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Telefónica's New Program For Growth Understands the Importance of the Bond with Customers

by Philip Kendall | Nov 30, 2018

Telefónica's "Reconnect" programme outlined yesterday is an interesting departure from the previous “We Choose It All” strategy that has been in place for the last three years. It is an attempt to deliver a marketing-delivered, customer-centric growth strategy that is much needed in today's challenging telecoms environment.

As Telefonica explained back in November 2015 its strategy to be an “Onlife Telco” was “founded upon six key elements, three for value proposition – outstanding connectivity, integrated offering, and differential experience – and three facilitators, which will be Big Data and Innovation, end-to-end digitalisation, and capital allocation and simplification.”

Now in November 2018, the new strategy has a solid foundation in those six elements, but puts the customer relationship and relevance front and center of the strategy. The first of five elements of the new Reconnect strategy is “Growth in relevance for customers through an excellent digital experience based on the simplicity and personalisation of the offer, through the company's technological platforms and the application of Artificial Intelligence”.

The second element targets revenue growth through an “open ecosystem of partners”, a realisation of the importance of content partnerships for both existing consumer services but also in the emerging 5G world of vertical market opportunities. After this are more inward looking elements relating to efficiency, sustainability and employee motivation.

It is that first element of customer relevance that resonates strongly with Strategy Analytics. In our discussions with communications service providers in 2018 there is a growing realisation that it is hard to change the shape of telecoms revenue growth in many markets. Ever-expanding service options often involve larger and larger bundle discounts and new network technologies often result in passing efficiency gains on to customers. Talk is increasingly turning to CSP relevance and building a trusted partnership with customers. This is much more than customer experience management  and stimulating growth through better service experiences; it is about those enhanced service experiences being part of a strategy to build a closer bond with customers, to move to a situation where customers actually like, rather than tolerate, their CSP.

This is really a problem for the marketing departments to solve and one we have been discussing for a number of years (see our report “Are Telecommunications Operators in Denial? ROI is at Risk & New Business Model is Needed”). We noted in that report that the single biggest challenge facing the telecommunications industry was the transition from a Network-centric, public utility business model to a Consumer-centric, marketing driven business model. We concluded:

“While investment in technology is always a necessary requirement, it alone will not trigger greater profitability or enhance long run competitive market positioning. Neither the technology itself nor an operator’s expertise is sufficient to establish differentiation so that one operator can capture a long run relative advantage that leads to sustainable profitability and growth.

The future frontier for mobile operators must be to achieve marketing excellence, establish brand equity, perform needs-based segmentation, and target value propositions that can successfully transform these commodity markets.”

Please get in touch to discuss how we can help you change the conversation with your customers and target value creation through deeper customer relationships.

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