Launching a simplified digital attacker sub-brand can help incumbent telecom companies in battling legacy and meeting their customers’ standards for ease of use. Especially when it goes hand in hand with providing a seamless self-care app.
You turn the tap on, water runs out of it. You turn the lights on, there is light. You turn your phone on…
As telecommunications services are nearly as essential for people as water or electricity, they are likely to consider telco operators as utility providers, expecting their services to be simple and work without hastle. And the very same applies to self-care applications, through which today most customers preferably manage their accounts. However, when it comes to a flawless digital customer experience (CX), digital native companies such as Netflix, Airbnb and Apple have set a high standard for ease of use.
It’s a hard decade’s night for telcos… from disruptions to legacy issues
That is what the management consultancy firm McKinsey & Company refers to as customer-back disruption. And speaking of disruption, there is more. For telcos, there has also been business-model disruption with upcoming technologies like IoT, AI or 5G (with the latter already used in cars), while new-entrant disruption has brought competition to the market and marginalized its core business (such as high-quality over-the-top [OTT] players). It is safe to say that telecom companies faced a great many critical crossroads over the past years – and have yet to thrive in this ever-changing landscape.
In order to be ahead of the curve and provide a top-notch CX, digital transformation is necessary for incumbent telcos. Only, it is not a walk in the park: their inflexible legacy puts some troublesome obstacles in the way of being able to innovate and develop.
So how to address this bottleneck?
The separation of underlying legacy systems from customer-facing frontends is definitely one good solution. Using TM Forum’s standardized Open APIs, this is how as a digital vendor we designed and delivered Deutsche Telekom’s next-generation self-care app in 2018. The One App is now being used and loved in 9 countries across Europe.
There is, however, an alternative road to solving legacy issues without any technical limitations. And while it might seem peculiar, it is definitely reasonable: if you can not keep up with digital natives, become one.
Self-cannibalization: the age of digital attacker brands
For incumbents preferring a completely blank canvas, a digital attacker strategy might be the solution if they are to meet customers’ demands regarding simplicity. According to McKinsey & Company article on the topic, a digital attacker is a new, simplified subsidiary brand built on modern digital platforms, independently from the company’s legacy business.
The firm stated five steps that are essential in launching a brand like that with flying colors – that is, of course, if you consider it a suitable solution for your business.
- Make a simplified and differentiated product
- Create customer-tested design and an easy UX
- Build flexible technology that helps future innovation
- Use advanced analytics to drive digital sales
- Adopt agile ways of working
The digital attacker approach has many advantages for telcos. Just to sort out a few, supported by McKinsey reporting numbers:
Better CX and Net Promoter Score (NPS)
As they provide a much improved customer experience, NPS can be 30-40% higher than it is for incumbents.
Acquiring new customers
Within four quarters, a digital attacker generally contributes approx. 25% of overall gross additional subscribers to the incumbent operator. 70% of whom are totally new.
Reduced costs and higher profitability
The acquisition cost is roughly half of the parent company’s, while being more than 5% more profitable. The cost-to-serve per customer can be reduced by 50 to 70%.
Faster time-to-market (TTM)
In such a competitive industry, a short idea-to-execution cycle is essential, be it a campaign or launching a new product. The flexibility to a speedy change also opens up new possibilities.
A growth driver for the parent operator
As a digital attacker sub-brand offers a more separate environment to experiment and innovate with less of a risk, it makes it easier for the incumbent company to adopt those findings as well.
These fully-digital products are considered easy in every aspect, for customers and telcos alike: they are easy to use, easy to understand and easy to adapt either to technological innovations or to clients’ changing needs.
No wonder telecom companies from all over the world already went for – and successfully adopted this strategy. Among digital attacker brands are Yallo by Sunrise Communications in Switzerland, Orange Flex in Poland, Yacoot by Zain in Saudi Arabia. And then there is Flip on the Hungarian market: a friendly and honest brand with its own set of values and personality.
Flip: a digital attacker featuring simplicity
Launched by Magyar Telekom in 2017, Flip – that is a Mobile Virtual Network Operator (MVNO) from a perspective – offers simple telco services at a favorable price level, without fuss and loyalty. And as the agency to define, position and implement this standalone brand, we are well familiar with it. Relying on our profound domain knowledge, Mito Digital was responsible for designing and developing the customer-facing interfaces, such as the sales portal and the self-care portal and application. All of which had to be implemented within an extremely tight timeline, in just 6 months.
“We realize that there is a customers’ segment which specifically requires the basic services. We can address the needs of these clients more efficiently and accurately with a new brand, featuring simplicity and freedom, without any obligations“, said Christopher Mattheisen, former CEO of Magyar Telekom at the event introducing Flip, as quoted in the company’s press release.
As the digital attacker brand has no physical stores, its self-care app / portal is the main interface for customers to manage their bills and inquiries, thus providing a cost-efficient self-service solution to all parties.
Focusing on the customer, heading back to the basics
Flip is a great example of how simple and good-quality can – and should – go hand in hand. One of our main takeaways from the project was that those looking for an operator such as Flip don’t want fancy features. Instead, they want easy, reliable and comfortable services online, with transparent wording and a seamless interface. Again, just like water or electricity. Only then can you focus on adding extra value with services such as eSIM management or even turning cars into interconnected devices using 5G.
However, if your self-care app fails to meet your customers’ basic expectations, there is not a unique feature or extra service that can save it.
As a digital vendor with a decade of experience in the telco industry, we have always considered user experience to be the foundation of excellence. Focus only on your business and your customers will unfollow – but focus on your customers and your business will follow.
For incumbent operators, launching a digital attacker brand can be an advantageous solution when it comes to battling the legacy in a maintainable and user-centric way. And as customer journey shifts towards digital, it is more necessary than ever to offer a simple self-care solution with an easy CX.
One thing is for sure: you had better be ready to attack yourself with your own new digital brand before others do so.
Mito Digital is a business unit of Mito, a unique powerhouse of creative & digital experts with a passion for clever things. We have been working with our clients around the globe for more than ten years, in numerous industries from aviation through lottery and retail to telecommunications. Our goal is to design and deliver smart, human-centered and best-in-class digital solutions that meet and exceed the business goals of our clients as well as the demands of their clients. Our expertise in the telco industry covers applications and portals both in the B2C and in the B2B segment, responsible for self-service and sales functionalities.
The author(s)
Klára Pálossy
Content Writer
Klara writes about digital for people who love digital stuff, mostly in digital form. Be it aviation or lottery, design or mobile development, she is on the lookout for good stories at Mito Digital, and has a genuine interest in how to make the digital world a better place for users. Sometimes, she writes analog style too – shopping lists and haikus, mostly.
