New Study: "What customers really want"

Failure to understand customers can undermine competitive position of telecom providers

• Confusing mass of user data not much use in understanding customer needs
• Corporate philosophy and business strategy must be rigorously focused on customers
• Competitors from adjacent industries, like Apple, Google and eBay, are setting the standards for customer orientation
• All the relevant processes and IT landscapes must be reconfigured

The strength of a company's customer orientation will be a key factor over the next ten years in determining which telecom providers will survive in this highly competitive industry – and which will not. This central conclusion emerges from a study by Roland Berger Strategy Consultants entitled "What customers really want". Based on interviews with European telecommunications managers, the study shows that telecom providers need a better understanding of their customers' wishes and gear their market strategies to those wishes. And as a necessary condition for achieving this realignment, companies must have in place an adequate data and IT infrastructure.

Saturated markets, fierce competition and shrinking margins have led to a situation in which the services offered by the various telecom providers are increasingly similar or even interchangeable, explains Klaus-Ulrich Feiler, Partner at Roland Berger: "Differentiation within this competitive market is now largely just down to price. We have seen repeated initiatives designed to focus business activities more strongly on the customer, but they have rarely produced the desired results." The reason is that the companies collect enormous quantities of data on their customers, but are hardly ever able to translate the information into a real understanding of these users. Consequently, attempts to develop new products that meet the actual needs of customers often fall short.

Customer data does not mean customer knowledge

Telecom providers collect very considerable amounts of data: on top of their market research data, they gather operational customer data (for instance on orders, contracts and bills) and network data (on times and locations of use, etc.). More recently, they have also been able to generate context data about the social environment of users from social networking platforms like Facebook or Twitter.

The problem, however, is that all this data is being compiled by different business units across the company. Furthermore, the data structures are complex and disjointed, while the IT systems and processes are outmoded. This prevents meaningful analysis of the available information. Important data can often only be compiled manually, which involves time-consuming and inefficient processes.

Outside models: Apple, Google and eBay

But things can be done differently. "Firms from adjacent IT sectors, like Apple, Google and eBay, are setting the standards here. They show how businesses can deploy their customer data effectively and intelligently in order to put successful products onto the market," says Feiler.

Apple, for instance, has demonstrated in the case of the iPhone how a close understanding of customer desires can be used to generate a product that takes the market by storm. This customer focus also ensures that the new product fits in perfectly with the existing portfolio and then creates fresh impetus for further product innovations.

Google, by contrast, has successfully opted for intensive data mining, i.e. discovering the behavior patterns of its users on the Internet without requiring personal registration. The resulting data is then fed into comprehensive customer profiles.

eBay stands for a holistic understanding of customers. The company tracks not only the buying behavior of its clients but also their selling behavior. In this way it has been able to build up large quantities of highly relevant user data.

IT landscape as basis for success

In the past, telecom providers treated their customer base above all as a technical challenge. "But that alone no longer works: Today, these companies are having to shift their focus away from technical concerns and concentrate on the wishes, needs and consumption patterns of their customers in order to get the right solutions onto the market," explains Feiler. "This process of reorientation, which must begin within management, aims at ensuring that all aspects of the company's business activities are assessed from the customer perspective."

The basis for this reorientation is ultimately reliable and efficient data management. So telecom providers should be reviewing all the relevant incentive systems, organizational units, processes and IT architectures from the perspective of customer orientation and then make the necessary realignments.