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Giving customers what they really want

I finally worked it out! It’s taken me many years to understand why the digital service providers like Facebook, Google, Spotify, et al have all grown at stellar rates while other more stable, conservative industry sectors like retail stores and telcos are wallowing in the realms of self-flagellation.

Of course, the old DNA argument holds water, but even when new DNA has been injected into these conservative operations they have hardly made an impact. You can dress them up with marketing gumpf but they are missing the point – their customers’ expectations are fundamentally changing and they are not changing with them.

Mobile service providers, in particular, have failed to keep pace with the changing habits of their consumers. Aggressive marketing campaigns, seductive tariff plans, subsidized handsets and generous data bundles are so passé. They may have worked at pulling in the masses when the technology was new and cost-inhibitive, but times have changed.

Today’s consumer simply wants to be connected all the time and at a speed that ensures jitter-free video playback. The rest is fast becoming irrelevant.

Communications has become a utility, like it or lump it. If customers don’t get the two basic things above they will walk and they will do so with or without a contract. You can almost guarantee that if you overlay a map showing areas customer concentrations with one of good coverage they will be closely matched.

The telecom industry has become paranoid about decreasing voice and messaging revenues and lower profit margins attributed to third-party apps that are usually free. It keeps trying to add new products and services that are simply not matching what the app stores and online content providers can offer.

It’s the cost of developing and marketing these duds that is partly to blame for affecting the bottom line. The decision-making process to undertake new world projects is flawed by old world thinking and the need to have everything just right before proceeding. By the time they get started the opportunity has usually passed.

The high-flying digital players (apologies to Disruptive Dean) move at the speed of light, trying stuff out and if it doesn’t work right they either fix it or dump it. No skin off their nose. And the consumers accept it as part of the ‘new age’ process. This ’try and fail’ mentality may not make sense to the old business heads but it does generate a lot of innovation and occasionally creates a big winner.

I used to think that changing out senior management of telcos with bright stars form other industries would solve the problem but in the few cases where this has been tried the talent has either hit a stone wall or been forced out for being too radical. Those remaining, for the most part, seem to have been ‘converted’ to conforming to the ‘old ways'.

This may sound like a sweeping generalization but see if you can find a shining star example that hasn’t slotted into one of these three scenarios. We can all see the future, or at least what the analyst can foretell, and it doesn’t look rosy. But for the immediate future, whilst revenues and profits keep investors happy, we won’t be seeing any radical change in thinking.

At the Great Telco Debate recently held in London, Keith Willets of TM Forum fame, and I, both pushed the inevitability of telcos becoming utilities and either structurally or functionally separating their network and consumer/enterprise operations, quickly mastering the art of becoming master wholesalers.

We are not talking ‘dumb pipes’ here, we are talking brilliantly managed ‘smart networks’ whose capacity can be sold ‘raw’ in bulk or with all the accouterments needing for virtual network operators or enterprises to succeed – on their own. That way the telcos could concentrate on providing what everyone really, really wants – constant, clean and fast connectivity anywhere, anytime.

This article originally appeared in DisruptiveViews.