The days when telecom providers held a monopoly over voice and data services are quickly eroding. New entrants like Netflix, Google, and Internet TV providers are rapidly changing the telco business. Poor customer service and complicated pricing plans are risky practices.
And even though telco companies sit on a mountain of data points, other companies like Apple, Facebook, and Google are also amassing huge amounts of customer data. To compete, telcos must deliver innovative products and services and connect with customers on a personalized level.
The Personalization Conundrum
Digital marketing and providing better customer experiences is a priority for the telecom sector, according to a survey of more than 200 telecom executives conducted by Econsultancy and Adobe. In terms of providing consistent, personalized experiences, 73 percent of the respondents say their marketing activities are integrated to some extent, but two in five (44 percent) say the ability to fully utilize marketing technology is still a key challenge.
"Telecoms are personalizing at very different levels of sophistication," observes Stefan Tornquist, vice president of research at Econsultancy. "Much of that variation is related to where they stand in terms of unifying their disparate proprietary systems, databases, and marketing applications."
And when it comes to sharing data with third parties, telecoms are "sharing everything they can that isn't restricted PII [personally identifiable information] like call histories," Tornquist adds. "The more specific the data, the more valuable it is, and in the case of telecoms, it can be very specific indeed, especially as our phones are increasingly our main conduit to the digital and wider world."
But even though telco companies have access to a bevy of rich data points, they face numerous obstacles in leveraging that data, notes Forrester Research analyst James McQuivey. "People will say they don't want their data collected but they still expect brands to know them, so telcos, like other industries, have to walk a fine line between both demands," McQuivey says.
The pressure is also rising for telcos to keep up with the innovative ways that companies are collecting ad revenue, including those outside of the telecommunications industry like Netflix and Amazon. "There comes a point where if you're not using your data, someone else will figure it out," McQuivey adds. "I think telco companies need to test their level of risk tolerance."
Searching for New Revenue
Indeed, companies like Verizon and AT&T are experimenting with new revenue streams through partnerships with brand advertisers and app developers. In 2013, AT&T introduced a two-tiered price plan when it launched "GigaPower," a broadband service that is designed to operate at the same speed as Google Fiber. Subscribers can pay $70 for the broadband service if they agree to receive targeted ads from AT&T and its partners versus the ad-free version, which costs $99.
Verizon is also offering incentives for customers to receive targeted ads. Customers who sign up for Verizon Selects, a program for tracking Web browsing and mobile-app behavior, can win rewards like gift cards and dining or entertainment discounts.
Verizon's data marketing arm, Precision Market Insights, recently came under fire though, when Jonathan Mayer, a lawyer and computer science graduate student at Stanford University, reported that a unique identifier was being used to power a "zombie cookie"that continued to track users even after they'd opted out. Verizon has since said that it will allow subscribers to opt out of being tagged with the persistent tracking code.
U.S. telcos are not the only companies being squeezed by new competitors. Etisalat Misr, the Egyptian arm of mobile telco giant Etisalat, which operates across 19 countries in the Middle East, Africa, and Asia, is also searching for fresh revenue.
"As a telecom operator, our revenue is declining as more players enter the market," says Khaled Almansouri, chief information officer at Etisalat Misr Egypt. "And so we're looking into new revenue streams beyond our legacy services."
Etisalat chose Teradata's Integrated Marketing Cloud platform to help it consolidate its customer service and marketing data as it pursued new markets. One of those areas included B2B customers. Etisalat credits the Marketing Cloud platform with helping it attract B2B mobile advertisers who are interested in targeting against the carrier's data profiles. In 2013, within a few months after launching the platform, Etisalat expanded its customer outreach to more than 1 million customers.
The company is also looking for other ways to monetize its data as customer intelligence. "We have to capitalize on the rich data that we have," Almansouri says. "For example, if a petrol station wants to open in a certain area, we can tell them when traffic is busiest because we know the movement of our subscribers."
Additionally, the company is looking into expanding its offerings with cloud services and machine-to-machine learning. "By 2020 we'll have about 50 billion connected devices," Almansouri adds. "As more things become digitally connected, it will be important for us to help our subscribers stay connected across their different devices."
Carl Boeing, global head of sales, customer engagement, and commerce at Hybris Software, agrees that telco companies have to find more ways to leverage their data profiles while maintaining the customers' trust. As an enterprise ecommerce platform provider, Hybris helps telco companies like Vodafone and Telmore created personalized messages for subscribers. "But increasingly we're seeing telecoms become brokers or enablers of additional connections and play matchmaker between customers and brands whose products might interest them," Boeing says.
As an example, Boeing points to a capability Hybris is developing in which mobile subscribers create "wish lists" of products that interest them on an app and allow carriers to share that list with retailers. When the consumer walks into a store equipped with beacon technology and opts into sharing his or her profile information like a photo and name, a sales associate can offer the item to the customer, perhaps at a discount. "
"The telco can make both customers happy by giving retailers a qualified lead and consumers get the product they wanted," Boeing explains. "It's a win for everyone." But for such a situation to work, the carrier must have the customer's explicit consent, Boeing adds. "The customer has to see value in this notion of sharing information so making that connection between the consumer and brand at the right time is critical."
Trust and transparency are key drivers of customer relationships, notes Natalie Petouhoff, vice president and principal analyst at Constellation Research. "The key to privacy is to have services that are opt-in and companies need to explicitly say how the customer's information will be used," Petouhoff maintains.
Companies should also let customers choose what information about them can be shared. "Customers might want to allow a telecommunications provider to use their preference for sports-related information to provide content or promotions," Petouhoff notes. "But they might not want marketers to use information on their general browsing history because it could be considered too intrusive."
Leveraging real-time analytics is one way telcos can add value to their services while still offering products and services, she adds. For example, customers can be alerted to various data and application plan options during roaming periods. On the backend, telcos should also analyze real-time network traffic from large users to manage capacity more efficiently and minimize network slowdowns.
As the mobile and telco space becomes increasingly fragmented with new competitors eating up market share, telcos must focus on delivering relevant, flexible, and reliable experiences to their customers or risk disruption.