahrain channel roles
- Figure 7: Mobile application – 2017 results
- Figure 8: Zain Bahrain customer interactions by channel Q1 2017 – Q1 2018
- Figure 9: Channel mapping
- Figure 10: Zain mobile app promotion
- Figure 11: Scratch and win promotion