Beware the New Economy thrill ride

Conversely, being pinned at the edge of a company, paralysed by the centrifugal force of its own internal cycles, is not an enjoyable experience at all. Indeed, it should be the customers creating the centrifugal force.

Telcos have been paralysed at the periphery of the stock market, pressed against the walls by the maelstrom of the financial markets. Just like the Rotary Disco, their ride began from a standstill because they were generally state-owned monopolies. The drum began to turn as they became a safe stock to own. Then they became the hottest thing on the Stock Market and valuations soared. But now the ride is grinding to a halt.

Nowhere has the end of the blue skies New Economy crashed so heavily into the pragmatism of the real economy. Telecomms market values have plummeted, with new-generation telcos down by as much as 99%, and this is set to hit monolithic and upstart telcos alike.

The recently ended 12-24 months of crazy valuations and aggressive growth put an emphasis on acquiring customers, but the intense competition and need for a large subscriber base has led to a commodity market where the worth of individual customers grows smaller. Furthermore, telcos may win customers on price but they don’t necessarily profit out of it. In fact, these cost-conscious customers, like many bank account holders, are non-profit generating – a liability.

This only leaves one route for telcos, and it’s straight from the tried and tested Old Economy. Profit and survival lies in cross-selling. In the technology-averse Old Economy, this was done opportunistically.

Lessons learned in the New Economy – using technology innovatively, improving flexibility and making use of new business models – allow for much more strategic, cost-effective and targeted cross-selling.

Telcos must bring customers in from the periphery of their business model. So implement a few yards of your favourite CRM package and everyone’s a winner Sadly not. Most companies need to become customer-centric. Implementing a CRM system alone doesn’t achieve this. Indeed, in isolation it’s counter-productive because most suites don’t address the related cultural and process issues.

A strong CRM package needs to be tightly integrated with other core systems to give a single and real-time view of the customer. Customers should be able to communicate across a full range of channels, with a consistent level of service. At every contact point, customer-facing staff must have all customer details and be able to cross-sell accordingly. Customer bases should be rationalised to leave only a selected base of loyal and profitable individuals to be carefully nurtured. Telcos can then ensure they go the extra mile for profitable, or potentially profitable, customers.

Once the centrifugal force wears off, telcos will see that it’s time to enter the more mature world of the real economy, where the Old Economy meets the New. It’s also time to stop taking customers for a ride and put them back in the driving seat.

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