Omni-channel, soon available at your local operator

Consumption these days goes far beyond the mere product or service that is being bought. Sellers have invested heavily to make customers feel special in their purchasing experience. This extends beyond the actual moment of purchase to the impression of the website where the research is done to the customer service that follows the purchase. A recently published report by The Economist Intelligence Unit states that “Consumers look at the whole transaction and want simplicity, speed and accuracy across all channels.” Certainly, the product is always going to be central to a purchase, but both researchers and retailers are beginning to discover the impact of customer experience.

Omni-channel has been a hot topic over the last few years precisely for its ability to impact customer experience and harmonize the experience across channels. Retailers in particular have been displaying the benefits of providing an omni-channel experience by using digital channels to push sales. Deloitte claims that in the end of 2014, the amount of in-store retail sales influenced by digital technologies would be as much as 50%, with a sharp increase expected in years to come. Consumers do online research before visiting the physical stores, and even while in the store, they use the retailer’s website to get information about the product they are looking at. To achieve an acceptable level of customer experience, this level of accessibility has become a necessity.

Markets are always changing – how about you? 

In the early 2000s, many of the great brick-and-mortar failed to transition into the digital world, and consequently lost their hegemony (think Borders and Circuit City). However, those who succeeded (think Barnes & Noble and Staples) soon realized that by introducing a digital channel, vast amounts of data were suddenly made available for analysis. The potential to connect customer data across channels and use it to improve customer experience and create a single view of the customer was envisioned rather early, but implementing such a transformation has caused headaches for many organizations.

Even if we fast-forward to today, when organizations are generally significantly better at utilizing the data available to them, establishing a proper “single customer view” and using it to provide a proper omni-channel experience for the customer still remains a challenge for most organizations. Even when looking at success stories such as John Lewis, IKEA, Nordstrom, etc., the list primarily includes retailers, and very few telecom operators.

It is not that telecom operators do not appreciate the value and importance of the customer experience. However, the impact of customer loyalty in the telecom industry differs greatly from that of the retail industry. The previously mentioned Economist Intelligence Unit report found that “Close to three-quarters of consumers say they will stop doing business with a company following a bad experience…”. In retail, the customer often has the option to switch stores, putting pressure on companies to provide excellent customer experience to maintain loyalty. Customers of telecom operators, on the other hand, do not always have the choice to easily switch between service providers. Most subscriptions have a binding-period associated to them, and even if they can switch, the inconvenience of transferring phone numbers makes the transition a hassle. Moreover, customers use their cellphone service several times per day, and trading a service that they know for one that they do not is also a sizable barrier when the commitment is a year or even two.

As conditions change, so do the trends

However, there are several trends in the market that, when combined, indicate that the importance of customer experience and loyalty in the telecom industry is on the rise, and that omni-channel may become an essential tool for operators to both attract and retain their subscribers.

One trend that has been happening for quite some time is the convergence of telecom operators’ value proposition. Gone are the days when operators could differentiate their customer experience based on minutes, text messages, and coverage. These days, those are all hygiene factors; now it is all about data, and most operators have very similar bundles. It is difficult for an operator to convince a potential customer to switch without the promise of something better. Thus, it becomes crucial to outperform competitors with tools that are not premised on technical superiority, and that is untested waters for most operators.

Furthermore, customers are increasingly aware of the differences between service offerings. These days, the opinions of existing customers are easy to find through social media and online peer-review websites such as Tripadvisor, Yelp, and Foursquare. This puts a lot of pressure on service providers to go above and beyond in terms of customer experience to both keep existing customers happy, and attract those who are on the fence about switching operators.

In part due to the aforementioned trends, operators are attempting to create new value propositions and improve consumer experience in unconventional ways. An example of this is Tele2 in Sweden, which at the end of last year began to offer subscriptions that could be cancelled at any time. If more operators were to follow suit, consumers will have more options to switch service providers when unsatisfied, making customer experience increasingly important for the telecom industry.

Finally, and perhaps the most important trend, particularly in the light of omni-channel and single customer view, is how the power of analytics is increasing. With the amount of information operators have about each and every customer, they could do more to pro-actively personalize their service offers. If a customer is approaching the end of the contract period, and they are signed up for a 50GB data per month but never exceed 3GB, the operator could in theory offer the customer a cheaper, more appropriately sized contract. Moreover, if the customer has continuously been paying their bills on time, the operator can assess them as a “low-risk” customer, and thus be able to provide a small discount. These three pieces of information (that the customer’s contract is almost up, how much data the customer uses, and that they are low-risk) is something only the current operator is aware of, and it is an advantage they should capitalize on.

The party has started, don’t be late

There are several challenges on the road to deliver a unique enough customer experience across channels to attract customers. Legacy is one of the obvious challenges to all forms of system integration, and the required time/resource investment is nothing to scoff at either. However, the potential upsides are immense. AT&T is one of the telecom operator who has gotten furthest within this field, and Mazin Gilbert, Assistant VP of Inventive Science at AT&T Labs, said that because of omni-channel analytics, “[AT&T] can now capture and process the data in near real time. We crunch large amounts of data to get to decisions in a matter of minutes, and ultimately even seconds”.

This level of analysis is most definitely difficult to do, and especially to automate. However, several big players are moving to integrate channels and improve their customer experience. Certainly it can be both costly and risky to be at the forefront of change, but these service providers are making meaningful progress, and other operators need to be ready to follow. At this pace, I suspect that within a few years, omni-channel and single customer view will be the norm for any successful operator.

/Kristofer

Kristofer is a Consultant at Northstream

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