Beyond the Call: Why Telecom Companies Should Prioritize CX
The telecommunications industry is at an important crossroads as evolving consumer needs reshape the ecosystem of customer expectations.
By Rio Longacre and Josh Buchholtz
As the telecommunications industry goes through a period of rapid change — buttressed by economic headwinds, technology changes, and evolving customer expectations — industry leaders are focusing on customer experience (CX) to stand out in a crowded space, boost share of wallet, and accelerate product innovation in a privacy-safe manner.
Beyond simply placing the customer at the center of its business strategy — the essence of being CX-led — organizations are deploying a wide range of solutions to orchestrate high-quality, curated experiences, in effect, meeting customers where they are using the latest and greatest the tech world has to offer.
The telecom dilemma
The telecom industry faces the dilemma of intense pressure to meet customer demands for faster connectivity while providing rich experiences across multiple devices. Devices are increasingly fast while content is increasingly large, placing a heavy burden to balance innovation with maintaining network operations. This cyclical process balances advances in processing speed and increased customer demand for digital content across digital platforms against advances in network speed to support more powerful devices with an increasing number of applications running on them.
As far back as 2007, this was recognized and coined “The Telecommunications Carriers’ Dilemma: Innovation vs. Network Operation.” In the 15-odd years since, the environment has become more competitive, not less, and staying on top is harder than ever. Nearly 60 years ago, in 1965, the average tenure of companies on the S&P 500 Index was around 32 years. Today, tenure of corporate longevity has dropped by 34%. In the current softening economy coupled with inflationary pressures and sagging demand, many CEOs are prioritizing profitable growth over the “drive revenue and scale” strategy that dominated during the freewheeling, zero-interest-rate 2010s.
Given this environment, CEOs must perform a balancing act to stay competitive, allocating resources to maintain operational excellence while pursuing an innovation-driven strategy. Many industry leaders bounce around frenetically from one extreme to another in response to market conditions, the whims of Wall Street, and — of course — the fickle consumer.
Add to this dilemma the complexities surrounding the CSP (Communications Service Provider) customer ecosystem. Most CSPs serve business customers and consumers, who have different needs, purchasing habits, and values, and must therefore be served by unique value propositions. While business customers tend to desire network excellence, reliability, and system bandwidth, consumers, by contrast, are usually drawn to product innovation, ease of purchasing, and the ability to easily connect with friends.
The CX imperative
To survive and thrive in this complex environment, Slalom recommends CSPs follow a strategy that focuses squarely on the customer and the customer’s experience. CSPs who place the customer at the center of the business, understand customer needs and design products, services, and experiences to meet these, are better positioned to navigate the telecom dilemma. This helps businesses prioritize what’s important, deprioritize what’s not, and make investments in both time in money where they have the greatest impact using customer needs as the ultimate North Star.
Customer experience is the value created from the sum of all interactions between a company and its customers over time.
This may manifest itself as an interaction at a moment in time to the experience of a physical product itself (e.g., a cellphone or tablet), from chatting with an agent about a service issue to picking up a new device at a retail location. While a specific interaction may be part of customer experience, it is the totality of interactions over time and the feelings they invoke, across channels, services, and products, that constitute CX itself.
Because CX spans the lump sum of interactions across the customer journey, CX excellence requires a holistic, cross-functional approach that encompasses product, service, marketing, sales, and technology. When viewed holistically from a customer’s perspective, these capabilities work in unison to deliver a winning CX formula. CX is the orchestrator that drives customer-centric growth and enables companies to win.
What this means for CSPs
In the telecom industry, gaining a cohesive and complete view of CX has traditionally been challenging due to the bifurcated nature of the customer journey itself, which tends to skew heavily digital when looking at top-of-funnel activities, contrasted against lower-funnel activities associated with buying, picking up, and activating a mobile device, which take place still heavily in-person, on-premise.
Enter COVID-19, which threw a variable at the industry with its sudden, overwhelming shift to a digital-first, or digital-only, engagement model. Now that the pandemic is receding, and behaviors are returning to normal — and in some cases over-correcting — evidence shows many behaviors learned during that time period are here to stay due to their greater convenience, basic utility, or the force of sheer habit. A couple of great telecom industry examples of new behaviors are contactless payments and the acceleration of streaming content delivered via over-the-top (OTT) channels.
In this new environment that has emerged, the traditional linear telecom customer journey model of “Learn, Buy, Get, Use, Pay, Service” (LBGUPS) has evolved and needs a refresh. With the reality of a new omnichannel customer that has solidified post-pandemic, the customer journey has become more like a figure-eight rather than a linear process, blurring the lines between what used to be distinct activities, with, of course, a reliance on digital touchpoints that would have been hitherto difficult to conceive.
Advancements in generative AI and large language models (LLMs) are once again creating shifts in the customer’s overall experience with their. For example, leading CSPs are building data-driven propensity models to send highly-curated and meaningful offers to individual customers to reduce churn risk and drive loyalty. Understanding this new paradigm and using it to design and deploy great experiences, while ensuring transparency and privacy, will be paramount in the coming years.
Embracing CX as a way of doing business
Ultimately, it’s business and consumer customer demand that drives this CX imperative: 89% of B2B customers and 72% of B2C consumers expect companies to understand their unique needs and expectations, and 69% of business buyers now expect “Amazon-like” experiences.
For the telecom industry, Slalom’s experience has shown embracing CX results in three demonstrable benefits to CSPs:
1. Expanded share of wallet
CX helps organizations create incremental value by fostering the development of differentiated and compelling products, services, and experiences that uniquely fit customer expectations. This value increases new customer acquisition and win rates, boosting need-based customer acquisition, cross-sell, and up-sell.
2. Maximized moments across the journey
Placing the customer at the center helps organizations earn advocacy, loyalty, and customer love over time by knowing when, where, and how to engage every unique customer along their distinct journey. Gaining this expertise helps increase the share of wallet and the likelihood of repeat business while reducing customer churn and acquisition costs.
3. Increased internal efficiencies
Focusing on CX moves brands in the direction of orchestrating personalized experiences and disseminating curated offers based on unique needs and relevant desirability — the pinnacle of marketing. A CX measurement framework gathers disparate data points and integrates key functions under a shared set of goals and business objectives to ensure the sum of interactions is consistent and meaningful to customers. This, in turn, increases internal efficiencies and win rates, reducing duplicative work, eliminating friction, and decreasing the cost to serve.
Over time, organizations that invest in customer experience have thrived. Qualtrics reports companies with top CX ratings outpaced their peers’ stock performance from 2019 to 2022 and doubled their lead over companies with poor CX experiences. Further, research by Forrester also demonstrated CX innovators lead CX laggards in growth by 5.1 times, and customers are willing to pay 4.5 times more for excellent experiences.
How experience tech enables a winning formula
The marketing, advertising, and sales technology landscape has exploded over the last two decades, with continued differentiation and fracturing of the technologies into focused solution sets. Because it spans the end-to-end customer journey, this breadth of technology silos is colloquially referred to as “experience tech,” or an interdependent ecosystem of capabilities that sales, marketing, and service leverage to execute and optimize prospect, customer, and employee experiences throughout the user journey.
Following the logic of how to embrace CX in business practices, grounding on a holistic view of the customer journey is critical to identify and prioritize interactions, which can be mapped to capabilities and the specific experience tech solutions used to orchestrate the rich experiences customers demand — this is where many CSP organizations are currently underdelivering.
Because customer experiences are not siloed, the technologies orchestrating the journey shouldn’t be either. Effective experience technology strategies should focus on an aligned-approach and continuous optimization to define desirable, viable, and scalable solutions. To get there, leaders must comb through the complicated web of experience tech products and solutions. In 2023, experience tech comprises more than 11,000 distinct solutions, up from 150 as recently as 2011. Building an effective cohesive and integrated stack can thus be challenging, with myriad solutions, many with overlapping capabilities, to choose from.
CX and beyond: What’s next?
For CSPs, CX and the supporting technologies are the keys to unlocking profitable growth. Organizations that invest in customer experiences will win greater market share in coming years as research has shown customers spend more and shop more frequently with companies that offer better experiences. Purchasing decisions themselves are greatly impacted, with 74% of consumers indicating experiences alone drive price inelasticity while shopping.
With economic concerns escalating as the economy softens, the focus on CX becomes paramount. Customers are becoming more price sensitive as they evaluate where to spend money. As consumers become fickler and spending declines — which will certainly be the case in a recessionary environment — the competition to keep existing customers inevitably intensifies.
Increased competition coupled with rapidly evolving consumer behaviors mean the takeaway is clear: the telecom industry is at an important crossroads as evolving consumer needs reshape the ecosystem of customer expectations. CSPs that know their customers best and build products, services, and experiences that consistently meet their needs will have an inherent advantage over the competition.
A shorter version of this article was originally published on Fast Company.
Slalom is a global consulting firm that helps people and organizations dream bigger, move faster, and build better tomorrows for all. Learn more and reach out today.
