The telecommunications (telco) industry is constantly evolving to align with the cutting edge, but the sector’s deep roots mean that, by now, virtually every prospective customer already has a provider. So, in order to grow (or, indeed, remain viable at all), telcos have to delight their customers and win others away from the competition—but as it turns out, that’s a tall order.
In light of lackluster financial performance, telcos are increasingly unbundling their operations, and dealing with complicated dilemmas that emerge in the fallout. We’ll explore what those challenges look like, and outline how telco leaders can drive greater value from their ServCos.
Telcos today: what’s shaping the industry?
Despite the fact that consumer demand for telco products and services remains strong, the telco industry is struggling with weak financial performance and declining shareholder returns. This is due, in part, to an oversaturated market which has forced providers into endless competition over a finite number of subscribers.
But despite the fact that telcos have underperformed broadly, some have emerged winners. Pure-play infrastructure companies with no customer-facing operations have consistently outperformed any other telco archetype. And this trend isn’t an anomaly: in global enterprises with large customer-facing units, performance is even more dismal if network margins are removed.
This leaves telcos in a tough spot. Because network infrastructure is clearly bolstering profitability while customer operations are dragging it down, many telcos are unbundling their organizations into two parts: ServCos and NetCos.
ServCo and NetCo: Breaking down the breakdown
A NetCo refers to the part of the organization that handles a telco’s network infrastructure and operations. A ServCo handles all customer-facing operations.
Telcos are unbundling these two aspects of the organization—either structurally, in order to attract investments for network expansion or highlight the value of network assets, or simply in terms of mindset—in an effort to reverse historic underperformance.
Regardless of how it’s done, this operational unbundling has a seismic effect on large B2C telcos in particular. In reality, few of the industry’s leaders have embraced the scale of transformation necessary to win in today’s hypercompetitive environment; until now, NetCo performance has obscured this problem. With the organization delayered, there’s no hiding from the fact that ServCos aren’t pulling their weight.
The poor performance of ServCos coupled with the increasingly competitive nature of the industry spells trouble for many organizations.
Dealing with the dilemma
As B2C telcos now face the uncomfortable reality that their businesses—already underperforming broadly—are being upheld by network operations, they must also grapple with a deeper and more complicated problem: although ServCos are a drain on resources, telcos have no choice but to invest in this area of the organization in order to stay viable in a saturated market where customer expectations are higher than ever.
In turn, many companies find themselves struggling with a forced trade-off between profitability and competitive longevity.
Fortunately, it doesn’t have to be that way. Although unbundling the ServCo and NetCo makes it impossible to ignore the ServCo’s underperformance, it also provides visibility into why customer-facing operations are flailing—with that clarity, telcos can uncover solutions.
How to cut costs and generate revenue in your ServCo
In an industry where every prospect is already a customer or a competitor’s customer, ServCos must focus on retaining customers and maximizing the value of every customer relationship. To that end, there are a few steps telco leaders can take to drive down costs and boost revenue in their ServCos.
Prioritize digital transformation to improve retention
Telcos lag far behind the cross-industry average for successful digital transformations, and it’s no secret this heavily impacts customer experience. Without the NetCo shielding margins, ServCos must prioritize digital transformation more urgently where CX is concerned—but that’s not as daunting as it sounds.
Today, a single advanced tool can target all of your more pressing digital CX transformation goals, from self-service to data-driven churn management and beyond. More seamless customer experiences are a clear path to better retention.
Improve agent efficiency to minimize costs
If agents are unnecessarily spending time on after-call work like note-taking, summarization, and scheduling follow-up tasks, then they’re not operating at full capacity. Inefficiency is a drain on ServCo resources that sends costs rising; meanwhile, these rote tasks send agent satisfaction down.
And it’s not only tasks after the conversation that negatively impact agent efficiency. If answers to customer queries or product information aren’t readily available, agents are forced to spend too much time hunting down knowledge.
To solve the issue of inefficiency, ServCo leaders must ensure agents are positioned for success by giving them access to tools to unlock capacity and a central knowledge base to cut out frustrating searches.
Scale adherence to best practices to maximize revenue
Every ServCo has top performers—certain agents simply understand how and when to upsell or cross-sell. By observing the behaviors of your top agents, distilling them into prescriptive guidance, and distributing it to the entire ServCo, you can help every agent perform like your best.
Once you’ve identified the winning behaviors you want to scale, coach your other agents on those skills to ensure they’re adopting them in every conversation. With consistent efforts to close the performance gap, you can turn your ServCo into a revenue generation center.
As many telcos unbundle their organizations, there’s an opportunity to meaningfully improve outcomes from customer-facing operations. To learn more about how you can turn your ServCo into a source of value, get in touch today.
