After years of looking to do more with less, telcos at last have the opportunity to experience actual upside with a next-generation marketing and sales transformation. The long-promised concept of omnichannel, in which various distribution channels are truly integrated, is finally becoming a reality now that mobile and web are seamlessly connected, and automation and personalization are possible with advanced analytics. These factors present a chance to take customer engagement to a new level, accelerating the whole organization.
A telecom operator looking to improve up- and cross-sell revenue identified an opportunity to enable its app’s front page as a new “pull” channel to serve more personalized offers
Two main threats have already exposed the old way of doing business as quite vulnerable.
The first, digital attackers, have taken over significant market share. For example, MyRepublic launched in Singapore in 2012 and rapidly captured 7 percent of fixed-broadband market share. In France, Free Mobile captured a 19 percent telecom market share within four years of launching in 2012, leveraging its strong digital customer engagement and a lean business model supported by digital-only distribution. And in the United Kingdom, a similar model combined with crowdsourcing for customer service helped Telefonica’s venture giffgaff become a very popular telecom brand.
The second threat is that over-the-top (OTT) players, such as WhatsApp, Apple’s FaceTime, and Tencent’s WeChat, are also growing quickly, which could decrease spending on traditional fixed and mobile communications services (landlines and mobile devices) by up to 36 percent, according to our research. We expect this trend of continuous pressure on revenues to continue (Exhibit 1).
We believe all telcos can find immediate benefit from a structured, digital marketing-and-sales approach regardless of their digital maturity, though companies that advance their digital customer engagement will experience the biggest upside. Even over a very short period of time, we have seen significant results (Exhibit 2). For example, a global telco in the process of transforming its marketing and sales by combining digital, analytics and agile methods quickly achieved a threefold uplift in digital sales, moving from the bottom quartile to the top in less than a year in its first pilot in a mature market. The company is now scaling the change across its other mature markets, with similar results.
Three pillars of next-generation
marketing and sales
To pursue this kind of supercharged marketing and sales, incumbent telcos need to start by transforming digital customer engagement. Next-generation marketing and sales require both leadership buy-in and excitement and company investment into new ways of working and technology (Exhibit 3). Incumbents, especially, will need to think in these terms, as many years of M&A have left them with disjointed systems that rely on outdated processes.
Buy-in and talent
In our conversations with telcos undergoing agile transformations, we have heard a consistent message from executives: they wish they had released employees from the existing organizational structure to the new cross-functional teams sooner, which would have accelerated the process and demonstrated management’s determination to change.
Change, especially cultural change, doesn’t happen without C-suite buy-in and active use of role models. And it doesn’t really take hold until it is executed at the smallest unit possible in daily operation. To drive the required radical shift in the way work gets done, as well as in a telco’s technology foundation, buy-in to the program must come from the top. The power of C-level presence and engagement on platforms such as company town halls, internal social portals and even key meetings of the cross-functional teams can’t be overstated. Active championing of progress and learnings (even failures) helps to motivate employees to join the journey. Once the transformation is under way, C-level buy-in also extends to empowering teams. Without it, agile decision making can’t happen.
Choosing the right core team members is also crucial. They need to be advocates who exhibit high energy, strong curiosity, pragmatism and entrepreneurial spirit within the teams. Moving some of the organization’s best resources into agile squads can be challenging, but it is key to ensuring ownership on subsequent levels, including education and participation in the design and execution phases.
Finally, the transformation toward next-generation customer engagement requires deep digital talent for a set of new roles, such as data architects and marketing and advertising specialists. Existing staff probably won’t be able to perform all roles, so training and external recruitment will be essential. Of executives interviewed, 77 percent mentioned skill gaps as hindrances to driving digital transformations. External recruiting will require anchor hires (hire one great developer and his or her colleagues will follow) and new processes to attract the right prospects (such as conducting digital networking events and dedicated recruiting days) paired with digital employer branding (such as developing a unique selling point for digital talent).
The approach to recruiting itself can also help build a brand and bring in the best people. (For more on digital talent, see “The new tech talent you need to succeed in digital,” September 2016.) The types of talent telcos need are attracted to forward-thinking companies, so recruiting culture matters. Having the right company representatives give the right talks at the types of conferences at which talent can be found is one such method. Involving key team members in the entire hiring process is another. This method can ensure that recruiters are completely on board with the goal of transformation and can effectively convey that message.
Transitions on this level almost always require some external support in the beginning. But as the capabilities become cores of the business model, those roles should be converted to internal ones in a six- to nine-month time frame to ensure the new culture is embedded and a lower cost base achieved.
Digital ways of working
Traditional telcos tend to be highly siloed, often with marketing and sales teams working separately. This results in slow processes and low customer centricity, which is no longer sustainable. While it can take weeks and many back-and-forth handoffs to do something like put together a new discount campaign, working across functions in multidisciplinary teams can shorten the time to market for a new campaign to just days. This, plus agile working methods, is what accelerates digital customer engagement.
For example, a UK telco successfully transformed its performance-marketing group into an agile squad and achieved an increase in digital acquisitions of more than 16 percent in just four months. It then used the increase to build out to a broader agile transformation at scale across the company.
To achieve this faster, targeted and dynamic approach, multidisciplinary teams need to bring together the consumer-functions and IT groups to ensure the latter isn’t left behind. Together, they should focus on ambitious, short-term minimum viable products that follow a data-driven test-and-learn methodology. They should be empowered by top leadership to act quickly so decisions won’t get stuck in middle management, which would negate the benefits of the agile setup.
Since impact can be achieved by even a small team, the proven approach is to start with select proof-of-concept use cases, followed by a rapid rollout to the wider organization, to avoid the friction created by a two-speed business.
Comprehensive and flexible technology
To succeed in digital customer engagement, the agile processes and mind-set must be complemented by a strong technical foundation that will increase execution power and channel reach, as well as enable new use cases. Failure to resource effectively and invest up front can leave teams without the tools and technology required to unlock next-generation opportunities, such as personalization at scale. Unlocking these use cases will require four elements to work together effectively: data, decision making, design and distribution. (For more on the capabilities needed to drive customer engagement through personalization, see “No customer left behind: How to drive growth by putting personalization at the center of your marketing,” July 2018.)
However, this doesn’t mean that companies have to wait to build up their digital maturity before starting to use digital tools. Significant impact can still be made without the tech stack in place. For example, a telecom operator looking to improve up- and cross-sell revenue identified an opportunity to enable its app’s front page as a new “pull” channel to serve more personalized offers. However, it estimated the time it would take to build an automatic solution between the app and the company’s personalization engine to be six to nine months, which was far too long. Looking for a simpler alternative, the squad instead spent a little more than a week coming up with a manual minimum viable solution to target customers in the app. The process was more time consuming and less sophisticated than the initial design, but it gave the company the ability to harness part of the value immediately and gain valuable insight about what worked with its customers. The process also helped the squad members better understand which features and capabilities were critical, which allowed them to deliver an automated, sustainable solution in around two months, as opposed to the six to nine months initially estimated.