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Embracing the Digital Revolution

Matt Dorney
8/30/2017
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MVPDs are recognizing the importance of digital transformation and have started taking steps to improve customer experience, service delivery and more. They are also learning that executing on a comprehensive digital transformation strategy can have positive impact across other priority areas, including operational efficiencies, new business ventures like IoT and wireless, and M&A activity.

However, cable and telecom have lagged other industries like travel and hospitality in embracing the digital revolution. MVPDs have an opportunity to make digital investments without upending their current business. While operators struggle with the demands of competing investments every budget cycle, digital transformation must be made a priority to stay competitive.

Defining digital transformation
Digital transformation is a term that has been thrown around quite a bit in different contexts over the past few years. In IBB's view, and based on discussions with operators, digital transformation is centered around three main goals:

  • Increase customer satisfaction: Empower employees to delight customers by helping them do their jobs more effectively and focus on the most impactful customer engagements.

  • Empower customers: Empower customers by offering control and convenience that fit easily into their lives. The goal is for customers to think digital as the first mechanism of interaction.

  • Make the case for digital: Reduce analog transactions like customer service calls by shifting customers from offline to online, which reduces costs and helps change the operating model.

Facing the "digital first" challenge
IBB sees three key stages of a digital transformation. Stage one, which has been surpassed by most, saw the creation of an online information channel for customers to learn about products and services. Most MVPDs sit at stage two today, offering robust online sales and service capabilities.

Operators are facing the challenge of transitioning to the third, "digital first," stage of transformation. By stage three, operators will have made it possible for customers to do almost anything they need to do online without human assistance or interaction. Companies in other industries have successfully completed this stage by changing customer and employee mindsets to think digital first. In cable and telecom, the same must be done.

The biggest challenge facing operators on this front is that subscribers are conditioned to call customer service first when something goes wrong. But customer mindsets can be reconditioned. In doing so, operators will see customer experience improvements, cost reductions and increased growth opportunities.

Supporting customer experience improvements
A full digital transformation improves both the customer and employee experience. For customers, digital interactions result in higher Net Promoter Scores (NPS) when compared to other sales and service channels. Moreover, digital is an enabler of a true omni-channel experience where customers can enjoy moving seamlessly across all interaction points.

For employees, digital solutions allow frontline representatives to focus on impactful interactions and leave the easy transactions to self-service. Employees feel empowered when they can spend time trouble-shooting a major customer issue rather than accepting bill payments or resetting passwords. Finally, the transformation gives employees more tools and resources to build digital competency and more effectively maximize their performance.

Reducing costs
Shifting customers from employee-assisted analog transactions to self-service digital transactions results in cost savings. For example, when customers are encouraged to pay a bill online rather than call to make a single payment, that one transaction saves approximately $10. When a customer uses online self-help or system reset tools to troubleshoot an issue that would otherwise result in a truck roll, the enterprise saves approximately $45. At scale, these cost savings become considerable.

Other transactions that help save money include better automation of customer acquisition efforts, reduced reliance on outsourced customer care, and better interactive voice response (IVR) to help address issues without the need for interaction with human agents. These types of transactions allow the enterprise to cut costs in specific areas and reallocate the savings to growth areas.

Targeting growth opportunities
Digital solutions open the door to growth opportunities for the business. By connecting customers to online products and services, the company demonstrates that it has more to offer compared with traditional cable and wireless offerings or services. In practice, this might include giving customers access to video content online right after purchase versus making them wait days for a full install.

By connecting customers to value-added digital capabilities, operators create an extra "stickiness" factor. Simple transactions like getting a customer to sign up for automatic monthly payments have been proven to increase the customer lifetime value.

Why now?

Consumers no longer look at digital capabilities as a "nice-to-have," but rather a "must-have." Companies like American Express and Dominos have demonstrated the great results that come from major digital investments. Not to mention all the newer and successful companies that are digital-native -- Uber is in the physical transportation business, but the company's entire operation is digital. In addition, the industry is watching closely to see how Amazon transforms the grocery business following the announcement of its intention to buy Whole Foods.

To be sure, operators are treading on new competitive grounds. And while there are many new paths they can explore as they pursue success, ultimately, all must lead to digital.

This blog is the first in a multi-part series from IBB Consulting Group.

— Matt Dorney, Consulting Manager, IBB Consulting Group

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