Restoring connections: Competing in the experience economy

Telco management priorities in a world of 
radically changing consumer expectations

Few industries have come under more pressure of commoditisation than telecommunications. Communications service providers (CSPs) are under threat of becoming mere utilities while being confronted with the disintermediation of customer relationships. CSPs face head-on competition from OTT providers and an increasingly knowledgeable and demanding customer base. Digital technologies have changed consumer behaviors and expectations. Driving the change: Besides quality products and services, consumers today expect outstanding experiences.

As a result, we have seen a fundamental shift towards a consumer experience economy in which the development, pricing and delivery of products and services are done with an “experience” in mind. 

The value has moved away from the product or service itself towards the customer experiences with it.

These experiences represent a distinct economic offering, and one that consumers increasingly desire.

Reputational challenges

In confronting this shift in value, CSPs face significant challenges. The primary hurdle involves their existing customer experience reputation. Generally, telecommunications is not considered a role model industry for positive customer experiences; no CSPs were cited as leaders on any customer experience scorecards we consulted. According to our most recent telecommunications consumer study, only 16 percent of consumers are real advocates for their provider. More alarmingly, almost half are antagonists that harbor negative opinions and possibly bad mouth their provider.

To turn the tide, CSPs need to move away from an “inside-out” orientation that is focused on products, sales and the organisation, and adopt an “outside-in” orientation, where everything is focused on and built around the consumer perspective. By doing so, CSPs begin to reset the telecommunications experience and build brand enthusiasm through compelling, personalised services that are crafted through deep, and often instant, insights.

To turn the tide, CSPs need to adopt an “outside-in” orientation, where everything is focused on and built around the consumer perspective.

Based on our research, we see two areas of attention for the C-Level of CSPs to support this shift: Restoring consumer connections with your brand, and Getting the basics right.

Restoring consumer connections with your brand

According to our 2014 IBM Global Telecommunications Consumer Survey, the number one source for information for both emerging and mature market consumers is Online. In addition, consumers today heavily rely on other customers, with social media and recommendations from friends and family rounding out the top three sources.

Interestingly, while consumers are sharing more and more information with each other, their relationship with providers is becoming more distant. Most worryingly, we found that consumers are more likely to communicate negative experiences with others, and only rarely share those with their providers. 

Based on our research, we derived three critical priorities

1. Omnichannel experiences: Define mobile-first, cross-channel experiences that merge digital & physical interactions. A successful omnichannel approach integrates information and processes, allowing customers to move easily across different channels when and how they choose. For consumers this reality today is often a frustrating, unpleasant experience broken by silos. 

2. Integration of Social into the marketing DNA: Deeply integrate social and social analytics into your daily marketing operations. Two-thirds of the C-Suite is underprepared to activate social media strategies, while two-thirds of consumers indicate their providers are not using social media in an effective way. 

Consumers are most likely to communicate negative  experiences with others, and only rarely share it with their providers. 

3. Engage in circles of influence: Use advanced analytics to understand key influencers in critical segments of your base, their area of impact, and engage. While the majority of consumers prefer to not talk to a telco for their personal usage but rather use self care, 84 percent of the users are actually willing to provide feedback and engage with providers regarding product & service improvements. 

Getting the basics right 

One key step toward brand enthusiasm is simply getting the basics right. According to consumers we surveyed, CSPs need to focus strongly on these areas.

It is difficult for CSPs to build trust and enthusiasm, if customers are not experiencing consistent quality in their basic services. In addition to focusing on the basics, CSPs need to determine how to differentiate themselves in a commoditised environment.

More than half of the consumers consider their providers “average to poor” in a host of basic areas, including customer service, billing, gathering information and customer interaction.

Here we see three leadership priorities:

1. Define the experience around an enduring idea: Establish an enduring idea that you believe in, determine what differentiates the organisation, define how this differentiation is primarily experienced by the individuals that you serve. CSPs can learn from other industries. To build brand success, a company needs to tie its enduring idea to its business strategy, so it can successfully deliver the experience day in and day out.

2. Over-deliver: ... and never over-promise on an experience that forms an emotional engagement. Companies that do this effectively seek customer opinions at every touch point, proactively aim for improvements, and resolve issues quickly and fairly. CSPs have their work cut out for them in these areas, where well over half of the consumers rate them average to poor.

3. Be compelling: It is vital to not only be functional, but contextual in terms of enhancing user lifestyles. CSPs need to create emotional, meaningful connections, which leave users asking for more. This requires to foster an environment that enables a structured approach to innovation, using a variety of tools ranging from sourcing customer & employee innovation to the integration of extensive networks of partners that bring in new perspectives and complimentary competencies.

What do you think telcos need to do in order to compete effectively in the experience economy? Comment here.

Read more detail in the analysis from IBM's IBV or Click-to-Tweet.

Mark is leading IBM's work in the communications & media sector across the Asia-Pacific region for IBM Global Business Services. He is primarily engaged in helping companies execute and derive value from their digital transformations.
Mark is a passionate runner & triathlete, and you can easily track him down on the race calendar, especially in the Asia-Pacific region.

Follow Mark on Twitter @markdiekmann