Thursday, 24 December 2015

Dichotomy of the modern ‘telco’ Part V – customer engagement & churn and conclusions

Telcos could take a leaf off the digital industry in the way they interact with their customers.  It could help them reduce churn.  Telcos mostly stop interacting after acquiring a customer while the digital industry sees that as the starting point.  This article postulates.  The previous article suggests how telcos can adapt to the digital economy.  The challenges faced by telcos in the digital era are raised in the first.

Customer engagement is an ongoing activity with digital firms.  Part customer service, part sales and post-sales, part post-support it is also used to retain customers.  Social media, email and messaging are some tools used but for better control over the long-term, try building your own community platform, the focus of this post.

Whichever channels are used, there are some rules to follow.

To engage successfully, one must be respectful of the participants. It’s no more just about customer adds.  What unites all successful efforts is a deep commitment to the community; of customers, consumers and would-be customers.  The process should be open and transparent.  Don’t treat them merely as a revenue source. Recently my mobile provider put me on a data plan I didn’t ask for and even before the next bill after I cancelled it, they texted saying I’m back on that plan!  Another time and it’s sayorana.

Continual engagement is a must if you are going to get anything useful.  Be responsive and make information available, the starting point to anchor interaction. Use social.  Some hold workshops and conferences.  And unlike the traditional customer service, manage the process actively, like a branding exercise.  The best ones have a thriving community.  You struck the jackpot if it becomes self organising.

“Telstra crowdsources customer service, so that users support each other to resolve problems without charge” – McKinsey, May 2014.

Once achieved, you have a powerful device.  Besides managing churn, it can be tapped (yes, it’s okay to do this) for feedback, for ideas, to test ideas, grow your customers and like Telstra, use it for customer support.  Or like BMW, to develop a closer relationship to those closer to the ground.  Internal brainstorming can never match this way of injecting customer ideas.

BMW hosted a ‘virtual innovation agency’ on its website where small and medium sized businesses can submit ideas in hopes of establishing an ongoing relationship.  The platform serves as an input device; tapping fresh ideas, suggestions, having a dialog.

How do you begin engagement through a community platform?

Open platform

Build an online open platform and note that one opened to all is more effective than limiting it to customers, obviously with exceptions.  It can be as simple as an extension to your website all the way to a spun-off site like Quirky that General Electric uses to tap innovation.  Many include tools and application programming interfaces, allowing other sites to connect digitally.  This grows the community.  The objective is to build and engage a community around your brand, product or company by deliberately tapping into crowds of customers, consumers, partners, suppliers, external experts and enthusiasts.

Open platforms can be used in different ways.  If it is mostly for listening, say, for opinions and ideas to improve a product, consider this.  For directed activities, say, what features a product could have, try this.

Once an engagement mechanism is successfully put in place, the telco can use it to track customers’ digital lifestyles, test willingness to pay for a type of service, simultaneously test variations before launching a new service (A/B testing).  You now also have a test bed for your lean-based service development or simply use it to manage churn.  The potential depends only on the creativity (and the culturally-adapted] of the executives.

With that, let’s conclude this series.

In the digital industry the customer is king, then content

Bearing in mind that the current generation tend to be impatient, involved, DIY-infused and lives a digital lifestyle, the following from the digital industry may be useful.

·         User experience - move this to the top of the list, not an item in the bucket list as customer service.
·         Rapid provisioning of services - this may mean the older Operations Support Systems needs to be rejigged with speedier ones that support agile and minimum viable product.  And for similar reasons, deploy software defined networking.
·         Give customers more control with digitised self-service tools – provides for immediacy and don’t even think about user manuals or filling onerous forms for service variations.
·         Use blogs to build rich relationship with customers.  Take a look at Square’s blogs.
·         Crucially it’s all about building communities starting with an open platform.

Prioritise the big picture; the telco vs OTT mentality won’t help the bottom line

“Think without, less within”

Once it was only about phone calls, now it’s about broadband, the web, online services, apps and a global ecosystem that no single industry controls.  In this new order, telcos are part of the ecosystem, not the ecosystem.  In this new setting telcos that adjust better, play by its rules, culturally adapt, adopt an open mindset and grasps the mechanics must do better in the internet era that offers a larger opportunity. 
And in the content strategy, monetise data the way the digital industry does.  This is a sizeable source of revenue.

But is change even over in this internet tail?

Here’s something to ponder.  The rise of Uber and the sharing economy has forced the car industry to rethink their business model.  They are starting to accept that the concept of ownership of cars may become antiquated in 10 to 15 years.  BMW is taking a pioneering approach to the issue and thinking about its future being in helping people to get from A to B, rather than simply selling cars.  That’s redefinition!  Will the telco industry experience something similar?  There are developments today, some with venture funding, their partners the handset makers, some unwittingly by the telcos themselves that may similarly redefine the communications providers industry, perhaps now a better term to describe the industry rather than ‘telco’.  What’s driving this is an industry that’s still only quasi-open with a set culture.  Tech as we know leeches on industries with friction to disrupt and there remain serious customer issues with telcos.

Merry X'mas!

Comments appreciated. @tommichen7 is an industry veteran, entrepreneur and had since the days analysed digital business models.

©Thet Ngian Chen, (2012, 2013, 2014, 2015).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Thet Ngian Chen and with appropriate and specific direction to the original content.

Monday, 14 December 2015

Dichotomy of the modern ‘telco’ Part IV – adapting to the digital economy

Telcos had long coveted a content strategy.  The 2nd post suggests how it might work in an internet era.  Why this is different from their original thoughts is discussed in the previous post while the challenges faced by telcos are detailed in the first.  How they may adjust in unfamiliar territory is the subject here..

‘Tech startups have made such a disruptive impact on traditional businesses that AirBnB and Uber have become clichéd presentation points at conferences the world over.  But many are also coming to realise the same tools that make startups so nimble and disruptive are equally accessible to them – if they only learn how to use them.’

What do customers seek?  Lower price, higher bandwidth and better customer service are a given but in a digital economy, there’s more.  I’ll focus on one – digital lifestyle.

A celco offering bundled services with WeChat and Facebook with their subscriber plan is testament to this customer wish.  Ignoring for a moment that this goes against net neutrality, is there a better way to forward plan bundled services?  Currently these services are chosen based on popularity and may not be what an eclectic mix of customers really want.  The digital sector uses tools that can provide better insights into customers’ digital way of life and thus data to improve stickiness.

Stickyness, reducing churn and a digital lifestyle

Perhaps the telcos’ coveted content plan of yore is really about digital lifestyles.  It can be a revenue source, it can reduce churn.  WeChat’s rich ecosystem of digital services is a good example of a sticky strategy as the digital industry calls churn.  Vodafone, the co-creator of M-Pesa, the Kenyan phone-based payment scheme with Safaricom saw its churn reduced to below 0.1% with its introduction.  Getting a digital strategy right is good for business.

Telcos are of course already heading that way; investing in online services startups, video, security services and getting into finance.  But they appear disparate. If indeed this is part of the plan, it’s in a new setting for the planners and not one that they are used to.  A better understanding of the workings of the digital economy and creating the right environment for their executives helps.

Be mindful of the culture

Appreciating the ethos of the internet generation is important. It largely boils down to open versus close; inclusiveness vs exclusiveness, internal vs external, collaborative with a sense of freedom surmised succinctly by Chad Dickenson, founder of Etsy.

“’Free and open’ was what made the internet work then, and it’s a critical principle now. I didn’t have to ask permission to build my first websites.  I had unfettered access to material that helped me teach myself how to code. As I learned more, I quickly came to understand that the internet was so much more than a network of cables and wires that connected computers around the world. It was a platform for the purest expression of freedom, openness and possibility that I had experienced in my life”

Needless to say, it’s unlikely that Chad could have created Etsy within the old environment. 

Google’s PageRank algorithm mirrors the internal versus external argument.  Instead of a committee categorising content (internally), PageRank essentially hands over the role to algorithms and websites (outsiders) since websites by linking to one another rank each other.  It’s a challenge for traditional firms to think up something like this.

There’s help.

Crowdsourcing brings the outside in

Companies traditionally distrust the outside preferring to perform roles internally.  It runs counter to a digital lifestyle approach.  Their top-down, command-control culture assumes they know best.  They don’t.  The tech industry has shown that the world has changed to a more open, transparent, inclusive and participative environment.  And customers really do know best.

“Amazon is letting viewers help choose its new lineup of TV shows, scuttling a secretive, wasteful process once reserved for Hollywood taste-makers. The online retailing giant will let visitors from the U.S, U.K. and Germany watch, rate and critique 14 pilot episodes the company has bankrolled. Viewer comments will help the company decide which shows — if any — get the green light. "Why follow the guru method when you don't have to anymore?" says Roy Price, director of Amazon Studios. "The audience is out there and the audience is interested. We might as well make them a partner in the process." -

Customers today like to be engaged.  The current generation also tend to be less patient, more involved, DIY-oriented and lives a digital lifestyle.

If you ask, many will respond.  But why ask?   AT&T asked consumers to complete an online video.  The start of a story is posted online.  Anyone can then suggest how the story continues.  The only condition is that AT&T phones are featured as the crowd cartoonists build their ideas into the crowd-directed story.  It earned a large number of eyeballs ie. low-cost marketing. This is creative but it’s difficult to continually come up with such ideas if the organisation culture remains closed.  And the mere effort to ask creates engagement and communication with consumers, a tenet of digital businesses.

The culture that lead to lean startup and agile: these modern management techniques came from the open source model, an internet software developmental model.

Besides marketing and conducting surveys (Amazon), a lot more can be achieved by cleverly engaging the consumers from what they want, their habits to monitoring trends, product development, brand insights, business development, etc.

How do you engage?  That’s the subject of the concluding article next week but the digital industry seem to look at work as an internalising versus externalising decision.

And wouldn’t it be nice if mobile handsets that come with subscriber plans are pre-installed with digital services they commonly use rather than the currently one-size-fits-all bundled schemes?

Comments appreciated. 

©Thet Ngian Chen, (2012, 2013, 2014, 2015).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Thet Ngian Chen and with appropriate and specific direction to the original content.

Monday, 7 December 2015

Dichotomy of the modern ‘telco’ Part III – cause of change

‘Once, only AT&T had the right to connect electronic devices directly to its telephone network!’

If a telco executive was told in 1989 that their voice business has peaked, their telco infrastructure would be replaced and the term ‘telco’ could soon be moot, what would he think of the messenger?

Yup...but ip-based networks today have replaced much of the traditional telecommunication networks.  Voice calls are now a small part of a telcos’ revenue.  Voice calling is detaching from a telco network.  [The first ISP was launched in 1989.]  As though these are not enough, the next change has begun which will see the ‘telco’ radically alter.  This article reflects.  The previous article made some suggestions towards ‘content’ strategy while the first article discussed the challenges faced by telcos.

It’s all about online services now

By online it includes content, streaming, digital services, apps, that is, what telcos call OTT services.

The change can be traced to a phenomenon of the internet economy – datarisation.  When an article be it video, voice, code or text is transported over the internet, the economic value around it is reduced, some to zero.  Messaging is now free, not so with sms.  It affects anything that can be digitised and turned into data – products (music, books, software, media), services (phone calls, computing, ads), transactions (money, insurance) -  and delivered over the internet.  Thus bookstores, software houses, publishers are up in arms.  In the process it also unbundles; there is a separation of content from delivery.  Traditional highly integrated industries such as telcos, banks, radio, newspapers, tv re-structures as a result.  Radio stations for example may not need their own radio masts anymore.  Media paints a bleak picture of their demise but the concept of radio stations remains, re-imagined with a lower cost structure and able to reach wider audiences.  It has a similar effect on traditional sectors that can be disrupted by information; taxis, hotels (AirBnB is really in the information business; it owns no other asset and it makes money from it), even job search.  Datarisation’ tells how industries are being transformed.  It also hints how the information age really works.

Let’s apply datarisation to phone calls.  Voice has no intrinsic value unlike music.  A telco adds no value to it.  Voice charges come from its delivery through the telecommunications infrastructure it owns.  If voice calls are routed over the public internet instead like with WhatsApp, the economic value around it must drop.  It has.  In fact a lot of conventional phone calls today are routed through the internet because it is cheaper.  If you use Telekom Malaysia’s Unify, you are really paying for broadband.  Phones are an add-on, calls are free.  But the inflection point is with 4G mobile, accelerating the turning of dedicated voice pipes into internet pipes, and smartphones.  Internet messaging (IM) startups began by offering messaging services.  Growth was swift.  IM then morphed to include voice.  This was recent but will grow because of economics.  WhatsApp call, like radio stations does not need its own dedicated network.

Voice is now merely a type of content and is detaching from a previously integrated whole

Since phone calling now do not require an integral network, economics dictate that it unbundles.  The die has been cast.  This also means the slow death of international calls, sms and roaming charges.  In the transition, the charges are lowered as it has.  Over the internet, there’s no such thing as roaming.  Do you pay extra when your email crosses borders?  In the European Union, it’s being removed.  China has asked their celcos to reduce roaming rates.

The ISP is the telco

As voice, roaming and sms revenue drops below broadband’s, isn’t the telco really an ISP?  Their traditional voice business is essentially being transferred to IM firms.  Regulations can slow this but it’ll only be temporary.  Better to move forward because if the ISP is indeed the new ‘telco’, the entire business model changes. 

In the meantime they should of course maximise any ‘traditional’ business they can but they shouldn’t lose sight of the long term.  They already missed the boat on voice 2.0.

Examples on how telcos can adapt to the digital economy anchor the article next week.  But I like to end this post by urging that they look at data in a different way because by doing so they can derive new revenue streams.  They have a lot of data - what Google sees, telcos do too (local) but little is done to monetise it.  If a telco allows clients to upload, say security or routing data to the telco’s cloud-based analytical tool for analysis, wouldn’t those clients be delighted?  Think data!

©Thet Ngian Chen, (2012, 2013, 2014, 2015).  Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited. Excerpts and links may be used, provided that full and clear credit is given to Thet Ngian Chen and with appropriate and specific direction to the original content.