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How digital will disrupt in 2017

If ever there was a business buzzword for the last year, it would have to be ‘digital.’ Digital upstarts have created upheaval in a number of traditional vertical markets, while established companies of all shapes and sizes clamored to reach a more agile and customer-first business model through digital transformation. 

The telco sector is the perfect example of an industry undergoing significant change. Mobile operators, in a race against tight margins and ever-increasing competition, have been compelled to find a more customer-centric service model to engage the always on, digital consumer. And in our mobile-first world, everything hinges on the service experience from mobile operator, as they are the gateway to delivering content, communication and services to their customers via their mobile device. This demonstrates a fundamental shift from serving customers through retail or contact center outlets that encourages direct engagement with the customers.

As this era of Digital Transformation continues, what can we expect to see in 2017?

On-demand services

First, on-demand services will move beyond just a data-consumption business model. Customers will leave behind flat fee, all-you-can-eat pricing and data allocations as they get a taste of on-demand opportunities. 2017 will also see a proliferation of on-demand business models beyond telecommunications and into other vertical sectors, especially in developing regions. For example, Latin America and Southeast Asia are already seeing the first implementations of pre-paid, on-demand electricity, as this model works especially well for utilities. 

We also predict a proliferation of on-demand capabilities in the telco space. Consumers want to only pay for what they’ve used. The transformation that mobile operators need to make requires changing their old-school billing systems and models. This means large, inflexible data plans will continue to become a thing of the past as operators use these new systems to compete on customer experience alone. Salesforce sales futurist and growth advisor Tiffani Bova defined this current landscape by saying, “Customer experience is the last source of sustainable differentiation and the new competitive battleground.”

Gartner predicts by 2017, U.S. customers' mobile engagement will drive mobile commerce revenue up 50 percent. Mobile operators must interact with their customers in real-time if they’re going to impress them by delivering personalized offers ‘in the moment’ - and hold on to them in a market notorious for its high level of churn. 2017 will be a pivotal year for telcos to take a leadership position in providing greater customer control, inspiring a new wave of loyalty and transitioning the traditional mobile operator/subscriber transactional engagement into a mutually-beneficial, instant relationship.

Customer engagement

Next, customer engagement will take place where the customer is. In other words, engagement will be fluid across all channels and devices. Omnichannel is the key to true continuity of engagement, and consumers will be able to transparently ‘hot-swap’ between devices regularly. By focusing on an omnichannel experience, mobile operators are helping to redefine customer service - allowing customers to take control of managing their own engagement, on their own terms. 

Operators have, on average, around 150 monetisable interactions with a customer on a daily basis, and that customer expects instant responses and seamless service each and every time. This requires greater business agility and a level of responsiveness that can only be achieved via a digital platform.

The telco industry will find increasing value in Net Promoter Score (NPS). Net Promoter Score, or the metric that demonstrates the likelihood a customer will recommend a company to their colleague or friend, has ascended over recent years to become one of the most prominent metrics for companies. More than two-thirds of Fortune 1000 companies use NPS (Bain), and for good reason. Net Promoter leaders on average grew at more than twice the rate of their competitors.

For operators in 2017, NPS will become the single most important indicator of digital customer experience and will start to appear in quarterly financial reports, and Chief Digital Officers success will be judged by the metric. NPS will become the leading litmus test of customer experience, translating to loyalty and long-term shareholder value. According to Capgemini, operators that have higher scores will see their revenue grow by as much as 33 percent, those with lower scores could see a revenue decrease of 7 percent on average.

Mobile operators in action

Also in this new year, mobile operators will ‘stop talking, and start doing.’ MNOs have considered digital strategies for some time and are ready to take them into the mainstream, and customers are eager to see execution in the form of real-time interaction with their service provider. Digital leaders have already started to emerge, and they are the ones who are winning customers and making money. In 2017, we’ll see more from investors and financial analysts benchmarking the efforts of these digital leaders. 

Today’s telcos cannot afford to drag their feet when it comes to implementing end-to-end digital solutions. McKinsey & Company research shows telecom companies with robust digital capabilities boast a profit margin of 43 percent, compared to their counterparts whose margins hover around 21 percent. That’s why over the last three years, 25 percent of mobile operators have hired a chief digital officer to develop and rollout new digital experiences for their customers. We expect to see that number climb higher in 2017.

Mobile operators will also finally embrace the cloud. This will be the next wave of delivering services and disrupting the status quo. It allows telcos to ‘plug’ directly into digital platforms hosted in the cloud rather than having to undergo lengthy and more risky transformation projects. The difference in timescales can be as much as three years’ average for a full digital transformation versus just three months with the cloud. 

To date, traditional telcos have been reticent to move their data-rich and highly sensitive operations into the cloud. However, 2017 is the year operators will finally embrace cloud-based software in an effort to be more fully digital and to boost their operational agility. Cloud services will allow operators, currently hampered by large, legacy systems, to plug-and-play straight into the technologies that will allow them to adapt and profit in real time. These operators will recognize that cloud technologies offer the ability to bring new customer engagement opportunities to market faster and with greater reliability.

Finally, the market will see an increase in consolidation. The acquisition of Time Warner by AT&T points to more mergers and acquisitions this year. AT&T also bought DirectTV, and Verizon bought Yahoo and AOL. M&A activity in the telecoms sector will pick up pace during 2017, as bigger companies push full-force into transforming into media and internet companies in order to meet the needs of this new ‘on-demand’ digital economy.

Jennifer Kyriakazis, founder & VP of marketing, MATRIXX Software
Image source: Shutterstock/TechnoVectors

Jennifer Kyriakakis
Jennifer Kyriakakis has worked in the IT integration, product marketing and high-tech consultancy sectors for over 20 years. Prior to MATRIXX, Jennifer worked for Portal Software (acquired by Oracle) where she was responsible for the global marketing strategy of Portal’s product suite for the broadband and mobile markets.