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Digital transformation is emerging as a key driver of comprehensive change in the world around us. The telecommunications industry or Telecom Companies is at the forefront of this transformation, both as an industry witnessing a large-scale change in its market environment and as a key driver of worldwide digitization.
Telecommunications has traditionally been about delivering a service to your end customer; voice calling, messaging, etc. In the past five years, the telecom business has entered a period of slow decline, with revenue growth down. A 2015 survey conducted by the Harvard Business Review revealed that telecom comes right after media, as sectors that are poised for the maximum digital disruption. In the same study, 64% of telecom executives, and 72% of media executives testified to that effect. The digitalization creating the threat to the telecommunication market however it is not just threat it has also created opportunities for telecommunication to rebuild their market positions, reimagine their business systems, and create innovative offerings for customers.
The e-commerce market is witnessing huge domestic and foreign funding from various investors. Digital trade discoveries place in everyday news for many reasons like new ventures, creative business models, funding, valuations, market offerings and profitability.
The digital revolution has allowed start-ups and digital players to provide much better services, customer experience and lower prices than telcos.
Tele companies need to shift their mindset away from providing direct services, toward enabling digital services. The convergence between telecom and information technology means that there needs to be innovation, competition, and investment in the telecom networks, as well as in the services, content, applications and operating systems.
Here are some ways telecom companies can win in the digital revolution:
Embracing digital sales brings about real changes and results; investing and refining the digital sales process on an average are known to bring down commercial costs by 30% and increase revenues by the similar proportion. Since customers usually interact with multiple channels through their individual customer experience, creating a digital sales network will ensure that service and product delivery is more seamless, and the multi-channel pathways are clear for customers to interact with. The end result will be more seamless customer experiences.
Embracing the digital future of technology would also mean, taking care of after sales exactly the way, the sales process was being catered. McKinsey Studies show that areas like Western Europe have companies conducting as much as 89% transactions and interactions online.
Customers too have taken a liking for the digital processes for various reasons, with 76% of them being satisfied with digital-only journeys. For telecom operators, as it looks, costs for customer care operations and call volumes could be reduced by around 25% to 30%. One enterprise who took a digital transformation project reported even higher figures of 40% reduction in costs, and an equal number in rising in customer satisfaction.
Business analytics is the reason many customer experiences are changing today. For telecom companies, analytics can be useful in reducing customer attrition rates, make more informed and accurate marketing decisions, improve upon customer collections, and also optimize the network design. Amongst the many problems that can be solved, one can take an informed guess as to why and when the customers could be defecting to other competitor brands, thus giving the company a better chance of rectifying the problem before it causes any damage.
The McKinsey study mentioned that one telecom company raised its telephone-outreach hit rate from 60 to 480 at-risk customers out of every 1,000 calls, and reduced its attrition rate from 24% to 20% a year. On the other hand, marketing spends can be improved and streamlined with forecast simulators and econometric models, which would be established the most productive pattern of spends, apart from predicting acquisitions, and helping with maintaining and growing retention levels.
Though telecom services would remain the stream of business for telecom majors, looking at allied and adjacent businesses also make good business sense. From telecom to financial services, media, IT services, etc which would bring about synergy within the company, but create separate revenue streams, actually makes managing business more diverse, but better off financially. Also, during such a process, collaborative efforts at building partnerships are an obvious outcome, especially when the telecom major has the active interest in a specialized area of business, but doesn’t have the resources to divert for such a cause.
The most prominent example in India is that of the Bharti Group, custodians of the Airtel brand, which has now gone into NBFC, insurance, retail, food products, which is connected under a single umbrella, and use the same service delivery networks, to bring in seamlessness.
But this process can only take place fruitfully, when create focused offering for promising adjacent opportunities with clear positioning, developing platform based solutions in disruptive technology areas that are close to the core business but provide additional growth potential, minimizing costs in production and delivery by using automated and ‘low touch’ processes to avoid building in extensive personnel requirements, and driving by starting with a basic portfolio of services to gain traction and then developing one or two solutions with demonstrable advantages for a particular business.
Making smart use of digital technologies across the whole business is imperative for telecom operators that want not only to combat the declining growth, shrinking margins, and intensifying competition in recent years but also to seize opportunities that could make them stronger and more profitable than before. Getting it right will involve a wholesale digital transformation that starts with full commitment and strong leadership from the top.