To date, 2017 has proven an interesting year for U.S. mobile operators embroiled in a war of words and customer loyalties. The newly re-minted “unlimited” plans promise greater access to the data customers crave, but with tricky fine print that suggests they aren’t as unlimited as they seem. Once again, customers are encouraged to carrier-hop, looking for the best plan to tide them over for a period of time, then moving on when it gets too expensive or too limiting.
It was T-Mobile’s CEO John Legere who said in the company’s latest earnings call, “Welcome to the game Verizon. Let’s compete on price, let’s compete on network. We’re playing from a position of strength. Unlimited is who we are.”
This call out was preceded by Verizon’s announcement the day before, unveiling an unlimited plan despite saying only weeks earlier it wouldn’t do so. As soon as Verizon made its announcement, T-Mobile, AT&T, and Sprint quickly updated their own respective ‘unlimited’ plans. Since then, Comcast and U.S. Cellular have jumped into the fray. Aside from making headlines, this fervor of activity has done little to boost stock price, but has left customers wondering why these operators only react to one another, never seeming to offer their best plans from the start.
In a digital era where business success is defined by customer loyalty, banking on an “unlimited” price war seems an awfully big (and expensive) risk to take.
A Different Kind of Customer
What these price wars reveal is a seeming lack of ability for the U.S. players to differentiate on anything other than price. While competitive pricing is certainly attractive and expected, customers today – led by Millennials, the first truly digital generation – are placing greater value on experiences over products. In fact, a full 46 percent are willing to pay more for them, according to a recent survey from EY Seren. Customers don’t want to be burdened with switching to a new carrier every few months, and as such, they no longer care about negligible, time-sensitive savings – they value the control and overall convenience that comes from a tailored experience or targeted offering.
Mobile subscribers today want to engage with an operator they feel they can trust, and trust is built when customers feel they are getting personalized options tailored to their unique needs at a price point that demonstrates true value and transparency. In return, these customers will deliver their loyalty.
Interestingly, U.S. carriers have a host of role models to look to when it comes to redefining the customer relationship, role models the carriers themselves helped to create. Companies like Dominos, Walgreens, Starbucks, and American Express have all used the mobile environment to reinvent their brands, finding ways to deliver custom, personalized offers and experiences rather than a one-size-fits-all mentality. In the process, these brands have built an entirely new level of engagement and loyalty. With these new business models, customers have grown to expect a particular level of transparency, immediacy, personalization, and instant gratification. In fact, consumers have proven they are even willing to share access to a significant portion of sensitive, personal information when they feel they can trust the brand and see a real value add.
Technology to Compete
This level of customer engagement requires a top to bottom digital transformation, one that many carriers have already considered or are in the process of undertaking. The latest industry survey report from Mobile World Live shows that network functions virtualization (NFV) and 5G are top of mind for operators, and they recognize that a systems overhaul is required to be more agile in the face of these new technologies.
This move to update legacy IT systems and processes is critical, as current models were built for a century gone by. Most telco IT systems are unable to cope with the challenges presented by high frequency interactions, shared data across applications, and real time customer responses that are tailored to the individual. An overhaul is no longer a luxury, it has become an absolute necessity to stay relevant. Telcos, who now manage billions of mobile transactions daily, must operate like agile digital upstarts and be prepared to provide each individual the customized engagement they will value.
The Real Measure of Success
This kind of investment is proven to pay off. Operators who find themselves more adept at managing customer expectations see a near immediate upturn in net promoter score (NPS). And NPS, in return, delivers monetary value to the bottom line. In fact, a three year study by Capgemini showed that mobile operators with high NPS scores averaged 33 percent revenue growth, while those with low NPS scores actually saw revenue decline by as much as 7 percent.
Leading telcos around the world are proving to be a great example, undergoing significant digital transformations in order to compete on an entirely new playing field. Operators like Three UK, Telstra in Australia, and Swisscom have all been vocal about their decision to provide new and differentiating service experiences for their customers rather than focusing solely on price or defaulting to unsustainable unlimited data promotions. What’s more, the results they are seeing are helping to transform reputations and usher in a new era of customer/operator relationships.
While the U.S. telco wars certainly make for great headlines, when the dust settles it is painfully clear the customer loyalty needle has hardly shifted. To step out ahead of the competition, these carriers are going to need to move on from price and network comparisons and embrace an entirely new playing field.
The telcos who will control the headlines of tomorrow will be the ones who invest in customer experience through innovative services, premium and exclusive content, benefits, social networks, community features, and an ecosystem of services and partners. And to the victor will go the spoils – loyal, mutually-beneficial, and long-term customer relationships.
Dave Labuda is founder, CEO, and CTO of MATRIXX Software, a company aimed at helping telcos realize the benefits of digital transformation. Labuda previously co-founded Portal Software in 1994 and served as CTO and CEO until the company was sold to Oracle in 2006. He served as CTO for Oracle’s Communications Global Business Unit until February 2008, providing architectural vision for the new organization and acting as a key advisor on several strategic acquisitions.
