How to transform the telco business (Q&A)

Telecommunications companies are a little late to the omnichannel party. According to a recent IBM study, only 44% of consumers globally consider their service provider’s omnichannel experience good or excellent, and more than half say their providers are average to poor in a host of basic areas.

The telco industry has to look outside the telco industry to become successful

Bob fox, IBM

One reason is that telcos are competing on price and products alone. They’re also faced with increasingly knowledgeable and demanding customers who expect an Apple- or Amazon-like experience with every company they do business with. Marketing spoke with Bob Fox, global industry leader for telecommunications at IBM Global Business Services, about why telcos lag behind and how they can deliver a better customer experience.

Why telcos need radical transformation
The telecom industry is far behind the leaders in customer experience. At some level, it would be fine if Telus, Bell and Rogers just competed with each other. But they don’t. In the minds of consumers, they’re competing with Apple, Amazon, Marriott, Costco, etc., which are all companies with a net promoter score above 60. As a measure, that basically says you have 60% advocates. The global average for the telco industry is -19, believe it or not. And Canada is one of the lowest in the world; the numbers range from -34 to -54.

We think the telco industry has to look outside the telco industry to become successful. And they’ve got to make a radical improvement, not an incremental one. Companies recognize this is a huge issue and have various programs in place to try to improve it. The big question is, ‘how many of them see this as a business transformation and therefore something that they need to do radically?’

As the global leader for the [telecommunications business], I travel around the world and CEOs, CMOs and COOs ask, ‘who is the best at customer experience?’ And frankly, a couple years ago, we got a bit tired of using examples of [telcos] that were making small progress, when there are amazing stories of companies outside the industry that have transformed themselves in a short period of time, who looked a lot, technologically, like telcos. And so we began to say, ‘yes we can tell you about the interesting things Telus is doing… But what you really want to look at are the companies that have leaped forward in their respective industries, that were as incumbent and as stodgy as telcos, and how they did it in a short period of time.

Changing customer expectations
Consumers are saying ‘geez, I can walk into the best bank in Canada and get this level of service, the best retail store and get this level of service, or online with Apple and Amazon… I can basically [conduct every transaction] I want with those companies online.

Just as an experiment, try to find the phone number to try to talk to someone at Amazon. It’s actually very difficult. It’s possible, but they’ve really geared it and developed their entire business around a digital service provider model. So we’re training consumers to sort of expect that. If you look at what banks and airlines have done with the online experience, they’ve really taken so much of human interaction out and given people choices, whether it’s mobile, desktop or kiosks.

Now companies like Google are in the telecom business, as is Apple and Facebook with WhatsApp. So, they’re beginning to be more direct competitors [with telcos] than they are indirect competitors. But the level of expectation has been raised by the best performers in the consumer space. And everybody’s got to catch up.

The problem with telcos
The reason is that, in general, the telco delivery system was build around human interaction, not electronic interaction. [That included] someone coming to your house to wire it up, the call centre and the retail shops. We did a survey asking consumers if they would choose a self-service option rather than go into a store, a kiosk or call the call centre. And what’s true across countries, including Canada, is the vast majority of customers want a self-service option. If companies can actually get people to do most of the routine things on self-service channels, it’s a win-win. It’s a win for the customer – they get what they want when they want it. And companies do it at a lower cost.

There are barriers to doing that. Overhauling the entire delivery system is in part cultural. How do we become what we call a digital service provider, meaning we provide most of the things we have digitally? The second complication is this omni-channel point. When I walk into a Verizon store, the Verizon rep has no idea that I’ve made three calls to the call centre in the last two days, or that I’ve been on their website looking for products, or worst yet, that I’ve clicked on the button, ‘how do I cancel my contract.’ So the poor rep in the stores doesn’t know whether Bob Fox is dying to spend $600 on an Apple phone or whether he’s really angry and wants to yell at someone.

But all that’s knowable. If you have the right systems behind the scenes, you can identify the interactions the customer had in other channels and begin to know at least, ‘is this a great sales opportunity or a disaster in the making?’ And when you combine that with everything that’s available today with social media, there really is a way to create a 360-degree, real time-view of every customer. It’s really just the will do it and the prioritization of it across all kinds of other things that telcos are being pushed to do.

What are the risks of not acting?
The risk is that one company gets it and really begins a radical transformation. The companies that choose not to are going to be left behind. There’s going to be major share shifts to whoever it is that leads the pack. And there is a timing issue. These things take time, so if [a company] gets a head start of a year or two or three, it’s hard [for others] to catch up.

Risk number two is that people laugh at Google Fibre right now, they laughed at Google saying that they’re going to be a global MVNO [mobile virtual network operator]. But I think they’re serious on both counts… We’re going to invite more and more MVNOs to be in the business, we’re going to invite more and more of the big four or five category killers to be realistic players. And one company in every country will say, ‘okay, I really am going to be the customer experience champion.’ In the U.S., people kind of laughed at T-Mobile… but they’re now the number three company, not the number four company and [that happened] in a very short period of time. It can happen.