Brand Stretch In A Changing World
By Kevin Perlmutter
Telecoms are now truly at the heart of innovation — supporting, guiding, and powering other innovators and connecting everything that is important to our personal and business lives. Fast mobile networks are helping to revolutionize every aspects of our lives.
Telecom doesn’t always receive the credit it might for helping to make lasting change across industries like healthcare, entertainment, home security and personal finance. As network speeds continue to increase, with 4G LTE networks beginning to light up, we will see more seismic changes in human behavior. Further, some developing countries that were once referred to as “third world” due to their remote connection to capitalism are now catching up, thanks to modern mobile networks that improve education, healthcare, and commerce. Growth into new areas for telecom carriers is so explosive that leading brands are being forced to stretch every year — more than some companies do in a lifetime.
Serving customers in new ways
With mobile penetration over 100% in major markets, telecoms are serving their customers in new ways to drive loyalty. Already, they are making it possible for consumers to pay for things with a mobile device; store and access data in the cloud; monitor their home from afar; run their business from the road; and watch HD movies on the go. But the real prize for these brands is building customers’ appetite for, and reliance on, a rapidly expanding array of new offerings and capabilities.
While it may seem like we’re in boom times for telecoms, these opportunities come with their own set of challenges. Inside the leading telecom companies, corporate strategists, technology visionaries, and operational orchestrators need to stay many steps ahead to pave the way for a future that does not yet exist. These companies are constantly evolving, working to bring their employees along, and trying to stay in front of consumer demand. Externally, the industry is intensely competitive, where making the first move or a claim of superiority is often a top priority.
For brands to stretch credibly, many will fi rst need to earn the trust of their customers. This is not a challenge in all markets, as some carriers are associated with national pride. For example, Deutsche Telecom is felt by many to be the national carrier in Germany, and is the most trusted telecom brand in the market with a trust rating of 73% on the German Consumer Confidence Index. Vodofone and Telefonica’s O2 each follow with a 60% trust rating in the German market.
In some other markets, years of advertising claims that showcase the best possible offering have eroded trust, because the experience doesn’t always match. Customers are more able to see the cracks in the foundations — pointing out an opposite experience for every claim, and having little patience for less-than-perfect service. This dynamic is visible in the US, where the four major telecom brands — Verizon, AT&T, Sprint and T-Mobile — all make aggressive claims of network superiority that do not always match the user experience. Syndicated research from multiple sources shows that customer satisfaction averages below most other service categories, due to network coverage and customer service challenges.
Closely linked to trust and credibility is the brand’s perceived corporate contribution to the community that it serves. Many telecom brands contribute significantly to their community through massive investments in infrastructure or philanthropic contributions, although they don’t always get credit. In contrast, many seem to be at odds with consumers or local governments and face roadblocks when they want to expand their offering or stretch into new areas. We see differences in how this plays out when the telecom is not on the positive side of public opinion or government regulators. In China, for instance, brands like China Telecom are subsidized and supported by the government to extend service to the country. In Mexico, there is a public debate underway between the government and the dominant player in the category — who owns landline carrier Telmex and mobile carrier Telcel — about having too much control over the market. Recently, the Mexican government has taken steps to open the doors to new competition. In the US, the leading telecom carriers and the government seem to be at odds over how to keep up with consumer demand. This sparring has made it difficult for US telecoms to overcome regulatory hurdles for some acquisitions or to access new spectrum.
Capable and credible
Another consideration as telecoms stretch into new areas is to ensure that they are fully capable and credible to deliver the new offering, and that their business is set up to serve the new offering well. They need to evaluate whether they should build or acquire the capability; launch it on their own, through a joint venture or as a co-brand; treat it like a sub-brand or a product; or perhaps market it under a different brand. How the offering fi ts into their brand architecture and how it is launched will determine what potential value is added or detracted from the business. Movistar in Spain and Latin America is a prime example: As a sub-brand of Telefonica, the Movistar brand is used strategically and differently, or not at all, in the countries Telefonica serves.
Lastly, for telecoms to truly stretch, they will need to take their customers on a journey into new areas of possibility. Their outward focus should be less about blanketing a market with superiority claims, and more on understanding customers’ needs and desires, and then overtly meeting or exceeding them. They should use their customer-facing employees and digital technologies to form closer bonds with customers, and to interest them in new capabilities that can improve their lives and businesses. Going forward, value won’t come from having access, it will be based on how useful and meaningful access is for the customer.
Many telecoms will have to work extra hard to earn the trust of customers and governments to play in areas they want to go. In terms of brand strength, they will need to improve understanding around what their business can credibly offer customers. They will need to do so in a way that is authentic, both in terms of brand personality and competitive differentiation. And most importantly, they will need to truly listen to their customers and respond in ways that are most relevant to their basic and emerging needs.
For some, bold steps like reorganizing the company may be needed to realign and keep pace with consumer behaviors. For both SingTel, serving parts of the APAC region, and SFR in France, reorganizations are already underway. SingTel says that the reorganization is in part to “seize emerging opportunities in an era where consumer usage behaviors are quickly evolving.” SFR says, “We have been designing plans to adapt to a new competitive environment…including quick wins and more drastic structural changes,” according to parent company Vivendi CFO.
As the global telecom industry continues to rapidly evolve, its impact on other industries and peoples’ lives will continue to be profound. Some telecom brands will stretch to keep up with the changing world. However, those who stretch in the right ways and take their customers on a fulfilling journey will be the ones who change the world.