Preparing for an Upturn

By John Konczal, Global Industry Executive of Communications and Media, Sterling Commerce

On the whole, communications service providers (CSPs) are actually in a better position to weather the recession than businesses in other industries. Mobile and broadband services have become indispensable commodities for most consumers – regardless of the state of the economy. The majority of services offered today are via subscription-based models and long-term contracts that protect the companies from recession-based decisions. While we continue to worry about the current downturn, it’s important for CSPs to be prepared for when the economy inevitably improves. But what can providers do in a downturn to be nimble and adjust to market changes? How can they be ready for when consumers are more receptive to new offers and services?

Although they are in better position, CSPs are far from recession-proof. Some have suffered from declining revenues in home markets and heightened competition as consumers actively look around for better deals. As a result, many CSPs have become aggressive in their pricing schemes, dramatically cutting the prices of their products and services in order to combat customer churn. While such tactics help to retain customers in these difficult economic times, they can be damaging to service margins and long-term revenue. Companies also risk creating an enduring customer expectation for lower pricing, which can quickly become damaging for a brand in times of recovery. Although it is important that businesses in the telecom industry avoid being sucked into a downward price spiral, simply raising prices again without offering something extra will frustrate consumers. Therefore, CSPs will need to find alternative ways to differentiate their offerings to retain and enhance value with the customer.

One way to differentiate is to embrace digital content and related value-added services. This, in turn, will enable CSPs to sell-in additional products and services to customers: digital content including digital movies, music, games, books and applications, all purchased online and delivered over high-capacity networks to any connected devices. These add-ons will create new revenue streams and make up the lost revenue brought on by the competitive pricing tactics during the recession. This extra step in digital content delivery also will help generate brand value that will combat the “low-cost” undertones created during the recession, helping the brand position itself as the must-have super-enabler of access and delivery of all the digital products consumers are demanding.

Introducing digital content to an existing offer will mean CSPs will need to speak to a broad range of new content and service vendors, partners and suppliers. Hence, however promising digital content may be for new revenue streams and brand image, it may seem like a daunting operational challenge if this is the first time a CSP has gone for this approach.

The key to overcoming those operational challenges is to implement a flexible business collaboration platform that will enable CSPs to connect with their new business partners in a fast and efficient way to deliver compelling new digital content offers to customers. By seamlessly integrating a CSP’s delivery system with suppliers and partners, a CSP is better positioned to become the super-enabler of digital content.

In addition to business collaboration, CSPs also need to be equipped to sell this content from a variety of channels – in-store, online, through contact centers or directly through a mobile device. These new business models need to be easy to deploy and integrate with other selling channels so that revenue is generated right away and consumers are able to interact with the brand in the way that they prefer. In this move to multiple channels, CSPs can learn from leaders in retail who have already embraced cross-channel best practices to satisfy today’s demanding consumer. With so much competition, if consumers are unable to get what they need the way they want to instantly from their provider, they’ll move on to the next provider who can deliver.

Today’s fiercely competitive marketplace means service providers need to cut costs while staying one step ahead of the competition. It’s not just about surviving the downturn – it’s getting ready for the next upturn. When consumers feel more confident and are able to make more purchases, the companies that have their selling processes already in place will be the ones to succeed and capture that revenue. Otherwise, they’ll be stuck in the past.

John Konczal is global industry executive of communications and media at Sterling Commerce. His specialty is the design and deployment of sales, order capture, and order management solutions supporting complex service bundling in both retail and wholesale communications and media environments. Previously he was founder and managing partner of element22 Partners LLC, a consulting and professional services firm specializing in introducing European and Asian software technology solutions to the North and Latin American markets. He’s also held previous positions with Telution, LHS Group, and AT&T.