In a series of perspectives, Moorhouse will explore the many avenues on offer to Technology, Media & Telecommunications players, new and old. From savvy market acquisitions, to brand-defining products, and competitor-beating loyalty offers, there are pockets of opportunity that allow for growth. Capitalising on these areas will allow companies to reap the rewards at the edge, respond to the opportunities presented by new technologies, and simultaneously build a strong basis for future innovation.
The state of play
No market is ever completely fixed. Although the UK telecoms market is relatively stable - EE, O2, Vodafone and Three own 82% of the mobile market between them - there are still opportunities for the intrepid. The remaining 18% of the market is split between Tesco (with 8.5%, encroaching on Three’s 10%) and “other” providers, including Virgin Media, GiffGaff, TalkTalk and Sky. As customer churn remains relatively constant in this environment, newer player, Sky Mobile, is one to watch: with 23% of the UK’s fixed broadband market, their ability to upsell and bundle attractive multi-play offers is enviable.
The classic growth technique is to win customers from a competitor by targeting people who are already using the same products or services. GiffGaff’s ‘hassle-free’ self-service model gives them cut-through in a cluttered market, but this kind of agility is harder for larger companies to replicate. However, it is possible. In June 2017, TalkTalk added 22,000 broadband customers by undercutting rivals’ prices in the same month they issued a profit warning. Conversely, for those companies focusing on the longer game, savvy investment in the ‘next big thing’ is likely to bring the greatest rewards in terms of market share. A lot has been written about the potential of the Internet of Things (IoT) to change the face of the market, but the opportunities are staggering: Gartner estimate that 8.4 billion connected ‘things’ were in use worldwide at the end of 2017, up 31% from 2016 and likely to reach 20.4 billion by 2020, with total spending in 2017 at $2 trillion dollars. This makes Orange Group’s Essentials2020 strategy a far-sighted approach, as they focus increasingly on IoT, mobile banking and smart cities for future development and growth.
To truly excel in a saturated market, not just grow, companies must ask themselves: what can we do better than any other brand? Identity-defining product offerings are key to success in a saturated market. This is evidenced by EE’s success in becoming the “UK’s biggest and fastest network” due to their investment in 4G and Three UK has achieved their current status as the best network for data on the strength of their ‘all-you-can-eat’ unlimited data plans. As customers change handsets less frequently and use ever-more data, telcos should focus on maintaining a strong cost-data-coverage offering, and ensure that developing opportunities far beyond network maintenance is an integral part of company culture. Put simply: to grow, companies must improve what they do badly. Vodafone’s decision to create 2,100 UK-based customer services roles as part of their investment programme (three-year, £2 billion) exemplifies this approach. They aim to win new customers and regain old customers who deserted them in the wake of serious customer service issues.
Targeting new customers is the most obvious method for growth. However, time and money spent winning back lost customers is more valuable in a saturated market, particularly as in 2016, the average mature market operator lost 25% of its total customer base.
Understanding the customer’s journey must extend beyond their departure, so that companies can increase win-back rates and consequently customer lifetime value. A 2015 study of US telcos showed that second-time customers had an average lifetime value of $1,410, versus just $1,262 during their initial run with the service – a 12% growth in overall lifetime value and one well worth investing in. With small changes companies can restructure their existing retention strategies to enable data mining of lost customers, and then offer tailored products and services to win them back.
The people’s champion
Yet to really get ahead in today’s market, telcos need to think beyond improving their customer service. Would you be brave enough to recommend a competitor, if you felt that their service better met a customer’s needs? Would the loss of one customer be compensated by improved brand reputation, and the new customers that would be brought in as a result? Increasingly, customer satisfaction – and therefore loyalty – is focused on the customer’s perception of their relationship with their service provider above even the product provided. The company that makes the leap of faith to truly advocate for each individual customer may well reap considerable rewards. This bold approach would advocate fairness for all customers, and allow telcos to communicate honestly about the service available, adjust product offerings accordingly and generate powerful brand integrity in an environment of customer misgivings.
Fortune favours the brave
There isn’t one easy-to-implement way to expand in a saturated market, but the answer lies in thinking differently. Over the next few weeks, we’ll be exploring how these different approaches and mind-sets can transform a company’s fortunes.
Ultimately, a saturated market means guaranteed demand, and therefore the security to be brave – by acknowledging and improving what you’re bad at, branching out in terms of future investment, and better understanding your present and future customers. The industry needn’t be worried about the future of telecoms: there are great opportunities for those bold enough to try.