Telecom players that invest in digital outperform their peers

29 June 2016

Telecommunications operators that invest, and embrace, digital channels enjoy a higher NPS and better performance vis a vis their peers, finds a new report. Despite the benefits that lie on the horizon, in particular incumbents are not transforming themselves digitally in the ways that meet changing consumer expectations, leaving them exposed to, potentially large, risks.

Rapid digitalisation is in part facilitated by a range of devices that connect to the internet via telecommunications operators (telcos). The facilitation is implicit in the wider transformation of consumer behaviour as new avenues are opened up for consumers, from social media to ecommerce. While digital, enabled by telcos, is disrupting a range of markets, from retailers to financial services, the telcos themselves are too finding that digital is equally important to their own market space.

In a new report from Capgemini Consulting, titled ‘Unlocking Customer Satisfaction: Why Digital Holds the Key for Telcos’, the firm considers consumers’ relationship with operators and, according to the results, what operating leaders are doing that allows them to outperform the rest of the pack. The study itself involves 5,700 mobile consumers across nine countries in the US and Europe.

NPS of mobile operators is low and negative

NPS scores
The study finds that telco operators have a relatively unchanged model since the start of the mobile networks, and that they have mostly stuck to a standard playbook: lay out networks, expand cross-channel presence, offer a plethora of plans with limited differences, and when new generation technology goes mainstream, adopt it and repeat the cycle.

The survey results suggest, however, that this model is starting to buckle under consumer sentiment. The ‘net promotor score’ (NPS) averages a negative score for telcos, with dissatisfaction widespread across geographies and operators. The lowest scoring average for respective countries are the Netherlands, with an average -11, and Spain, with -8. The UK has a more positive outlook on telcos, with a NPS of 7, while the US has the highest average score, at 14.

NPS vs use of digital channels

Digital correlations
The low NPS for operators across the board is made considerably worse when considering cross-border studies, which confirm that mobile operators lag behind other sectors in terms of customer satisfaction and experience.

According to the consultancy, one area in which operators appear to be lagging behind is providing digital propositions to customers that are increasingly expectant of such propositions. Physical channels are, according to this survey, falling out of favour among customers, with only 8% that consider the existence of stores as a must-have for mobile operators.

In a bid to better understand the relationship between digital offerings of operators and NPS score, the consultancy explored the correlation between several key characteristics. When mapping the relationship between the percentage of customers that use digital channels (web + mobile apps) for making purchases and accessing customer support, an increasing NPS was found to correlate with operators that have users using digital channels. In addition, the use of digital technologies also reduces consumer propensity to churn. Forty-six percent of consumers who rated their mobile operator “poor” in terms of the use of digital technologies plan to switch within the next year. But only 14% of consumers who rated their mobile operator “great” in the use of digital technologies plan to switch.

NPS is linked to high usage of digital technologies

The study also finds that a correlation exists between NPS and the percentage of respondents that agree their operators leverages digital technologies to improve customer services experience.

Romain Delavenne, Vice President, Capgemini Consulting, says: “Consumer expectations of telco providers have changed, but many operators have failed to provide what they demand, leading to low customer satisfaction. Slow roll-out of digital services lies at the heart of the issue and this is a clarion call for operators to accelerate their digital transformation efforts or risk disruption from digital-only players.”

High vs low NPS telcos and cross-border threats

Falling behind the times
The research also found significant correlation between NPS scores players’ and growth over the recent period. Growth between 2012 and 2014 for low-scoring NPS firms dropped -7%, with the average age of the operator being 21 years, operating mostly a physical/hybrid digital model and using call centres and limited digital channels. For operators with high NPS scores, growth was up 33% between 2012 and 2014, the operators were mostly small, while the operation leveraged primarily digital channels for sales and customer services.

The research highlights that the risks of not meeting customer expectations are real for operators. More than half of mobile network users (58%) say not meeting the demand for a new type of customer experience will compel them to switch over to a digital-only operator that exclusively uses digital channels to interact with customers.

According to the survey results, were a cross-border tech giant provider to enter the operator market segment, a considerable number of existing customers would consider making the shift. 44% of respondents on average said they would make the shift; worrying for operators is that it are particularly the high value clients (those spending more than $50) most willing to make the potential move, with 51% of the $50 - $75 category to move while 54% of the $75 category would go.

Greenfield and full transformation

For incumbent operators to keep up with the field, the researchers suggest one option is to launch greenfield digital operations, which have short lead times and low costs, while the longer term option is to digitalise their back- and front-end, which is forecasted to cost up to $500 million and would take five years to realise.

Romain Delavenne concludes: “It is clear that investment in digital is key to improving customer satisfaction, however many incumbent operators are saddled with legacy platforms and distribution channels that make true digital transformation difficult. The success of the newer breed of digital-only or hybrid operators in driving customer satisfaction and revenue growth provides a transition path for more established competitors. For many incumbents, realising quickly the benefits of digital could be tackled by launching greenfield, digital-only operations in the short term while continuing with core digital transformation efforts in parallel.”

More news on


Four ways digitalisation is transforming car brands and dealers

16 April 2019

From changing expectations from the customer to new stakeholders entering the industry, the digital transformation of global automotive industry means it is facing the wholesale transformation of its business model. In a new white paper, global consulting partnership Cordence Worldwide has highlighted four major digital trends that are transforming the relationships between car brands and dealers with consumers.

With digital transformation drives booming across the industrial spectrum, automotive groups are no different in having commenced large digital transformation programmes to improve productivity, efficiency, and ultimately profitability. Falling sales figures mean the automotive sector is facing an increasingly difficult road ahead, something which means companies in the market are even more hard pressed to find new ways to improve their bottom lines.

While it offers major opportunities, the industry’s move to digitalise is not without complications. It has triggered a series of major internal changes, which have presented automotive entities with the challenge of becoming a “customer-oriented” industry. A new report from Cordence Worldwide – a global management consulting partnership present in more than 20 countries – has explored how automotive companies are navigating the rapidly changing nature of digital business.

New business models

The level of change likely to be wrought on the automotive industry by digitalisation is hard to overstate. Automation could well lead to significant reductions in the number of accidents, higher vehicle utilisation and lower pollution levels, while leading to a $2.1 trillion change in traditional revenues, with up to $4.3 trillion in new revenue openings arising by 2030.

As a result of this colossal opportunity, it is easy to see why almost all automotive groups now have digital departments, with generally strong communication within the digital transformation and the customer approach. The changes to society which this may have are potentially distracting automotive firms from the change it is leading to in its own companies though, according to Cordence’s paper.

The automotive market is dead, long live the mobility market

Because of this, the sector’s business model is set to transform over the coming decades. With digitalisation speeding up the appearance of concepts such as car-sharing, a subscription package model will likely become more palatable. At the same time, car and ride-sharing models will cater to the sustainability criteria of millennials, who will rapidly become one of the automotive market’s leading consumer demographics in the coming years.

Antoine Glutron – a Managing Consultant with Cordence member Oresys, and the report’s author – said of the situation, “These ‘old school industries’ are now working on creating new opportunities, but in so-doing are facing challenges and threats: new jobs, new technologies, new ecosystem of partners, necessary reorganisation, different relationship with customers, and even new businesses. The customer approach topic is in fact a real challenge for car companies as it implies changing their business model and adjusting their mind-set to address the customer 4.0: from product-centric to customer-centric, from car manufacturer to service provider.”

Digital customer experience

In the hyper-competitive age of the internet, even top companies face an uphill challenge when it comes to holding onto customers through brand loyalty. Digital disruption has resulted in changes to consumer behaviour, which is forcing a range of marketing strategists to reconsider their old, possibly out-dated strategies. As modern customers wield an increasingly impressive array of digital tools and online databases, they and are now able to quickly and conveniently compare prices, check availability and read product reviews.

The automotive sector is no exception to this trend, according to the study. In order to adapt to the needs of the so-called ‘customer 4.0’, car companies will increasingly need to change their business model and move away from product-centric companies to customer-centric ones, from car manufacturers to service providers.

Glutron explained, “As an automotive company, you can no longer expect customer loyalty simply with good products; you must conquer and re-conquer a customer that “consumes” your service. The offer now has to be global, digital and personalised. Your offer has to be adapted to this customer’s needs at any given moment. A key issue related to data control is to build customer loyalty by creating a customer experience 'tailored' throughout the cycle of use of the 'car product': purchase, driving, maintenance and trade-in of the vehicle.”

One way in which the sector may be able to benefit from this desire for a tailored experience is via connectivity. Consumers are generally positive about new connective features for automobiles, and many are even willing to pay upfront for infotainment, emergency and maintenance services. Chinese consumers, where the connected car market is set to hit $216 billion, are already particularly interested in paying a little more for navigation and diagnostic features in their future new car. This can also enable automotive companies to exploit a rich vein of customer data, enabling them to rapidly tailor their offerings to consumer behaviour.

New automotive segments

Digital transformation has also brought with it the rise of completely new application areas. As mentioned earlier, the most well-known example is the autonomous or self-driving car, where the last steps forward were not taken by major automotive groups but by technology companies such as Tesla. While this may have given such firms the edge in the market briefly, a number of keystone automotive names will soon be set to take the plunge into the market themselves, leveraging their car manufacturing prowess and huge production capacities to their advantage.

Before companies rush to invest in this market, however, it is worth their while to remember that the readiness and uptake for such vehicles differs greatly geographically. For example, following a study published in 2018, 92% of Chinese would be ready to buy an autonomous car, compared with only around 35% of drivers in France, Germany and US. Meanwhile, the infrastructure of different nations will also be significantly less accommodating of the new technology.

Use digital for steering thr activity

Elsewhere, Cordence’s analysis has suggested that hooking the cars of tomorrow into the Internet of Things is also likely to see a rapid change in the business model for car maintenance, providing real-time diagnostics for problems. This presents chances for partnerships to improve the connectivity of cars, especially with tech companies; for example, PSA partnered with IBM for a global agreement on services in their vehicle. Meanwhile, data could also be sold to other parties with an interest in this data, such as the government, which could use it to manage traffic levels, or ensure that only adequately maintained vehicles take to the road.

Glutron added, “With the increase in the amount of client data and connected opportunities, the recommendation is to set up data-centric approaches. The value is now in the customer data. The general prerequisites are to rework the data model and the Enterprise Architecture and generally build up a data lake including data from all sources (internal and external, structured and unstructured).”

From automotive to mobility

Relating further to the idea of connectivity, the report claimed that automotive firms must now adjust their models in line with the provision of end-to-end mobility, rather than treating the sale of a car as an end point in their relationship with the customer. In order to realise this transformation, transformations are likely to become more and more important.

A network of partner companies means automotive firms can provide a global mobility experience. As the vehicle is increasingly connected to its environment, new partners can also be cities, governments, and other service providers within the global mobility services industry in which the car brands want to take part.

According to the study, the target is clear. Companies must look to a holistic transport service, offering to move customers from A to B in a unique and pleasant way – otherwise they might as well take public transport. At the same time, they should extend the services reachable “on-board” (especially the enhancement of the connectivity between the car and smartphones or other connected devices), and reach high standards in terms of user experience (online sales, online payment, customised experience during and after the use of the car).

Concluding the report, Glutron stated, “These mobility market transformations could be considered a threat for the car manufacturers. Quite the opposite: if they take up the challenge and review their business model so that they become the service provider – communicating no longer to a driver but to a ‘mobility customer’ – they can then take advantage of their expertise and their position as a historical player. The most convenient means of transport are cars, and building a car is highly-skilled work.”