For today’s telecom retailers - whether that’s wireless carriers, their authorized retail operators, device manufacturers with their own stores, or national retail brands offering wireless sales - looking ahead to 2024 and beyond means creating strategies for success in an uncertain future. So how are those businesses picturing that future, and how are they setting themselves up for that success?
In a recent survey we conducted, we asked a series of questions of respondents from across the U.S. and Canadian telecom retail sector to get some of those insights. The picture the results painted was one of an industry that is relentlessly changing - and the players who continue to adapt within those changes. Hit with a global pandemic, with the threat of recession, with constantly shifting consumer behaviors, with ever-growing market competition, and with mind-boggling new technologies, telecom retail operators continue to demonstrate innovation and fortitude. And it’s this adaptability, to meet customers where they are and rise to their new expectations, that is essential if retailers are going to win the race to win customer loyalty.
Cautious optimism for near-term success
The survey found telecom retail operators are largely optimistic - albeit slightly less so than in the last survey two years ago. Nearly 60% said they expected sales of new wireless devices to rise over the next three years, but that’s down from nearly 70% last time. For smart home devices, 78.7% expect an increase - but again, not as high as the near-84% from two years ago.
No matter who you are in this sector, there tends to be a set of common hurdles ahead. The biggest challenge ahead of respondents was cited as continued economic uncertainty, which 59.5% said they were worried about. The second most concerning trend for our respondents was the decreasing demand for new devices, due to less frequent upgrades and longer buying cycles. Some 46% of respondents said demand has declined. This is to be expected, given that consumers are largely finding that phones and tablets are so sophisticated, and new-model improvements now so incremental, that it’s rarely worth upgrading each year.
The introduction of eSIM technology is a newer hurdle to overcome. Nearly 86% of respondents see potential business opportunities with eSIM, and most are formulating strategies around it. But a third also see it as a threat. It poses a significant challenge to the authorized retail channel, as their customers will be able to purchase online from the carrier, and activate their device wherever they need, so it might obviate the need for the brick-and-mortar store. However, there are opportunities, especially when it comes to eSIM in products such as IoT and smart home automation, which could lead to retail success. Another opportunity with eSIM is enabling two lines on one device - especially for business customers and people who have work and personal lines on the same phone.
The changing face of telecom retail
The survey found that opinion is largely mixed on how the role of the physical telecom retail store will evolve over the next five years.
Some respondents think the physical store isn’t going away any time soon. There remains a firm belief that the customer’s in-store experience of holding that device, making sure they’re getting exactly what they want, will still be essential. Despite everybody getting used to ordering online throughout the pandemic, people today want a convenient combination, where they go to physical stores to check out their new device but maybe pay for it online. They may even return to the store to pick it up, using Buy Online, Pick Up In-Store technology. And it’s possibly that they originally saw the product on social media, for example. This is a truly hybrid customer journey that today’s technology supports.
When asked about the role of AI in telecom retail, nearly two-thirds of respondents said it was either very or somewhat likely that there would be considerable growth in AI and machine-learning being used to analyze customer data and retail patterns/buying behavior, which is then used to shape retail strategies.
Using AI for customer service is another key trend, deemed the second-most likely use case in this area to grow over the next few years. This comes as no surprise to those of us seeing this play out in daily conversations, in which this idea of an AI-powered or in-store virtual assistant has frequently come up in recent times. There is evidently an appetite among the telecom sector to talk about it, which suggests that it could soon be a reality.
Own the consumer, win the race
As for the future of consumer purchasing habits and where respondents see the focus? Just like in our last survey two years ago, the top-selected answer - by more than three-quarters of respondents - was “greater focus on customer loyalty and rewards programs to upsell and increase consumer spend.”
Again, this is something we see every day. Today’s race to “own the consumer” and gain their loyalty and business across all brand touchpoints is even bigger than the race to gain individual subscribers. The question is, how do telecom retail brands win that undivided loyalty? There are a few answers to this.
The first, of course, is offers and discounts. The fight between established carriers and new players to own the consumer as hot as it’s ever been and, according to our respondents, it’s all about what the competition offers, particularly in terms of rate plan pricing and promotions.
Today, new MVNOs and microcarriers - think Mint Mobile, for example - are coming in at very low price points, which is causing some of the bigger carriers to take notice as they start to siphon off some market share. This means larger carriers have had to start lowering their own price point, and they have the benefit of scale to do so, creating a very aggressive market.
Bundling is an even better way to truly “own” the customer. Even more disruptive than new micro-carriers has been the emergence of wireline companies offering wireless services - think Charter, for example, with its Spectrum Mobile brand. These players already have a large customer base from their cable and internet networks, who they target with aggressive bundles to add in wireless services. For traditional carriers, where wireless is their entire business, it’s hard to compete. That’s why Charter, Cox Communications, Altice and others are growing their wireless subscribers faster than any of the major carriers right now.
When you combine the need to win customer loyalty with wanting to reach the customer wherever they already are - such as in a grocery store, or hardware store or wherever it is - this is another place where telecom brands get the chance to win that loyalty. Will the typical wireless customer be loyal to their carrier, or even to their preferred device brand? Or will they be loyal to the grocery or homeware store they visit every week, where they are already collecting points? That’s probably an easy answer. This means the telecom brands reaching customers in those everyday stores, and finding ways to tie into those stores’ loyalty schemes, will likely be the winners.
