Telecommunications companies in Western Europe and North America have long focused on capturing growth in the consumer market as mobile phone usage became nearly universal and they sold broadband, TV and other data services to customers at home and on the go. They gave less attention to the business-to-business (B2B) market, where revenues were smaller and margins thinner.
Now, telcos are expanding their focus to B2B, where growth is expected to outpace the consumer telecom business. While forecasters expect the consumer market to continue growing at 0.6% annually, the B2B market -- which includes everything from home offices to large enterprises -- could grow at 2.6%, mostly due to demand for mobile data and addressable IT services.
Learning how to capture this opportunity will be a challenge for some companies, since they haven't provided their B2B groups with sufficient resources and have placed responsibility for these units too low in the organisation. When these companies do go after business opportunities, they often diffuse their efforts with too many projects, frequently overlooking opportunities in their core connectivity businesses.
However, they can make the change and develop this revenue stream if they refocus their strategy based on three clear principles.
Understand customers better and tailor products and services to meet their needs: Telcos will need to adapt their offerings to deliver effective products and services to small and mid-size businesses as well as larger corporate customers. For example, the most important needs of a plumber on the go all day would probably be lots of data and the ability to quickly replace a damaged or lost phone. For a small law firm, data recovery and security may be more important. In any case, small-business owners expect faster and better service than the regular customers standing next to them in the store or calling in to the service centre.
Reflect B2B focus in talent allocation and organisational structure: The B2B team should get its fair share of top talent and report high enough in the organisation to reflect the division's importance, with representation on the executive committee.
Invest in future-proof technological and commercial capabilities: Telcos need to build up their skills in the technology domains they decide to specialise in. Some will need to acquire or partner with other firms to attract the right capabilities. They will also need to continue to train their sales forces to sell bundles that solve customers' business problems, rather than individual products or services that may be more susceptible to price comparisons.
Learn to market and sell in the digital era. Customers are better informed than they used to be, not only about offers from their own telcos but also from competitors. They expect shorter sales cycles, too. Most telcos will need to develop new skills like a "smart view" of customers that incorporates predictive analysis of customers' purchases based on their activities.
Continuously improve through customer feedback loops. As in the consumer market, customer feedback loops are a powerful tool to improve operations, front-line behaviours and customer loyalty. However, B2B environments can be more complex, because the customer may actually be a collection of people, including users, decision-makers and those who pay the bills. Telcos will need to measure customer satisfaction with individual episodes to build a picture of the overall health of the relationship.
Some telcos will take longer than others to adapt their organisations and strategies to make the most of the opportunity in B2B services. Meanwhile, the appetites of their business customers for IT and telecom services grow daily, as their increasingly digital businesses require greater mobility, more storage, tighter security, machine-to-machine communication, data analysis and much more. Those who wait too long to look beyond their consumer models may miss the opportunity.
Christophe Van de Weyer, Florian Hoppe and Derek Keswakaroon are partners with Bain & Co's telecommunications practice based in Brussels, Singapore and Bangkok respectively.