Over the past year or two, we’ve all heard an almost endless amount of chatter (think media articles, analyst presentations, vendor blogs, and expert briefings) about 5G, innovative digital services, big data, digitization, and the incoming network revolution. That’s the digital network to you and me.
This is all well and good, but let’s consider the possibility that this next-generation telecom world could end up being all sound and fury, but actually signify nothing. What if I pull out my nifty, does-everything-you-could-possibly-imagine iPhone 13 (yes, I know, but let’s pretend it’s already here), it latches onto my service provider’s 5G network; and…I call my mum. Every night. And that’s it.
An exaggeration, perhaps, because this isn’t how every subscriber uses his or her digital device, but relevant to a considerable number of us—which poses a problem for the industry. Building the 5G bridge is an impressive achievement, with the potential to unlock a myriad of new revenue streams. But new bridge or not, you still have to get people to cross it. To want to cross it. So, just suppose we’ve built 5G and no one comes.
Enter the critical issue of digital adoption. Now that 5G is here (in some places) and on its way (in others), the focus needs to expand from build-out to usage, because only when digital adoption is realized, and digital tools are used to their fullest capacity, will the digital era begin to pay off. My nifty iPhone 13 may be a digital tool, but it’s not a digital asset if I use it only to phone my mum from time to time.
I’m a case study typical of many communication service providers’ (CSP) customers, falling way short of converting myself into a real, digital asset. This is an issue that CSPs have to address. The challenge of digital adoption now represents a priority for the industry. The question is simple: How can CSPs accelerate the time-to-competency for users of their new, digital tools?
Figure 1: How modern loyalty programs deliver more value
For a start, service providers are well aware that in their highly competitive, choice-abundant market, they must keep their customers happy by focusing on the customer experience they provide. So, their own digital transformations must from the outset prioritize digital adoption and allocate budget to it. There is a compelling reason for doing this: sustainable business growth is directly linked to the ability to create long-term relationships with customers. As can be seen in Figure 1 (above), digital adoption drives many business targets and prepares organizations for capturing the elusive sustainable growth.
Building is only the beginning
Building is the start of the digital adoption journey. To understand why this is so, the fundamental point to understand is that digitization essentially refers to new mechanisms by which telecoms services are delivered. These mechanisms (the 5G network, for example) provide CSPs with multiple new commercial opportunities via an expanded roster of services that can now be supported and delivered. Furthermore, the data that is accumulated in the execution of these services can be put to work to increase revenues again, meaning the beneficial impact that digitized networks and services can have on subscriber acquisition and retention is exponentially increased.
All of this doesn’t just happen. It’s insufficient to build a 5G network and hope things magically take off (from the perspective of increased revenues). The participation of subscribers in new digital channels doesn’t happen passively; it must be driven.
This is a critical challenge for today’s telecommunications companies. “Build it and they will come” doesn’t work. CSPs must actively engage customers via the digital channels they offer.
2020: Putting the pressure on digital
While digital adoption has always been a challenge, the COVID-19 pandemic has accelerated the need for it. Digital adoption and engagement should today be playing an even more critical role in building customer relationships and loyalty. Yet many CSPs are missing an opportunity here. In their bid to ‘trend,’ to gain followers on social media and to boost what they think is effective digital engagement, CSP brands often lose sight of the real goal: delivering what the customer wants.
The risk here for CSPs is prioritizing what is anemically defined as ‘building digital relationships’ at the cost of focusing on the real prize: creating meaningful connections with consumers. It is only after meaningful relationships are built that digital adoption increases and commercial success follows. Industry experience dictates that, for any high-performing customer communications strategy to be truly successful (think of loyalty programs as an example), the CSP must develop an emotional relationship with its customers. This is the starting point for increasing ROI. Obvious? Well, maybe, but evidence suggests possibly not.
So, if you’re going to prioritize driving digital adoption, what should you keep in mind as the principles of an effective strategy? I’d suggest:
- Clarify and clearly articulate your targets and priorities
- Develop a strong customer insights function
- Define proactive and adaptive customer journeys
- Create a portfolio of unique and personalized offers, rewards and experiences
- Deploy flexible and future-proof technology
- Embed strong program measurement practices
For industry leaders, these actions are already happening. Early digital success stories regularly highlight CSPs that have designed world-class loyalty and digital engagement programs with clear business outcomes and support for long-term brand building. These programs, when successfully executed, increase customer retention, boost profitability and revenue, drive digital adoption, generate valuable subscriber insights, and increase customer engagement.
Unfortunately, designing and implementing such programs is not without its challenges. Here’s how these can be overcome.
As is often the case, understanding how to succeed is most clearly grasped by understanding where digital often fails. And there are many reasons the newly digitized CSP falls short of fulfilling the potential of its newly created infrastructure. These include, first, a failure to meet the expectations of empowered consumer.
In the age of the consumer, loyalty program members have heightened expectations for how, when, and where they want to communicate and what they want to receive from brands. Instead of empowering consumers and providing them with some control over their interactions with a brand, too many programs still deliver loyalty program offers and rewards on a latent basis. Without the proper technology, integration, and a shift to active and flexible mindsets, marketers cannot appropriately foster a customer experience that caters to consumer-driven terms.
Another common issue is undervalued rewards. Determining the give-and-get of a loyalty program involves complex financial modelling. Furthermore, well-intentioned partnership programs often end up having the opposite effect on consumers and, rather than adding value, they simply complicate the redemption process. Loyalty programs frequently strike a tenuous balance between give-and-get, and too often the scales are tipped in favor of the company, not the consumer. Most programs offer discount-based rewards, and the perceived consumer value of loyalty programs deteriorates as a result.
A lack of real-time response capabilities is another problem. Marketers are still relying on push messages. Real-time response based on behavioral triggers is trickier and requires more planning and advanced capabilities to execute. However, without proper real-time capabilities, programs are limited in their ability to understand and respond to customer behavior or to deliver dynamic offers and rewards. This can also be related to an inability to manage customer data flow. Loyalty programs generate a lot of consumer data, from basic enrollment and contact information to transactional history to personal preferences and qualitative information. However, without the proper infrastructure and systems in place, marketers cannot use the data to build the insights that drive segmentation, targeting, and offer management.
Lastly, there’s the old chestnut: Data, process, and technology silos. We’ve all heard that before. Even when marketers have the ability to gather and apply analytics to loyalty program member data, integrating these insights with other parts of the organization or with enterprise-wide customer data infrastructure poses a much larger challenge. Data orchestration and integration rarely extends beyond the loyalty program itself.
Driving digital adoption now
In a world where customer expectations are high—and still increasing—and where customer experience is key to success, CSPs must set the bar high and ensure they are meeting a demanding customer’s requests. This will not be achieved by rushing headlong into the digital service world without first mastering the basics. Without a solid foundation, loyalty programs limit rather than improve chances for success.
To drive digital adoption, CSPs must build a customer intelligence practice. Capturing user data is only the first step. CSP marketers also need analytics to help them sift through and make sense of the data. Applying intelligence to loyalty program data generates insights based on customer value that improve and focus a program’s segmentation, targeting, and offer management.
They must also optimize customer journeys and brand experience. Using real-time data at the individual customer level can help analyze current behavior, predict future behavior and adjust the journey in real time for increased customer lifetime value, operational efficiency and business results. At the same time, CSPs must design personalized offers, rewards and experience portfolios. Creating memorable experiences inundated with emotion and that show empathy, care, and trust builds relationships and adds additional value for customers by associating offers with quality (lifestyle) brands that will raise customer satisfaction.
With all this in mind, CSPs must then deploy a technology platform that captures and manages customer insights and preferences. Technology represents a crucial aspect of loyalty program management. It manages the loyalty currency, tracks earn-and-burn mechanics, maintains a historical record of member data, controls dynamic offer management, and integrates with systems and partners. Without an efficient and powerful loyalty technology supporting your loyalty program, your time will be spent orchestrating day to-day operations with little time left over for innovation.
To justify the impact of this investment, CSPs should also define a Loyalty Measurement Framework to consistently track operational metrics (think enrollment rates, response rate, and so on), engagement scores (such as Satisfaction, NPS, etcetera) and commercial returns (including churn, ARPU, CLV, and more) to understand the success of loyalty program and increase the relevancy and commercial impact of loyalty marketing campaigns through better targeted actions to ensure that the programs deliver meaningful offers to the most profitable customers.
World-class loyalty: best practices that drive digital adoption
Faced with the challenge of driving digital adoption, digital CSPs must build world-class loyalty programs to ensure their future success. Digital technology has freed telecom customers to engage with their chosen brands on their own terms—researching, discussing and shopping at all hours via multiple devices and different channels. Yet the consumer wants still more. It’s not just about the product or the service. It’s the entire experience a brand provides.
Customers want to be treated as individuals, to be valued, entertained and, ultimately, delighted. Digital networks can enable these requirements to be met. To deliver the comprehensive and satisfying digital experience required to drive digital adoption, brands must clearly define what they want to achieve and how they will go about it. A deep customer understanding together with a solid data and technology foundation that supports interactive and personalized experience are now table stakes requirements for commercial success.
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