A game-changing shift in Africa’s digital communications market crowns data and the customer as King and Queen in this equation.
Africa’s digital communications market is evolving at a tremendous and highly competitive pace. Markets across the continent are demonstrating innovative power and this has far reaching consequences for the traditional telecoms and media players who run the risk of stagnating if they do not adapt. While the mobile data and enterprise markets offer huge opportunities for the creation of new services and revenue generation, the market for basic services is now crowded. Also, customers are less loyal to their network brand than they may once have been. The bottom line is that customer retention is now critical to business models. What do my customers want?
While it may seem like a simple question, it is unnerving how many operators don’t really have a clear picture. Traditional telcos are still focused on the technology – on bringing down the cost per bit and delivering the fastest speeds. A clue into customer usage habits, needs and wants (and what telcos should be focusing on) comes from the fact that Africa‘s mobile data revenues increased by an estimated 25.7% year-on-year to US$7.1 billion in 2011, while voice revenues grew by approximately 6% to US$51.5 billion Informa Telecoms Media (ITM) estimates that annual mobile data revenues will be US$18.6 billion, 22% of the total service revenues, by 2016.
This being the case and with a trade war looming on data offerings, operators need to urgently wake up to the fact that customers who are inundated with these network brand choices and an ongoing plethora of promotional enticements, (especially across the predominantly prepaid markets of Africa and the Middle East), often acquire multiple SIM cards. This has a severe impact on churn rates and revenue.
So, how should operators react to this? One option for operators is to resort to a price cut. But lower prices lead to an erosion of revenues and profitability ““ and promotional offers are easily copied by rivals. Customer centres are profit centres
An alternative strategy and one that is gaining ground in other parts of the world, is to improve customer experience management (CEM) as a means of differentiation. Customers with a better experience of an operator‘s services are more likely to continue using them; they are also likely to use these services more extensively than otherwise; and most importantly, they are more likely to use these services than those of the operator‘s rivals. Operators must prioritize customer experience and put it at the forefront of their technology investment strategy. The management of customer experience must be seen as a potential profit rather than a cost centre.
CEM was previously seen as being about the interaction between operators and their customers in retail outlets and through call centres. But CEM must become much more than that. Effective CEM requires a holistic strategy that encompasses and integrates customer channels; network coverage and quality; service and product offerings; loyalty programmes and pricing.
If they don‘t deliver on these promises, the operator will fail. To succeed, operators should be delivering and investing in new network capabilities, innovating their business models and looking at how they should be structuring large, capital-intensive businesses to cope with new revenue opportunities. Without such innovation, how will operators be able to grow their revenues or build networks that can support the inevitable continued growth in data traffic?
Network innovation is essential if operators are to manage the projected growth in traffic levels at a time when their revenues growth is either slowing or going into decline. Virtualisation and active and resource network sharing will be among the tools that operators adopt to manage capital and operational expenditure. Innovation also extends to the very heart of a telecoms operator‘s business model. To compete with new IP service providers, do they compete, partner or enable them? Do they focus on an existing geographical footprint or to take the OTT route and invest in services that can be delivered anywhere? Do they keep resources in-house or do they outsource or virtualize? Do they focus on the consumer market or invest more heavily in business users? Do they market business to consumer (B2C), business to business (B2B) or business to business to customer (B2B2C)?
To highlight the above and provide platforms for discussion and solutions, the annual ITM AfricaCom expo and congress takes place this year at the Cape Town International Convention Centre from 13 ““ 15 November 2012.