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Are the Large Telecom Providers Shifting Focus away from SMBs

Major telecom companies are focusing on large, multi-national businesses, on the one hand, and economy-of-scale consumer markets on the other.

The need for mobile operators to diversify to find new revenue streams has been well documented over the past few years. Ongoing market consolidation and increasing competition has made the battle to grow or protect market share especially fierce. This is leading a transformation as operators are transforming themselves into more agile and diverse service-driven businesses that are focused on more than just basic connectivity. The pressure is on to find new value added services that can add differentiation, drive customer retention and increase revenues.

SMBs are becoming a huge and underserved market. McKinsey estimates this SMB market is worth $28 billion globally and growing 20% annually; Gartner believes the market is experiencing aggressive growth, reaching $244 billon by 2017.

So why are SMBs underserved?

This market segment requires a greater level of customer service than consumer markets, leaving them out of the sweet spot of most large telecom providers. Selling and servicing SMBs involves a greater number of stakeholders and requires higher and more frequent degrees of touch, notes the independent news portal telecoms.com. Yet, to remain competitive, SMBs need the same telecom and IT solutions available to their larger competitors, but delivered cost-effectively and without forcing them to staff in-house positions.

It’s not that operators haven’t tried to engage SMBs either. Unfortunately market dynamics, economics and inflexible legacy technology architecture has been working against them and driving a non-viable cost of SMB acquisition. Typically, when engaging SMBs, operators would be forced to follow a multi-staged process that involved a number of stakeholders and include multiple face-to-face meetings and calls. The more complex the sale the more it cost to convert. Over the years this has led to operators focusing on larger SMBs and enterprises, simply because the rewards of conversion made the overall investment worthwhile. These deals have been based on a combination of technology infrastructure and ongoing managed services – packages that companies with fewer than 250 employees couldn’t justify.

As a result the SMB market has become an underserved majority. Worse still, because of the nature of operator customer segmentation, many SMB customers have been hiding within consumer tariff packages to avoid higher business prices. There are big incentives to get these business customers, typically between five and ten per cent of an average customer base to ‘self-identify’ and trade-up – operators have just lacked the incentives and tools to do so.

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How cloud has changed the game 

SaaS-based cloud business models have removed the historical barriers to enable operators to cost-effectively acquire SMB customers. The advent of vice (SaaS) and widespread cloud technology adoption have combined to completely change the business dynamic and make the SMB market a viable, and most importantly a profitable target for operators.

New cloud-based platforms have emerged that enable operators to become brokers for the latest business applications used by SMBs. The number of these applications available to SMBs has grown considerably over the past few years. The most common applications perform basic functions such as IT and mobile device security, email management, accounting services etc. By collating popular and proven applications, operators can help SMBs to keep pace with the latest innovation and confidently decide which apps are best suited to their needs. Providing support and advice to help SMBs navigate this vast range of business apps could prove critical in helping operators form more long-term, profitable relationships.

It’s not just about advice either. By offering SaaS courtesy of these cloud platforms, operators are removing the need for SMBs to pay large upfront costs for technology infrastructure. SMBs can simply licence business apps directly from the operators and benefit from competitive tariffs they have negotiated with the software providers by acting as a value-added reseller. Operators themselves can earn healthy margins from this approach too – often in excess of 50 per cent. There is little wonder that operators around the world are adopting this model and creating a global business application marketplace.

READ MORE: TELECOM CONSULTING SERVICES

Having the ability to offer and advise SMBs on business app adoption is one thing, but how do operators provide the relevant context so SMBs truly understand the value of using a business application marketplace? The answer lies in integrating into every appropriate touch point with SMBs – devices, apps and connection – so that they are offered a complete solution. Importantly the people in charge of all customer touch points, especially in call centre environments, must be trained in identifying potential upsell opportunities and feel comfortable having this conversation with the customer.

Operator call centres handle tens of thousands of customer calls every month. The majority of calls are focused on issues with tariffs or device upgrades. A good percentage of these calls represent sales opportunities if agents recognise business owners from consumers and have realistic expectations on what potential customers are likely to buy to start with. Most SMBs use three business applications at present, but this number is expected to rise to seven over the next three years.

The operators that succeed will be those that establish a reputation amongst SMBs as a trusted partner and supports the activation and licencing of these additional apps. In a perfect world, SMBs will regard mobile operators as the most obvious and logical provider of all supporting business apps in the future and approach them proactively, this completely negating the historical cost of acquisition issue.

For SMBs, choosing a provider that can deliver cost-effective, simple IT&T solutions customized to enable them to succeed in the changing telecommunications environment, is becoming even more critical.

SaaS and enabling cloud technology have created the business application marketplace – a valuable and strategic extension to mobile operators’ core offer. The ability to offer business apps to SMBs cost effectively has brought a large growth market segment into play and provides a healthy platform to drive revenues, increase the customer experience and improve retention.

Source: Telecoms

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