Think and act like a retailer

Iain Hackett, Convergys
10 Nov 2008

Mobile operators around the world recognize the need to start behaving more like retailers. But how does a company effect such a fundamental shift, and is the market poised to support operators in their efforts to connect more effectively with customers‾

With the convergence of telecoms and media accelerating, network operators need to evolve their business models to stay one step ahead of the competition. Intense price competition in telecoms access provision is driving structural change, and the investor community is forcing operators to consolidate their network assets to achieve the economies of scale necessary for sustained growth.

To offset commoditization of voice services and recoup the huge sums invested in spectrum licenses and next-gen networks, operators are looking to the opportunities presented by convergence at both the service and industry level.

To realize new revenue opportunities, however, operators are increasingly having to compete with new market entrants in the form of media, applications and content aggregators, such as Apple, Nokia and Yahoo.

So how should operators respond‾ Attempting to compete directly with this new generation of content packagers would be futile and is likely to result in massive erosion of shareholder value. Instead, operators need to embrace the market shift and acquire the skills, knowledge and technologies to become a better retail distribution channel for these players, thereby maximizing revenues from their part of the value chain. This means developing a retail mindset.

Thinking like a retailer means adopting a truly customer-centric operation; one capable of tailoring offers to meet customer needs by segment or by event, identifying opportunities in increasingly niche customer segments and delivering with a focus on managing the customer experience.

With an increasingly sophisticated buyer, bundled services delivering low-cost voice, video and data access are no longer enough to deliver growth.

A share of the end-user

The market is changing at a record speed, with content providers, major consumer brands and traditional network operators all vying for the same share of mind - and purse - when it comes to the end customer. Network operators have grown up selling their own access services. Their future revenue growth depends, however, on selling third-party media, applications and content services, which represents a huge shift in both business and operating model.

To succeed and garner a larger part of the value chain, network operators must offer superior customer profiling and segmentation; product management for multi-sourced bundles, with real-time rating; real-time decision-support for sales and care value optimization; and optimized contact strategy and use of self service.

So, what does it take to be the best service bundler and service provider in the market‾ Put another way, what does it take to become a great retail distribution channel‾ After all, retailers are the acknowledged experts in the art of third-party product bundling and CRM.

Operators can offer real business value to the packagers by providing them with first-class service management, local language customer care, charging and billing, credit management, bundle and offer management, local marketing and market knowledge, segmentation and analytics, and professional sales and marketing operations.

These all represent non-core business activities for packagers who rely on a wholesale model that works best when it sells through a global network of localized retail distribution channels.

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