Why customer value propositions really matter - A focus on the telecom services sector

Strategic
White
Paper

Why
customer
value
propositions
really
matter!

Delivering
communication,
IT
and
media
offers
that

people
want
to
buy

www.merkadoservices.com

Executive
Summary
This
fundamental
yet
complex
development

process
must
be
managed
in
a
dynamic
and

Today’s
end-‐users
have
a
growing
choice
of
disruptive
context,
where
innovation
and

Web-‐based
services
to
choose
from
to
meet
competition
can
come
from
anywhere,
at

their
broadening
needs.
These
services
are
anytime.

delivered
over-‐the-‐top
of
telecom
network

service
provider’s
Internet
access.
As
a
result
In
this
market
context,
Product
and
Marketing

of
the
growth
in
mobile
Internet
services,
leaders
can
improve
their
service/product

evolving
user
behaviour
and
changing
performance
by
executing
key
decisions

expectations,
end-‐users
no
longer
look
to
better
and
faster
than
the
competition.

network
services
providers
to
fulfil
their

needs
in
areas
such
as
communication,
This
critical,
competitive
imperative
can
be

collaboration,
entertainment,
information
and
systematically
achieved
by
using
a
full
set
of

productivity.
integrated,
decision-‐driven
go-‐to-‐market

methods,
to
develop
and
deliver
more

These
market
changes
have
pushed
the
value
relevant,
customer-‐driven
value
propositions.

away
from
the
networks
used
to
deliver
This
approach
offers
Product
and
Marketing

services,
to
the
services
themselves,
allowing
leaders
at
service
providers
and
their
ICT

more
companies
to
compete
for
end
partners
several
benefits
including:

customers
using
a
range
of
business
models.

 A
clear,
customer-‐driven
approach
for

In
a
world
where
the
growth
of
traditional
developing
new
offers

services
is
unlikely
for
most
service
providers,
 A
systematic
way
to
make
quick
and

and
cost
reduction
is
not
enough
to
compete
effective
decisions
resulting
in
better

over
the
long
term,
focusing
on
developing
performing,
market-‐driven
offers

better,
customer-‐centric
value
propositions
is
 The
means
to
train
managers
and
staff
in

a
key
value-‐creation
strategy,
offering
top
and
the
techniques
for
developing
effective

bottom
line
impact.
customer
value
propositions

For
Product
and
Marketing
leaders
at
service
Applied
effectively,
this
methodical
yet

providers
and
ICT1
vendors,
designing
and
practical
approach
helps
service
providers
and

delivering
effective
customer
value
ICT
vendor
partners
deliver
the
service
offers

propositions
requires
a
coordinated
blend
of
that
their
customers
really
want,
in
turn

diverse
skills
and
activities,
working
across
helping
them
achieve
a
sustainable,

organizational
functions,
yet
firmly
focused
competitive
advantage
within
the
quickly

on
customer
needs.
This
involves
leveraging
a
changing
market
for
communication,
IT
and

range
of
inbound
and
outbound
marketing
media
services.

activities,
used
respectively
to
understand

market
issues
and
needs
and
facilitate
the

commercialization
of
subsequent
customer

value
propositions.

1

ICT:
Information
and
communication
technology

Why
customer
value
propositions
really
matter!
2

Table
of
Contents

Executive
Summary ...................................................................................................................... 2

Introduction ................................................................................................................................. 4

Why
are
telecom
service
providers
losing
their
competitive
advantage? ...................................... 4

Service
convergence............................................................................................................................................4

Mobile
services
revolution ..................................................................................................................................5

Evolving
user
behaviour ......................................................................................................................................6

What
are
the
consequences
of
current
market
trends
for
telecom
service
providers? .................. 7

Decline
of
telecom
network
infrastructure-‐centric
services ...............................................................................7

Commoditization
of
network
infrastructure .......................................................................................................7

Changing
business
models ..................................................................................................................................7

Emergence
of
two
kinds
of
service
providers .....................................................................................................8

Network
communication
service
providers .....................................................................................................8

Specialized
service
providers ...........................................................................................................................8

Why
customer
value
propositions
have
become
strategic?........................................................... 9

What
specific
assets
should
service
providers
use
to
develop
new
customer
value
propositions? .. 9

Company
brand ...................................................................................................................................................9

Billing
relationship...............................................................................................................................................9

Customer
relationship
experience ......................................................................................................................9

Subscriber
data..................................................................................................................................................10

Service
policy
management ..............................................................................................................................10

How
to
create
better
customer
value
propositions? ................................................................... 10

Two
examples
of
effective
customer
value
propositions..................................................................................10

Freebox
Consumer
Triple-‐Play.......................................................................................................................10

BT
Business
for
SMBs ....................................................................................................................................11

Decision-‐driven,
go-‐to-‐market
methods ...........................................................................................................13


Introduction
Why
are
telecom
service

providers
losing
their
competitive

The
total
number
of
mobile
subscribers

worldwide
is
expected
exceed
5
Billion
in
advantage?

2010i
;
having
already
far
outpacing
fixed
line

service
usage.
Despite
a
worldwide
decline
in
Users
no
longer
look
to
traditional
telecom

voice
revenue
due
to
competition
from
low-‐ and
Internet
service
providers
to
fulfil
their

cost
IP
voice
services,
total
mobile
service
needs
with
specific
services
and
content.

revenues
are
forecasted
to
exceed
$1
trillion
Instead,
they
can
chose
from
an
ever-‐growing

by
2013ii.
Over
this
period
mobile
data
service
range
of
innovative
Web
services,
often

revenue
are
expected
to
grow
10%
annually,
delivered
“over-‐the-‐top”
(OTT)
of
service

reaching
$330
B
by
2013,
or
1/3
of
the
total.
provider
offers,
usually
bypassing
existing

billing
and
customer
care
relationships,
using

While
nearly
90%
of
today’s
mobile
data
only
service
providers’
Internet
connections.

revenueiii
comes
from
basic
Internet
access,
in

a
market
where
both
fixed
or
mobile
Internet
This
shift
in
the
marketplace
is
a
result
of

connectivity
is
less
and
less
differentiable,
various
related
trends,
including:

additional
services
are
what
customers
see,
Service
convergence

what
they
appreciate
and
what
they
really

value.

 Users
have
access
to
a
growing
range
of

services,
from
a
wide
variety
of
Web-‐
However,
under
the
pressures
of
accelerated

based
service
providers.
Such
services

innovation
coming
from
a
multitude
of
new

cater
to
a
growing
range
of
needs,

services
delivered
of
existing

including
communication
(ex.
calling,

Internet
access,
many
telecom
network

messaging;
www.skype.com),
news
(ex.

service
providers
are
finding
it
difficult
to

www.yahoo.co.uk),
entertainment
(ex.

compete.
In
a
market
where
communications,

music,
TV;
www.deezer.com,

IT
and
media
services
are
converging
more

www.hulu.com),
information
(ex.
local

day-‐by-‐day,
they
are
now
faced
with
a

information;
www.google.com/latitude),

growing
range
of
non-‐traditional,
Web-‐based

personal
IT
(ex.
file
storage;

competitors.
Within
this
context
many
service

www.dropbox.com),
and
work

providers
are
slowly
loosing
their
once

productivity
(ex.
office
documents;

unrivalled,
competitive
advantage.

http://docs.google.com).
Such
services

also
offer
users
a
mix
of
communication

In
this
ever-‐changing
market,
telecom
service

and
collaborative
elements,
facilitating

providers
who
are
unable
to
find
ways
to

usage
and
interaction
with
others.

differentiate
their
service
offers
by
quickly

and
consistently
delivering
new
and

 Most
services
are
available

innovative,
customer-‐centric
value

of
telecom
service
providers’
offers,
and

propositions,
may
be
relegated
to
simple

are
delivered
using
any
standard
Internet

carriers
of
data
traffic,
while
Web-‐based

connection.
This
connection
acts
a
direct

companies
capture
the
bulk
of
new
services

channel
to
market
for
the
Web-‐based

revenue
and
profit.

services,
offering
little
if
any
additional

value-‐add
from
the
network
service

provider.

Why
customer
value
propositions
really
matter!
4


 Underpinned
by
the
Web,
users
can
Figure
1
–
Global
Communication
Subscriptions

access
their
personalized
set
of
services

through
a
range
of
different
device

platforms,
according
to
their
context
and

preferences
at
any
given
moment
or

place,
with
little
importance
for
the

Internet
connection
being
used.

While
certain
network
service
providers
have

tried
to
compete
with
OTT
players,
most
have

had
little
success.
How
can
telecom
service

providers
play
more
effectively
within
this

converging
services
market?

Mobile
services
revolution

 Driven
by
mobile
Internet
devices
like
the

Apple
iPhone,
the
wireless
web
is
reaching

maturity.
This
has
largely
been
enabled
by

a
slick
user
experience,
offering
easy

access
to
a
large
range
of
Internet
‘Apps’

dedicated
for
mobile
use.
As
early
leaders
 The
number
of
connected
devices
is

in
mobile
Internet
usage,
Japanese
mobile
exploding
across
diverse
industries.

Internet
services
spend
grew
28%
yearly
Mobile
Internet
applications
have

between
2000
and
2008.
Their
share
of
emerged
in
areas
like
car
electronics,

spend
on
non-‐‘mobile
data
access’
grew
transactional
services,
healthcare
and

to
34%
of
the
total,
up
from
15%
over
the
home
appliances.
Morgan
Stanley
(See

same
period.

iii Figure
2)
estimates
that
between
2010-‐

2015
the
total
number
of
connected

 More
and
more
people
are
adopting
devices
will
exceed
10
Billion
iii,
while

mobile
communications
at
the
expense
of
Ericsson
estimates
that
this
will
grow
to

fixed
line
services.
There
are
already
50
Billion
by
2020iv.

close
to
70
mobile
subscriptions
per
Figure 2: Connected Devices

100
people
worldwide,
compared
to

19
for
fixed
telephony
(see
Figure
1).

By
the
end
of
2010
the
ITU
expected

over
5
Billion
mobile
phone
users

worldwidei.
Furthermore,
in
many

markets
in
emerging
regions
like

Africa,
Asia,
Middle
East
and
Latin

America,
and
in
hard-‐to-‐reach
zones

worldwide
where
fixed-‐line
services

and
Internet
usage
is
low,
mobile

services
will
continue
surging.
Many

people
in
these
areas
will
experience

the
Web
for
the
first
time
thanks
to

wireless
service
access.
Source: Morgan Stanley, Economy + Internet Trends, Apr 2010

Why
customer
value
propositions
really
matter!
5


 Mobile
service
innovation
is
accelerating.
services
are
available
on-‐demand,
in
real-‐
The
mobile
development
community
is
time,
and
with
low
/
no
sign-‐up
fees.

wide
reaching
and
highly
active.
The
Apple
 Users
are
actively
creating
and
sharing

App
Store,
which
opened
in
July
2008
and
content
via
the
Internet.
While
the
early

currently
operates
in
77
countries,
now
Web
was
characterized
by
companies

offers
over
185
000
apps
created
mostly
publishing
media
and
advertising,
today’s

by
3rd
party
developers
from
around
the
Web
gives
people
the
ability
to
directly

world.
As
of
April
2010,
users
had
contribute
as
‘creators’
of
content,

downloaded
over
4
Billion
appsv.
Other
personal
opinions
and
other
forms
of
self-‐
mobile
app
stores
serving
Android,
expression
with
tools
such
as
chat
groups,

Blackberry,
and
Windows
Mobile
devices
blogs,
video
and
photo
sharing
sites,
social

have
seen
similar
growth
trends
on
a
network
services.
This
has
spawned
a

smaller
scale.
mass
participatory
culture
previously

reserved
for
an
elite
few.

 In
an
effort
to
play
a
greater
role
in
mobile

service
development,
a
group
of
leading
 Virtual
interactions
are
becoming
the

global
telecom
network
service
providers
norm.
People
around
the
world,
are

and
equipment
manufacturers
including
growing
accustom
to
interacting
with

Orange,
Telefónica,
Vodafone,
AT&T,
NTT,
others
remotely,
in
personal
and

China
Mobile,
Samsung
and
Sony
Ericsson,
professional
contexts.
This
is
illustrated
by

recently
founded
the
‘Wholesale
the
growing
popularity
of
blogs,
social

Application
Community’
networking
services
(ex.
Facebook,

(www.wholesaleappcommunity.com).
The
Twitter,
LinkedIn)
and
other
collaborative

WAC’s
primary
objective
is
to
establish
a
tools
(ex.
Wikis,
shared
workspaces,
etc.).

simple
route
to
market
for
developers,
in
By
breaking
the
barriers
of
time
and

turn,
providing
access
to
the
latest
and
space,
these
tools
are
changing
the
way

widest
range
of
innovative
applications
people
relate
with
each
other.

and
services
to
as
many
customers
as

possible
worldwide.

 Users
expect
greater
service

customization
and
management.
As
a

Initiatives
like
the
WAC
offer
service
providers
result
of
richer,
more
interactive
services,

potential
access
to
Billions
of
customers
users
have
come
to
expect
open
and

worldwide.
How
can
service
provider
flexible
service
environments
that
can
be

effectively
leverage
their
respective
strengths
tailored,
self-‐configured
and
managed
by

and
assets
to
improve
their
competitive
each
individual
in
real-‐time,
in
a
way
that

position?

makes
the
most
sense
to
them.

Evolving
user
behaviour
While
most
telecom
service
providers
already

have
access
to
a
rich
set
of
customer
data

 People
expect
easy
access
to
a
growing
including
user
profile,
preferences
and

range
of
services.
Users
now
have
access
behaviour,
most
have
been
relatively

to
an
ever
increasing
set
of
‘Web
2.0’
unsuccessful
in
launching
or
selling
effective

services
and
applications
via
the
Internet,
Web
2.0
services.
How
can
such
service

fulfilling
needs
such
as
communication,
providers
effectively
deliver
compelling

socializing,
entertainment,
gaming,
services
that
are
tuned
to
each
user’s
evolving

personal
and
business
productivity,
desires,
in
a
profitable
manner?

education,
security
and
more.
Most

Why
customer
value
propositions
really
matter!
6


What
are
the
consequences
of
Commoditization
of
network

current
market
trends
for
infrastructure

telecom
service
providers?
While
service
innovation
continues,

supported
by
IP-‐based
software

Today’s
fast
changing
services
market
has
development,
the
network
infrastructure

been
made
possible
by
the
use
of
open-‐ used
to
build-‐out
voice
and
data
transport

standards
software
for
developing
flexible
IP-‐ networks
has
become
more
standardized
and

based
services,
quickly
and
cost-‐effectively.
widespread.
As
a
result
of
consolidation
in
the

This
is
pushing
the
value
from
the
network
service
provider
sector,
combined
with
the

infrastructure
used
to
deliver
services
to
the
arrival
of
lower-‐cost
ICT
network
equipment

services
themselves,
while
allowing
a
growing
suppliers,
network
equipment
revenue
and

number
of
companies
from
all
industries
to
margins
have
fallen,
signalling
its

participate
in
the
value
chain.
This
has
lead
to
commoditization.

a
repositioning
of
many
service
providers
and

ICT
vendors.

In
an
effort
to
further
control
CAPEX
and

OPEX,
many
services
providers
have
begun

These
changes
in
the
ICT
landscape
is
a
result
outsourcing
their
network
operations
to
3rd

of
different
factors:
parties
and
in
some
cases
have
started

sharing
infrastructure
among
each
other.

Decline
of
telecom
network

These
changes
further
demonstrate
that

infrastructure-‐centric
services
service
differentiation
can
no
longer
be
based

only
on
specific
infrastructure
deployment

Traditional,
proprietary
network-‐centric
strategies.

services
models
(ex.
IN
services,
PSTN
Voice,

closed
messaging
and
other
data
Changing
business
models

communication
networks)
are
in
decline.
They

cannot
deliver
the
flexibility,
quick
time-‐to-‐ New
competitors
–
often
Web-‐based

market
or
cost
advantages
offered
by
many
companies
or
integrated
hardware/software

open-‐standards,
software-‐based
services.

manufacturers
–
are
offering
a
growing
range

of
OTT
services,
supported
by
innovative

On
the
other
hand,
most
OTT
services
are
business
models,
including
white-‐labelling,

delivered
using
IP
environments
via
the
fee
/
commission-‐based
transactions,
revenue

Internet.
IP-‐based
services,
like
consumer
and
sharing,
and
advertising-‐sponsorship.

business
IP
voice,
related
calling
functions
or

IP
contact
centres,
are
supported
by
a
large
This
growing
range
of
business
models

base
of
developers,
offering
quick
and
easy
enables
the
effective
commercialization
of

evolution,
thus
lowering
operation
and
customer-‐driven
services
and
applications
by

maintenance
costs.

easily
satisfying
the
varied
interests
of
the

different
parties
involved
while
mitigating

Open-‐standards,
IP-‐based
software
has
risks.
With
time,
many
of
these
new
business

become
the
new
fabric
for
service
models
will
become
common
across
service

development.
Service
providers
and
ICT
providers
of
all
types.

vendors
who
cannot
evolve
in
this
changing

landscape
are
slowly
being
marginalized
as

their
services
lose
relevance
in
an
ever-‐
changing
marketplace.

Why
customer
value
propositions
really
matter!
7


Emergence
of
two
kinds
of
service
customer-‐driven
solutions,
fulfilling
their

providers
clients’
particular
needs.
This
may
require

joint
collaboration
with
any
number
of

As
a
result
of
current
market
dynamics,
relevant,
best-‐of-‐breed
service
partners
from

service
providers
are
beginning
to
cluster
into
different
industries,
many
non-‐technology-‐
two
main
types:
based,
in
order
to
deliver
the
right
customer

solutions,
in
a
consistent
manner.
This

requires
using
different
business
models
to

Network
communication
service
providers
satisfy
each
party’s
interests,
while

maximising
their
unique
assets.
Where

Providers
of
reliable,
high
quality
network
necessary,
this
also
means
buying
network

connectivity
services
including
proprietary
communication
services
from
other
dedicated

voice,
Internet
and
other
dedicated
data
service
providers,
moving
away
from
such

communications
networks.
Their
focus
is
on
non-‐strategic
activities.

assuring
a
consistent
connection
for
their

network-‐based
communications
services.
This
While
traditional
network
communication

includes
guaranteed
service
availability,
services
providers
will
continue
to
exist,
faced

service
coverage
or
any
other
relevant
SLAs,
with
market
changes,
many
will
need
to

related
to
their
network
service
offers.
They
refocus
on
delivering
more
specialized
and

might
sell
directly
to
a
broad
range
of
end-‐ relevant
customer
value
propositions,
as
a

customers,
including
consumers,
businesses
key
strategy
to
compete
more
effectively
over

or
governments,
or
indirectly
as
wholesalers
the
long
term.

to
other
specialized
firms
including
niche

service
providers
and
large
private
and
public

organizations.
While
some
resources
will
be

dedicated
to
managing
and
developing
their

product
portfolio,
greater
efforts
will
be

placed
on
assuring
operational
excellence
of

their
services
network
in
order
to
assure
high

scalability
and
production
at
the
lowest

possible
cost.

Specialized
service
providers

Providers
of
specialized
services
fulfilling
the

particular
needs
of
targeted
customer
groups.

Specialized
service
providers
will
focus
on

delivering
targeted
and
effective
value

propositions
offering
a
better
customer

experience
through
greater
service
relevance,

simplicity
and
higher
overall
customer

satisfaction.
They
own
or
will
try
to
develop
a

recognized
brand
and
positioning,
customer

relationship,
and
local
and/or
virtual

presences
in
order
best
serve
their
specific

target
markets.
Their
primary
focus
will
be
on

the
development,
marketing
and
selling
of

Why
customer
value
propositions
really
matter!
8


Why
customer
value
propositions
problems,
motivations,
expectations,

preferences
and
behaviour,
which
in
turn

have
become
strategic?
conditions
the
solutions
to
these
issues
and

what
they
are
willing
to
pay
someone
(i.e.
a

In
light
of
evolving
user
expectations
and
specialized
service
provider)
to
help
resolve

continued
innovation
in
a
nearly
border-‐free
them.

market
for
over-‐the-‐top
mobile
and
Web-‐

based
services,
most
telecom
service
While
the
idea
of
developing
more
relevant

providers
worldwide
can
no
longer
rely
only
and
compelling
value
propositions
seems

on
existing
network-‐centric
services
to
apparent,
judging
by
the
range
of
similar,

generate
top
and
bottom
line
growth.
complex
and
often
technology-‐centric

Moreover,
for
all
but
a
few
service
providers,
services
in
markets
today,
it
seems
that

focusing
on
lowering
network
delivery
costs
further
progress
is
possible.

through
diverse
outsourcing
strategies
is
not

enough
to
ensure
a
long-‐term,
sustainable
Finally,
during
this
time
service
providers
have

competitive
advantage.

built-‐up
a
unique
set
of
assets,
which
must
be

used
to
stay
competitive
when
designing
the

Many
regulators,
which
have
already
allowed
next
generation
of
customer-‐driven
offers.

infrastructure
sharing
among
network
service

providers
while
forcing
them
to
wholesale

network
access
to
new
entrants,
are
now

pushing
strongly
for
Net
neutrality.
If

What
specific
assets
should

successful,
this
ruling
will
mean
that
telecom
service
providers
use
to
develop

network
providers
cannot
even
receive
rent
new
customer
value
propositions?

for
bandwidth
usage
from
Web-‐based

content
providers.
Prior
to
the
growth
of
the
Web,
telecom

service
providers
were
the
main
suppliers
of

In
this
context,
Product
and
Marketing
communication
and
IT
services.
During
this

leaders
at
telecom
network
service
providers
time
they
developed
long-‐standing
customer

and
their
ICT
vendor
partners
need
to
find
relationships,
and
gained
a
variety
of
specific

more
distinctive
and
strategic
ways
to
assets
that
are
hard
to
copy.
This
includes:

compete.
If
growth
of
traditional
services
is

unlikely
and
squeezing
costs
or
claiming
Company
brand

subsidies
is
not
enough,
the
focus
must
turn
 High
brand
awareness
within
current

to
developing
and
managing
more
relevant,
markets,
an
established
brand-‐promise,

customer-‐centric
service
offers
as
a
key
an
existing
customer
base
and
a
varying

strategy
to
drive
top
and
bottom-‐line
growth
degree
of
market
power.

and
re-‐establish
a
sustainable,
competitive

advantage.
Billing
relationship

 A
trusted
client-‐provider
billing

This
requires
offering
specific
customer
relationship,
including
existing
real-‐time

groups
–
for
example
homeowners,
nomads,
transaction
capabilities,
credit
guarantee

grand
parents,
or
control
seekers
-‐
mechanisms,
purchase
history
and
buyer

discernable
value
through
solutions
profile
data.

addressing
their
distinct
needs
and
issues.

This
is
driven
by
gaining
an
acute
sense
of

Customer
relationship
experience

what
those
people
and
organizations
value,
 An
established,
personal
customer

through
insights
into
their
specific
needs,
relationship
experience
across
a
variety
of

Why
customer
value
propositions
really
matter!
9


touch-‐points,
including
dedicated
strategic
for
business
growth,
yet
it
remains
a

customer
representatives,
retail
stores,
challenge
for
many
Product
and
Marketing

contact
centre
and
customer
Web
portals.
leaders
at
service
providers
and
technology

This
covers
the
personal
relationship
companies.
It
requires
gaining
a
deep

experiences
before,
during
and
after
a
understanding
of
the
specific
problems,
issues

client
subscribes
to
any
services.
It
may
and
needs
of
potential
customer
groups,
in

also
include
a
documented
customer
order
to
then
quickly
design
and
deliver

history
combined
with
an
implicit
effective
customer
solutions
that
offer
clear

knowledge
of
the
local
market
context.
value,
all
at
the
right
time.
What
are
some

examples
of
good
value
propositions?

Subscriber
data

 A
collection
of
customer
metadata
Two
examples
of
effective
customer

including
service
registration
details,
user
value
propositions

preferences
and
profiles,
usage
statistics,

address
book,
geographic
location
(in
real-‐ Freebox
Consumer
Triple-‐Play

time
for
mobile
services)
and
purchase

and
payment
history.
French
Internet
service
provider,
Free

(www.free.fr)
launched
its
Freebox

Service
policy
management
broadband,
triple-‐play
offer
at
the
end
of

 The
ability
to
define
and
actively
manage
2003.

At
that
time,
it
was
the
first
ISP
to
offer

network
policies
(ex.
Uptime
guarantees,
French
consumers
an
all-‐inclusive
package

SLA
parameters,
traffic
prioritization),
including
unlimited
broadband
Internet

application
policies
(ex.
Allowed
services
(2MB/s
download
/
512kB/s
upload
speeds),

and
options,
service
limits,
other
TV
and
unlimited
national
calling,
all
for
just

conditional
parameters)
and
subscriber
€29.99/mth
(see
figure
3).
This
was
in
stark

policies
(ex.
promotional
tariffs,
usage
contrast
to
the
incumbent
service
provider,

rewards),
on
a
per-‐customer
basis.
Orange’s
(previously
Wanadoo)
2-‐8MB/s

broadband
Internet-‐only
offer
for
€26/mth.

These
assets
are
a
combination
of
hard
and

soft
attributes
and
are
valuable
so
far
as
they
Figure
3
–
Freebox
Triple
Play
Offer

can
be
used
to
enhance
customer

propositions
by
offering
appreciable
added

value.

Using
these
assts
to
create
effective,

customer-‐centric
value
propositions
can
help

lead
to
more
satisfied
customers
and
greater

loyalty,
helping
to
fuel
business
growth.
The

key
question
then
becomes,
“How
does
one
Free’s
simple,
yet
innovative
offer
quickly

create
better
customer
value
propositions?”
won
over
new
customers
who
were
tired
of

searching
through
a
plethora
of
different
and

complicated
offers
to
get
what
they
needed,

How
to
create
better
customer
while
ultimately
paying
more
for
less.
During

the
first
three
years
they
more
than
doubled

value
propositions?

their
market
share,
mostly
at
the
expense
of

the
incumbent
service
provider
Orange.

Creating
the
product/service
offers
that

people
and
organizations
really
value
is

Why
customer
value
propositions
really
matter!
10


By
continuing
to
add
value
to
the
Freebox
BT
Business
for
SMBs

offer
without
ever
changing
the
price,
Free

has
remained
competitive,
winning
new
As
BT’s
channel
to
market
for
small
and

clients,
while
ensuring
the
loyalty
of
existing
medium
businesses
in
the
UK,
BT
Business

ones.
Today’s
Freebox
users
benefit
from:
(http://business.bt.com/)
had
been
under

attack
by
its
rivals
since
competition
began.

 Internet
access
of
up
to
28MB/s
download
During
the
2002-‐2007
period
its
revenues
had

/
1MB/s
upload
(or
100
MB/s
fibre
access
fallen
by
16%.vii
At
the
time,
this
business
was

in
eligible
zones)
characterized
by
its
supplier-‐to-‐customer

 Unlimited
e-‐mail
addresses
and
10GB
for
push
approach
for
selling
a
range
of
separate,

personal
websites
or
Blogs
technology-‐focused
communication
and

 Wifi
access
at
home
and
in
Free’s
public
connectivity
services;
the
use
of
a
standard

hotspots
SMB
segmentation
model
that
covered
over

 Unlimited
calling
to
fixed
lines
in
over
100
90%
of
all
UK
businesses;
offering

countries
components
vs.
business
solutions;
a
set
of

 30
supplementary
calling
services
(ex.
underlying
customer
management
processes

voice
mail,
call
waiting,
call
forward)
that
were
heavy
and
time
consuming
to
use,

 TV
features
such
as
DVR2,
VoD3
and
multi-‐ making
them
frustrating
to
deal
with.

TV
access

In
an
effort
to
redesign
its
SMB
business
to

Maintaining
a
fixed
pricing
strategy
while
offer
greater
relevance
and
convenience,
BT

regularly
adding
service
value
has
required
a
made
a
number
of
important
and
strategic

solid
business
case,
with
a
concerted
effort
on
changes
to
its
BT
Business
offerings.

managing
the
underlying
related
and

overhead
costs.
This
has
been
achieved
by:

 Using
in-‐house
SW
development
to
create

a
customized
set-‐top
box,
meeting
market

requirements
and
aligned
with
their

product
roadmap.

 Focusing
mostly
on
a
single
offer,
enabling
Its
new
philosophy
has
been
to
focus
on
the

reduced
marketing
and
support
costs.
distinct
problems
and
needs
of
SMBs
by

 Using
a
direct
distribution
model
including
offering
connected
solutions
with
discernable

online
ordering
and
mail
fulfilment.
value.
It
achieved
this
in
several
ways:

 Delivering
plug
&
play
functionality,
with

remote
software
set-‐top
box
upgrades
 Demonstrating
a
deep
understanding
of

 Offering
online
and
chat-‐based
customer-‐ SMB
daily
business
concerns
through

care
capabilities
where
possible.
insights
on
the
different
aspects
of

running
a
small
business
(ex.
planning
a

Today
Free
has
amassed
4.6
M
clients,
business,
effective
sales
and
marketing,

making
it
the
third
largest
ISP
in
France,
with
dealing
with
suppliers
or
partners,
etc.).

over
23%
of
broadband
market.vi
 Helping
prospective
clients
choose
the

right
offer
based
on
their
practical
needs

(ex.
according
to
their
stage
in
the

business’
lifecycle).

 Focusing
on
selling
business-‐centric

2

Digital
Video
Recorder
offerings
that
contribute
to
greater

Video
on
Demand

3

Why
customer
value
propositions
really
matter!
11


business
efficiency,
(ex.
Website
management,
product
development,
product

consulting,
SEO4
consulting,
CRM5,
e-‐mail
marketing
and
sales,
all
while
maintaining
a

marketing
services),
described
in
terms
of
common
customer-‐driven
focus.

the
business
benefits
offered
(ex.
cost

control,
increased
sales)
and
not
the
Effective
Product
and
Marketing
leaders
draw

technology
used.
on
inbound
marketing
activities
for
listening

 Leveraging
ICT
capabilities
themselves
in
to
the
market
to
understand
the
unresolved

order
to
improve
their
customers’
problems
and
needs
facing
users;
to
draft

relationship
experience
through
simplified
customer-‐focused
solutions
to
these
market

capabilities
like
electronic
contract
problems;
and
to
create
a
coherent
and

signature
and
self-‐serve
customer
service
detailed
plan
to
deliver
new
offers
to
market,

portals.
Such
changes
reduce
the
sign-‐up
profitably.
Such
activities
are
usually
the

time
from
weeks
to
hours.
domain
of
Product
Management,
following

 Helping
SMBs
quickly
develop
more
Strategic
lines,
but
working
closely
with

connected
and
efficient
businesses
selected
key
or
potential
customers
and

through
pre-‐packaged,
Internet-‐age
Product
Development
functions
to
gather

propositions
like
eShop
-‐
an
e-‐commerce
market
requirements
and
test
early
service
/

starters
pack
that’s
integrated
with
e-‐Bay
product
prototypes.

and
Paypal
-‐
or
BT
Tradespace
-‐
an
online

market
place
for
SMBs
to
connect
and
These
leaders
then
use
outbound
marketing

interact
customers
or
suppliers.

activities
to
speak
to
the
market
for
delivering

the
subsequent
customer
value
propositions

These
significant
changes
have
allowed
BT
to
via
their
distribution
organizations.
This

increase
its
Business
revenue
by
1.6%
in
includes
translating
technical
ideas
into

2008-‐09,
despite
the
recent
economic
relevant
market
messages;
designing

downturn.
At
an
event
in
June
2009
it
customer-‐driven
programs
to
stimulate
and

reported
+9%
in
Communication
and
support
the
introduction
of
new
offers;

Infrastructure
sales
(i.e.
calling
and
connectivity
making
it
easy
for
potential
buyers
to
make

services),
+19%
in
Hardware
/
IT
/
Devices
the
right
purchase
decisions.
Such
activities

sales
(i.e.
traditional
CPEs,
IT
devices
and
are
usually
the
domain
of
Product
Marketing,

related
maintenance
and
support
services),
in
close
collaboration
with
Communications

and
+100%
in
Software
and
Applications
and
Sales
functions.

sales
(Salesforce.com
and
other
SaaS).viii

This
complex
process
must
also
be
managed

The
Free
Freebox
and
BT
Business
examples
within
a
dynamic
and
disruptive
market

demonstrate
the
top
and
bottom
line
impact
context,
where
innovation
and
competition

that
developing
great
value
propositions
can
can
come
from
anywhere,
at
any
moment.
In

provide
companies.

this
environment,
speed
usually
matters
more

than
perfection.
This
means
quickly

In
practise,
bringing
new
and
innovative
developing,
testing
and
bringing
to
market

offers
to
market,
that
deliver
better
new
product
and
service
offers,
while
leaving

performance,
is
not
easy.
This
requires
a
room
for
constant
improvement
-‐
incremental

coordinated
blend
of
specific
skills
and
or
disruptive
-‐
based
on
changing
market

expertise
across
distinct
organizational
conditions.

groups,
including
strategy,
product

Companies
like
Google
with
their
‘Beta’-‐

Search
Engine
Optimization

4
labelled
services,
and
Apple
with
their

5

Customer
Relationship
Management

Why
customer
value
propositions
really
matter!
12


periodic
and
easy-‐to-‐use
software
updates,
propositions,
more
often.
This
offers
several

already
apply
this
philosophy
to
their
key
benefits
to
Product
and
Marketing
leaders

products
and
services,
providing
an
overall
at
service
providers
and
ICT
vendors
alike:

better
customer
experience.

 A
clear,
customer-‐driven
focus
to
design

Ultimately,
a
company’s
Product/Marketing
and
deliver
customer
value
propositions,

structure
will
only
result
in
better
performing
with
a
quicker
time
to
market

offers
if
it
can
make
and
execute
key
decisions
 A
systematic
way
to
make
quick
and

better
and
faster
than
the
competition.

effective
decisions
resulting
in
higher

performing,
market-‐driven
offers

To
achieve
this,
Product
and
Marketing
 The
means
to
train
managers
and
staff
in

leaders
must
focus
on
the
key
decisions
that
the
requirements
for
developing
effective

lead
to
maximum
value,
and
the
actions
that
customer
value
propositions

follow.
With
a
clear
understanding
of
the

critical
choices
to
be
made,
they
can
decide
Applied
effectively,
decision-‐driven,
go-‐to-‐
where
in
their
organizations
such
decision
market
methods
allow
Product/Marketing

must
be
taken,
to
align
and
adapt
their
leaders
at
Service
Providers
and
ICT
vendors

structures
accordingly.
to
jointly
design
and
deliver
more
relevant,

higher
performing
customer
offers,
more

Decision-‐driven,
go-‐to-‐market
methods
often.
This
will
in
turn
help
them
achieve
a

Whether
we
consider
the
inbound
or
sustainable
competitive
advantage
within
the

outbound
marketing
activities
needed
to
quickly
changing
communications,
IT
and

bring
new
services
and
products
to
market,
media
services
marketplace.

employing
a
complete
set
of
decision-‐driven

methods
(See
Figure
4)
facilitates
the

strategic
shift
needed
to
develop
and
deliver

more
relevant,
customer-‐driven
value

Figure 4: Decision-driven, go-to-market methods for delivering effective value propositions

Why
customer
value
propositions
really
matter!
13


Conclusions
organizational
functions,
while
staying
firmly

focused
on
customer
problems
and
issues.

The
traditional
business
of
telecom
network
This
process
must
also
be
managed
within
a

service
providers
remains
threatened
by
the
fast-‐moving
and
disruptive
market
context,

continued
development
of
innovative,
where
innovation
and
competition
can

converged,
Web-‐based
services,
serving
a
appear
at
any
time.

growing
range
of
user
needs,
and
delivered

over-‐the-‐top
of
any
Internet
access.
Using
an
integrated
set
of
decision-‐driven,
go-‐

to-‐market
methods
to
develop
new
offers,

As
the
value
continues
shifting
to
the
services,
provides
Product
and
Marketing
leaders
many

and
away
from
the
networks
used
to
deliver
benefits,
including
a
clear,
customer-‐driven

them,
more
types
of
companies
are
vying
for
focus
for
quickly
developing
new
value

the
end-‐customer,
leading
to
the
propositions;
a
systematic
way
to
make
quick

commoditization
of
underlying
network
and
effective
decisions
leading
to
higher

access
services.
product
performance;
and
an
ideal
way
to

train
managers
and
staff
in
what
is
needed
to

While
a
few
telecom
service
providers
have
create
effective,
market-‐driven
offers.

the
scale
and
capacity
to
become
the
leading

providers
of
network
communication
services,
Service
providers
and
their
ICT
partners
who

most
need
to
rethink
their
competitive
are
not
able
to
quickly
and
systematically

strategy.
For
these
players
in
particular,
along
deliver
the
customer
value
propositions
that

with
their
ICT
partners,
focusing
on
designing
people
and
organization
want
will
be

and
delivering
more
relevant
customer
value
relegated
to
low-‐margin
data
packet

propositions,
more
effectively,
all
while
taking
purveyors,
as
more
market-‐driven
companies

advantage
of
their
unique
assets,
is
a
key
jump
at
the
opportunity
to
fulfil
customer

strategy
to
remain
competitive
and
grow
their
demands,
reaping
the
associated
benefits.

top
and
bottom
lines
in
today’s
market.

Merkado
delivers
joint
go-‐to-‐market
advice,
assistance

For
Product
and
Marketing
leaders
at
service
and
methods,
helping
Communications,
IT
and
Media

providers
and
ICT
vendors,
designing
and
Service
Provider
and
ICT
Vendors
bring
more
relevant

offers
to
market,
more
effectively.

delivering
effective
customer
value

propositions
is
challenging
as
it
requires
To
see
how
Merkado
can
assist
your
organization,
please

managing
a
range
of
diverse
activities
across
visit
us
at:

i

“ITU
sees
5
billion
mobile
subscriptions
globally
in
2010”,
February
15,
2010;
http://www.itu.int/ITU-‐
D/ict/newslog/ITU+Sees+5+Billion+Mobile+Subscriptions+Globally+In+2010.aspx

ii
“Mobile
service
revenue
to
exceed
$1
trillion
by
2013:
Informa”,
January
19,
2010;

http://www.mobilemarketer.com/cms/news/research/5125.html

iii
“Internet
Trends”,
Morgan
Stanley;
Apr
12,
2010

vii
“Ericsson
CEO
to
Shareholders
–
50
Billion
connections
2020”,

April
13,
2010;

http://www.ericsson.com/thecompany/press/releases/2010/04/1403231

v
“Apple
preview
iPhone
OS
4”,
April
8,
2010;
http://www.apple.com/pr/library/2010/04/08iphoneos.html

vi
“Alcatel-‐Lucent:
Encadre
SFR
devant
Free
dans
le
fixe,Orange
attendu
plutôt
au
S2”,
May
11,
2010;

http://www.investir.fr/infos-‐conseils-‐boursiers/infos-‐conseils-‐valeurs/infos/encadre-‐sfr-‐devant-‐free-‐dans-‐le-‐fixe-‐
orange-‐attendu-‐plutot-‐au-‐s2-‐250305.php

vii
“BT
Business
revenues
declined
from
£2,716
million
in
2002/2003
to
£2,264
million
in
2006/2007,
a
fall
of
16.6%”;
BT

http://www.btplc.com/Sharesandperformance/Annualreportandreview/Annualreports/Annualreportsarchive.htm

viii
“Case
Study:
BT
Business
Drives
New
Revenues
In
the
SMB
Segment”,
Dec
8,
2009;
Forester
Research

Why
customer
value
propositions
really
matter!
14

Why customer value propositions really matter - A focus on the telecom services sector

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