Cognizant 20-20 Insights | January 2018

Executive Summary

A decade ago, legacy communications service

providers (CSPs) owned both the medium (fiber,

copper and wireless) and consumer traffic, while

media companies owned content creation and

aggregation. Over time, technology and market

upheavals (digital convergence, bandwidth avail-

ability, market entry and industry consolidation

and vertical integration) have blurred those lines.

Fast forward to today, where new over the top

(OTT), digital and tech-based entrants own con-

tent as well as innovative and lucrative services,

relegating legacy CSPs to provisioning low-mar-

gin commoditized services (such as POTS, DSL,

etc.). This is a pivotal point for providers — they

must look outside of their traditional services and

products to achieve growth.

By applying the following concepts to their strate-

gic thinking, CSPs can better adapt to new market

realities and revive their flagging fortunes in the

years to come.

The Growth Imperative: How Communications Service Providers Can Get their Mojo Back

To thrive in new market realities, communications service providers must embrace human-centric customer service, enter adjacent verticals and monetize their data.

COGNIZANT 20-20 INSIGHTS

Cognizant 20-20 Insights

The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 2

Embrace a human-centric approach to customer service.

A logical first step is to relook at customers and

understand their needs in the backdrop of accel-

erating change. For years, industry experts have

emphasized a customer-centric approach, but

that has meant little more than rough, demog-

raphy-based segmentation models — from which

providers have responded by tailoring products

and services to those broad segments. However,

technology and availability of high-quality, gran-

ular demographic, behavioral and financial data

now allow for better hyper-personalization, not

just at the point of purchase as a prospect, but

across their entire journey as a customer. Pro-

viders can now look at customers as individual

human beings with emotions, wants and prefer-

ences — and personalize not only their offerings

but also the experiences they deliver to drive

customer growth, satisfaction and retention.

Venture into adjacent vertical segments.

Providers must assess opportunities and expand

into market spaces where they can leverage core

strengths, assets and investments — their net-

work reach, infrastructure, brand and customer

base. As an example, the proliferation of con-

nected devices and the Internet of Things (IoT)

has opened new avenues and opportunities for

providers to become more than mere enablers of

these technologies. Providers can use this oppor-

tunity to build upon other services and products

that can be applied for outreach in various ver-

tical markets. For example, collaboration with

technology companies and government can help

build and manage smart cities, and collaboration

with healthcare providers and device manufac-

turers can elevate healthcare to new levels.

Monetize data.

Data is the most valuable currency

in the digital economy. Providers

are in a unique position because

they have access to descriptive

customer data, such as demographics and loca-

tion, as well as utilization and behavior patterns.

Providers can use insights generated from anal-

ysis of customer data to build more appropriate

solutions for customers and to deliver better

customer service. Data and analytics can help

build a holistic view of a customer’s daily life,

which enables providers to personalize, cross-sell

and upsell new content features and services.

Insights generated from data analytics can also

spawn and enable entirely new business models.

This white paper dives deeper into these three

concepts to see how traditional video, Internet and

mobile service providers can make this transition.

Technology and availability of high-quality, granular demographic, behavioral and financial data now allow for better hyper-personalization, not just at the point of purchase as a prospect, but across their entire journey as a customer.

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The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 3

INDUSTRY BACKDROP

Incumbent providers of video, Internet and

mobile services face numerous business chal-

lenges such as commoditization, customer churn,

slow growth and shrinking profitability from tra-

ditional services. They also face challenges from

digital entrants and disruptors such as Google

and Amazon as well as startups, which are fun-

damentally altering how service providers build

and maintain long-term relationships with their

customers.

As a result, the communications industry is at

a crossroads — traditional video, Internet and

mobile service providers must proactively fend

off new competitors while they address new busi-

ness opportunities.

Given this, what can traditional communications

service providers do, not just to survive but also

to grow, reclaim and dominate the market? Can

they avoid being disrupted and disintermediated?

And can they position themselves for growth and

lead in the new digital era?

For long-term growth, providers must leverage

their two biggest assets — a large customer base

and connectivity backbone. The large customer

base provides access to customer data that can

help generate new revenue streams. Providers

must also take advantage of the infrastructure

that is in place for connectivity and develop and

deliver a portfolio of value-added services. An

example of such a service can be to allow for more

integration between all devices a customer owns

— like allowing a smart home assistant to talk to

the smart car and control all smart home settings.

KEY DIMENSIONS OF SUSTAINED STRATEGIC GROWTH

We see three important dimensions that provid-

ers can undertake to rejuvenate their business.

Taking a Human-Centric Approach: Simple, Intuitive, Personalized

Numerous studies have shown that customer

experience is one of the most important factors

in the success or failure of a business.1 Providers

that can create a hassle-free, pleasant experi-

ence at every touchpoint are more likely to gain

long-term customer loyalty. A human-centric

approach to customer service focuses on putting

the customer at the center, delving deep into a

customer’s mind to understand her emotions,

needs, wants and perceptions.

It must start from the pre-purchase phase where

products and services are defined and created. It

must then continue to how and where products

are marketed and sold into after-sales support.

Product Definition & Development: Building Infinite Flexibility

Most video, Internet and mobile providers offer

numerous traditional products and services.

Unfortunately, most are complex; customers typ-

ically have a difficult time determining the best

product that meets their needs. Often, customers

do not know the technology well enough to utilize

these products and services to the fullest extent.

This impacts not only product/service expan-

sion but also negatively impacts experiences as

customers perceive that they aren’t getting full

value for their time and money spent.

A human-centric approach to customer service focuses on putting the customer at the center, delving deep into a customer’s mind to understand her emotions, needs, wants and perceptions.

The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 4

For example, there is a lack of flexibility in what

consumers can choose from traditional paid TV

providers versus what OTT providers offer. Most

traditional paid TV providers bundle a large

number of channels. For a single male sports fan,

for example, children’s channels are unnecessary.

For a family with younger kids, Disney channels

and other kids programming channels is a must,

but these customers may not care for western

movie channels. However, the way channels are

currently bundled, customers do not have much

of a say in what channels they can select, unlike

OTT providers such as Sling TV that allows them

to select channels by genre.

Providers need to focus on developing prod-

ucts and solutions that address specific needs

and wants of the customer. As they streamline

product offerings to achieve customer relevancy,

providers must consider the following factors:

• Invest in research studies and data analyt-

ics to develop valuable insights into how,

where, when, why and how often customers

access various products. Analyze various

events in the context of the customer’s per-

sona to determine unmet needs. Leverage

these insights to develop relevant solutions.

• Build simple products with a high degree

of flexibility so that they can be easily cus-

tomized by customers to address their needs.

For example, allow customers to view and cus-

tomize their bandwidth via a smartphone app.

The Customer Journey: Self Defined, Person-alized, Yet Repeatable

Following product development, providers must

continue to probe existing customer needs

to determine how to upsell and cross-sell and

attract new customers. Providers must use

insights available from historical data to better

target their solutions. Developing a personalized

relationship with customers from the purchase

and beyond helps build a perception that the pro-

vider cares for customers and can aid retention.

For example, online retailer Zappos is known for

its loyal customer base. A Zappos customer ser-

vice representative reportedly sent flowers to a

woman who ordered six different pairs of shoes

because her feet were damaged by harsh medical

treatments.2 This personalized treatment creates

lifelong customers.

As they modernize their operations for customer

support from marketing and sales to after-sales

support, providers must consider the following

factors:

• Get to know your customer — really know

them, their preferences and connect with

them. Knowing your customer helps you

understand their preferences. To connect and

establish a relationship with the customer,

collect information from the beginning and

continue to track every subsequent touch-

point in the customer lifecycle (e.g., video

viewing patterns, billing history and payment

patterns, past history of customer service

Cognizant 20-20 Insights

The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 5

contacts, demographics, online habits, their

feedback on social media, etc.) Use this

knowledge to personalize all interactions

from marketing to customer care.

• Simplify how customers can reach you.

Customers want to reach providers about

issues instantly and via multiple channels.

A digital channel is the leading choice for most

customers when contacting providers. Adopt

a wide array of tools and platforms to meet

customer expectations and provide seamless

transition from one channel to another during

a contact. For example, a customer may reach

out to a sales associate via online chat and

switch to the phone to continue the conversa-

tion. The customer might be frustrated if he

were to be routed to a different associate and

had to explain his need all over again.

• Empower your employees so that they can

go above and beyond and help customers

resolve issues. For example, enable employ-

ees to extend promotions, offer discounts,

issue refunds and offer incentives to keep

customers satisfied and reduce churn.

• Be proactive with customers. Reach out on

potential service disruptions and, if possi-

ble, provide alternatives that anticipate and

resolve customer issues and needs. For exam-

ple, let customers know if a better service

plan or a better product may be available to

meet their needs less expensively.

• Solicit customer feedback often and follow

up after every touchpoint with the cus-

tomer. For example, if a customer calls with

service issues, sincerely follow up after a

couple of days to check if the service is better

and issues are not repeated. This is proven

to improve brand reputation and increase

customer retention. Feedback is critical as it

identifies new areas of growth based on cus-

tomer needs and wants.

The better a provider knows its customers, the

better equipped it will be to provide custom-

er-relevant products, services and solutions.

Venture into Adjacent Verticals: Making Incremental Bets in Adjacent Spaces to Drive Growth & Limit Risk

The most sustained, profitable growth comes

when a company pushes out the boundaries of

its core business into an adjacent space. Tele-

communications providers have the advantage

of owning the network connectivity that is at the

core of their solutions. They are best equipped

to build powerful platforms to enable verti-

cal industry solutions. There are tremendous

opportunities for growth by developing indus-

try-specific solutions.

For example, consider the application of con-

nected devices in healthcare. Many providers

have forged partnerships to provide healthcare

solutions for enhanced patient care. Solutions

that enable remote monitoring of patients, or

video conferencing with doctors, etc., open the

Cognizant 20-20 Insights

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The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 6

door to preventive healthcare and reduced costs

in consumer healthcare. By marrying smart

home technologies and healthcare solutions,

providers can develop solutions for the elderly

that will enable them to live longer at their home

and receive healthcare.

For example, collaborating with technology ven-

dors and government bodies can help advance

the creation and management of smart cities.

An efficient network infrastructure is required to

handle the volume of data that is needed to do

this. Providers can gain a foothold by providing

the necessary communications infrastructure and

then develop solutions to address key city pain

points, such as the strain of a growing population,

with smart transportation systems, smart utilities,

waste management and smart healthcare.

Pursuing Adjacencies: A Three-Step Pathway for Increasing the Odds of Success and Mini-mizing Risk

• New products and services: Introduce new

and top-of-the-line products and services, and

provide a natural transition path for exist-

ing customers. This will lead to newer, higher

margin services that are content- and data-

driven.

• Acquiring new customers for new services:

Target new customers for these products and

services, specifically millennials. Younger cus-

tomers form an ever-increasing percentage

of the working population and, being digital

natives, are more inclined to use new technol-

ogy-powered offerings.

Collaborating with technology vendors and government bodies can help advance the creation and management of smart cities. An efficient network infrastructure is required to handle the volume of data that is needed to do this.

A Formula for Market Expansion

Bubble sizes indicative of size of opportunity

1. Immediate adjacencies: Leverage loyal, existing customers to research, test, develop and upsell newer products and services. Offer a migration path for existing customers to transition to.

2. Near adjacencies: Target new customer segments as these newer products become more established and accepted.

3. Far adjacencies: Develop new, innovative next-generation products and services to target these newly acquired market segments.

Products and Services

Provide the path to transition existing customer to newer, higher margin services

Existing

Cu

sto

me

rs

Acquire new customers (millennials) and provide top-of-the-line products and services

New

New High Risk

Low Risk

Voice

Mobile & Internet

Connected Tech, Data, Security

1

2

3

3

Figure 1

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The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 7

Monetize Data: Use Data as a Growth Accelerator

Almost any “thing” can be instrumented to gen-

erate data and insight. Companies that learn how

to monetize this information will be the winners

of the digital economy. Providers have a signif-

icant advantage when it comes to data access

— they hold customer data that has been accu-

mulated over years as well as the vast volume of

data that flows through their networks. Moneti-

zation opportunities include:

• Emphasize connectivity platforms. Most

providers already offer connectivity platforms

for IoT. These platforms help create an install

base of IoT devices that rely solely on their

networks and create an ecosystem for the car-

rier within the customer’s home. For example,

devices built with AT&T’s IoT Starter Kit are

designed to make the company the default

carrier once those devices are deployed.3

• Enhance data storage and analytics. Pro-

viders must develop capabilities to store and

analyze the vast volumes of data collected.

The resulting intelligence can create trans-

formative business services and applications.

For example, many telecom companies col-

laborate with banks and retail outlets to

apply analytics generated from a customer’s

behavioral data to detect fraud by triangulat-

ing location, purchase details and customer

information. They also use this data for tar-

geted, personalized real-time offers based on

customers’ travel preferences and behavior.

• Monetize anonymized data. Providers can

also analyze and classify different types of

data — subscriber, device, usage, demographic

and location based — and then sell the insight

and foresights in anonymized form to third par-

ties such as retailers. As new business models

are created to enable data-powered revenue

generation, conduct adequate research to

understand the data value chain. For example,

as cities embrace smarter management of

their resources, they will be ready to consume

anonymized data on traffic and movement of

people and usage of resources. Uber Technol-

ogies now provides data such as ride durations

between two points, based on trips booked on

its ride-hailing platform, to city officials to help

them in urban transport planning.4

CSPs can provide similar data on movement

of individuals throughout the day that will

aid local governments in infrastructure plan-

ning. Data obtained from CSPs may even be

superior and more holistic as they can provide

data categorized by modes of travel. AT&T

has partnered with the University of Califor-

nia at Berkeley and the California Department

of Transportation to use aggregated data to

help manage traffic patterns by using mobile

phone pings to track commuter patterns and

identify trouble spots.5

• Mine data for better customer experience.

Providers can use data analytics on customer

behavior, usage patterns, customer experi-

ence and customer complaints to improve

customer retention. For example, analyzing

historical data on how often customers com-

plain about network issues and correlating

it to account abandonment (applying geo-

graphic and demographic data segmentation)

will help to proactively determine when

customers may leave and implement churn

prevention plans. Similarly, customer pref-

erence data, along with insights into usage

patterns, can help improve service person-

alization. Providers can use the knowledge

gleaned from data analytics to find ways to

connect with customers.

Cognizant 20-20 Insights

The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 8

Providers can identify indifferent customers that have not expressed any feedback in the recent past and reach out to them to understand their needs and present them with personalized solutions that will build and nurture their relationship with customers.

Cognizant 20-20 Insights

The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 9

For example, a survey by blog site thinkJar

found that only 1 in 26 unhappy customers

complain, and the rest churn.6 Providers can

identify indifferent customers that have not

expressed any feedback in the recent past and

reach out to them to understand their needs

and present them with personalized solutions

that will build and nurture their relationship

with customers.

A CALL TO ACTION

The market for traditional services is saturated

and, to some extent, driven by commodity pric-

ing. To achieve revenue growth, providers must

leverage emerging technologies to enhance

customer experience and pursue market adja-

cencies. Customers are already experiencing the

benefits of connected devices (e.g., wearables,

smart alarms, voice-enabled virtual assistants,

etc.) and are demanding services that will sim-

plify their life.

For example, personal assistants such as Alexa

and Google Home help customers perform simple

activities like searching the Internet, making lists,

searching for music and even controlling home

lighting systems. There is a growing demand for

how voice-enabled personal assistants can get

more integrated into a customer’s life, for exam-

ple, by monitoring health, tracking schedules and

managing household finances.

Take this opportunity to make organization

changes to capitalize on the changing industry

dynamics:

• Consider overdue technological changes

and infrastructure upgrades. Invest in

internal technological systems and network

infrastructures that facilitate more flexible

and agile operations and enable your orga-

nization to respond to the dynamic market.

Make smart use of digital technologies to

collate and analyze customer information

to reduce churn as at-risk customers can be

identified and efforts can be made to retain

them. Ensure new network technologies are

not only flexible to handle higher speeds and

more data, but are also sufficiently flexible to

handle the new products and services arising

from the IoT revolution.

• Overhaul business processes and services.

Re-architect business processes and service

protocols to provide flexibility, easy acces-

sibility and consistency to connect with and

support the consumer at every touchpoint,

whether that interaction occurs in a digital or

non-digital environment.

• Assess key elements of your organiza-

tional culture. Venturing into newer business

models requires a fundamental mindset

change for employees. Attract and retain

talent that can execute on digital. Support

this change by creating platforms for employ-

ees to learn and support an entrepreneurial

culture where they can bring forth new ideas

for solutions and products.

It is imperative that CSPs undergo a complete

refresh of how they do business. They must

seize those opportunities that enable them to

be key digital partners by providing connected

ecosystem solutions that span multiple vertical

industries in a way that makes it seamless, simple

and personalized for the customer.

Cognizant 20-20 Insights

The Growth Imperative: How Communications Service Providers Can Get their Mojo Back | 10

Vanisree Krishna MoorthyManager, Cognizant Consulting Communication’s Media and Technology Practice

Vanisree Krishna Moorthy is a Manager within Cognizant Consult-

ing’s Communication, Media and Technology Practice. She has over

four years of experience as an IT and management consultant work-

ing with marquee media and communications companies, leading

key IT projects. Her areas of expertise include intelligent automa-

tion, IoT and digital strategy. Vanisree holds an undergraduate

degree in electrical and electronics engineering from the College of

Engineering Trivandrum, India, and an MBA with concentrations in

marketing and finance from XLRI Jamshedpur. She can be reached

at Vanisree.Krishnamoorthy@cognizant.com | LinkedIn: https://

www.linkedin.com/in/vanisreekm/.

ABOUT THE AUTHOR

FOOTNOTES

1 Jake Sorofman, “Gartner Surveys Confirm Customer Experience Is the New Battlefield,” https://blogs.gartner.com/

jake-sorofman/gartner-surveys-confirm-customer-experience-new-battlefield, A Gartner survey on the role of marketing in

customer experience found that, by 2016, 89% of companies expect to compete mostly on the basis of customer experience,

versus 36% four years ago.

2 Jim Edwards, “Check Out the Insane Lengths Zappos Customer Service Reps Will Go To,” www.businessinsider.com/zap-

pos-customer-service-crm-2012-1.

3 “AT&T IoT Starter Kit,” https://marketplace.att.com/products/att-iot-starter-kit-2nd-gen.

4 John Ribeiro, “Uber offers cities ‘anonymized’ ride data,” www.pcworld.com/article/3155494/techology-business/uber-to-

provide-anonymized-data-to-city-officials.html.

5 “AT&T uses big data for smart traffic management,” www.rcrwireless.com/20151001/big-data-analytics/big-data-for-traffic-

management-tag15.

6 Vala Afshar, “50 Important Customer Experience Stats for Business Leaders,” www.huffingtonpost.com/vala-afshar/50-im-

portant-customer-exp_b_8295772.html.

REFERENCES

• Jürgen Meffert and Niko Mohr, “Overwhelming OTT: Telcos’ growth strategy in a digital world,” www.mckinsey.com/indus-

tries/telecommunications/our-insights/overwhelming-ott-telcos-growth-strategy-in-a-digital-world.

• Paul-Louis Caylar and Alexandre Ménard, “How telecom companies can win in the digital revolution,” www.mckinsey.com/

business-functions/digital-mckinsey/our-insights/how-telecom-companies-can-win-in-the-digital-revolution.

• Brendan O’Brien, “Three Ways CSPs Can Monetize IoT,” www.ariasystems.com/blog/three-ways-csps-can-monetize-iot.

• Chris Howarth and Arnab Chakraborty, “Big Data generates big opportunities for CSPs,” http://telecoms.com/opinion/big-da-

ta-generates-big-opportunities-for-csps/.

• Jomer Gregorio, “The Power of Human-Centric Marketing,”www.business2community.com/infographics/power-human-cen-

tric-marketing-infographic-01825600#8LrRbvmXwph7kwqp.97.

• Tony Zambito, “The future of modern marketing is human centered,” https://www.linkedin.com/pulse/20140518191726-12991-

the-future-of-modern-marketing-is-human-centered/.

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