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The Customer Centric Enterprise
A model for the communications industry.
Posted Sep 1, 2005
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Communications companies are at an exhilarating stage in the history of the industry. The industry is at a point of convergence where the opportunities for growth along with risks and rewards are abundant. Along with opportunities come challenges, including customer acquisition, churn, pricing pressures, aggressive competition, and overcapacity.

Telecom companies are finding that the revenues from traditional TDM services are gradually evaporating, and that the competition from pure-play VoIP players for the traditional business is starting to make a dent in revenues. Wireless carriers have similar challenges: The demand for better equipment and wireless data is growing. Carriers are becoming data access providers, where voice is becoming just another data type. Cable operators, too, are being attacked by aggressive competition from satellite service providers like Dish and DirecTV.

The new players, particular the pure-play VoIP businesses like Vonage and Packet8 are also not safe in this market--they face competition from providers that are aggressively moving into the VoIP market, and that are using their customer bases--along with established, backend capabilities--to take a significant market share.

So, what's a company to do? One look at the state of the communications industry today clearly shows an underlying message: Aggressive growth opportunities bring with them aggressive competition. The need to survive in a highly competitive market brings with it the need to be the best at attracting and retaining the best customers. To attract and retain the best customers a company needs to provide what the customers want, backed with flawless execution of ongoing support. In other words, companies that want to survive for the long haul in the communications industry will need to transform themselves from product centric to customer centric enterprises.

So, what do customers want? The true answer is, it depends. It depends on who the customer is, what he needs, what he expects from you, and what others are offering him. It sounds simple--identify your customers, understand their needs, and give them what they want--but it requires a different approach to what most communications players are used to.

Most companies in the communications industry have grown from product-centric roots. These companies have focused on looking at the product or service that they offer, trying to find customers who have a need for that product or service. The problem with this approach is that the company concentrates on identifying ways to sell what it has, instead of trying to understand what customers need and developing a solution that meets their requirements at an acceptable price point. A communications company must instead transform itself from a product-centric to customer-centric organization to better understand customers' needs and wants, and offer them a product and/or service that meet, or exceed, those requirements.

Some key benefits of adopting a customer-centric mindset include

  • Churn reduction: Leading players will build loyalty by designing their customer acquisition, pricing, and service programs to reward increased usage and account longevity.
  • Customer acquisition: Targeting product offerings with unique value proposition to a specific customer segment can significantly increase the success rate of an organization's sales efforts.
  • Higher ROI: Serve customers in specific segments and realign the organization to focus on the ideal segments, giving a higher return on investment dollars.
  • Increased ARPA: Improved, targeted service offerings to customers will enable customer-centric enterprises to increase their average revenue per account.
  • Improved operational effectiveness: Focusing products and services on specific customer segments will help communications companies better manage internal resources.
  • Product differentiation: Communications companies can develop a clear product differentiation in its target market by developing unique products and value proposition for a well defined customer segment.

    The opportunities presented by convergence in the communications industry are undeniable. These opportunities bring a new competitive environment with its own unique challenges. Companies that stay product focused will have significant difficulty in achieving sustainable growth. Companies that are able to build a compelling brand via customer centric enterprises will be able to create a loyal customer following and benefit from increased profitability.

    About the Author
    Umesh Jain is the founder and president of Merging Elements. He has more than 14 years of experience in customer service, service marketing, CRM, call centers, outsourcing, and management consulting. Umesh can be reached at umesh.jain@mergingelements.com. For more information on Merging Elements, visit www.mergingelements.com

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