Market Focus: Telecommunications -- The Plight of the Wirelines
As the telecommunications industry pursues its much-talked-about claims to refocus on the customer, the market for CRM products and related customer assurance software has seen a resurgence. According to a study released by telecom industry research firm Dittberner Associates, telecom companies spent $997 million on CRM-related software in 2005, and the firm expects spending to increase to $1.3 billion by 2010.
The main question for telecom CRM lies in how wireline companies will hold up in a world ruled by iPhones and BlackBerrys. "Wireless carriers are way ahead of wireline carriers," says Dan Baker, research director of Dittberner's OSS/BSS KnowledgeBase. "Wireline companies do not have a new product yet except for [Voice over Internet Protocol] and video-on-demand. Wireline is between a rock and a hard place: The world is going toward wireless services, and one of the problems with wireline companies is [that] for so long they relied [on] and pitched the idea of reliable service."
While reliable service is important, Baker stresses that it's not of paramount importance to consumers anymore. For example, he suggests Verizon's advertisements--boasting of being "the most reliable" regarding service and reception -- are missing the mark. "In today's world, 'reliable' isn't as important because customers want a better deal and more options, so a total focus on reliability is not where it's at," Baker says. "Voice service is so good that everyone takes it for granted -- it's not a differentiator anymore."
Baker and Shira Levine, senior research analyst for next-generation Operational Support Systems (OSS) and billing at IDC, agree the largest problem for the wireline companies is one of mindset. "The telecom market has historically been a monopoly, with incumbent providers and a captive audience," Levine says. "There was really no reason for [wireline providers] to focus their businesses on the customer."
Baker advises wireline providers to break out of the monopoly mindset and to refocus on customers -- something he says is easier for wireless providers. "Wireless carriers grew up in a different era and [are] more customer-focused than wireline carriers will ever be because of the culture. Wirelines come from a monopoly environment, and they're trying to hold onto this monopoly they've had for so long."
Brian Hiener, Convergys' industry lead in the wireline market, also sees the monopoly mindset, but at the same time suggests that most companies providing wireline service now see themselves as having expanded beyond that one category. "Most of them have morphed over the last two years," Hiener explains. "They've added wireless or video to the products they're offering, so there are very few true players out there anymore. When you talk to them about customer relationships, they're trying to avoid churn as much as possible by trying to bundle them over to the new products."
Looking ahead, Hiener believes there will be a monumental shift in the way wireline companies try to offer new products and bundle services to retain consumers. The shift, he says, includes products similar to AT&T's video-on-demand offerings, but on a much larger scale. Hiener says wireline providers are looking to take the bandwidth they have and convert it into a vehicle to bring customers not only more content but a "blend of features across the products." These features could include programming video settings from wireless phones to record a favorite show, turning lights on in homes, and even changing air-conditioning settings -- all theoretical capabilities that Hiener says could become mainstream reality in the near future.
In the meantime, wireline as a standalone function is dying a slow death. According to Hines, the focus for many wireline providers, in terms of CRM strategy, is in helping contact center agents cross-sell bundled packages to current customers in order to keep them from going elsewhere. "We see anywhere from 14 [percent] to 16 percent cross-sell rates to their newer products," he explains. "You'll see a lot of focus in this area -- actually taking the contact center and looking at it as a profit center and generating revenue that way."
Baker acknowledges that wireline providers are selling existing customers new offerings, but he says spending money on new CRM solutions and counting on cross-sell as the salvation is just the start. Providers, he says, need to dig deeper: "Can wireline providers step it up and be more? Not just CRM from an automation standpoint, but actually care about the customer?"
Top 3 Vendors: Telecommunications Source: Dittberner Associates
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