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Heavy Reading Research

CSPs Go Shopping for CEM

Customer experience management (CEM) is a distinct and largely well-understood domain that is gaining ground in communications service provider (CSP) organizations.

This is the clear message from a research study Heavy Reading recently carried out, polling 118 CEM decision-makers in 75 service provider organizations in 34 countries. The research, which was sponsored by Alcatel-Lucent's Consumer and Market Insights Group, finds that even mainstream adopters of CEM have created specific CEM strategy planning and implementation teams, while CEM initiatives that started in early adopter and fast-follower operating companies are increasingly being elevated to Group level. As a key indication that CSPs mean business, 67 percent said that their CEM budget would increase next year, even in these lean times.

CEM has its skeptics and detractors, who argue, variously, that CEM is too broad a term to mean anything, or that it is just an offshoot of CRM. The research confirms that CEM is indeed a broad program, since CEM is seen as an holistic, company-wide initiative designed to transform every aspect of the telecom business that can affect the customer. But those implementing CEM certainly do have a good idea of what it means and the benefits it can bring.

The top drivers for CEM investment include business growth in markets where falling revenues and prices are the norm. Operators want to understand more about their customers – who they are, how happy they are and what they are prepared to pay for – to help them sell more to existing customers and win market share. A further key driver is market differentiation: In highly competitive markets, CSPs recognize it is difficult to differentiate through better networks or different services when their rivals have similar capabilities. CSPs in the survey see the opportunity to use customer experience to put clear blue water between themselves and competitors, enabling them to establish a market leadership position in customer retention and lowest cost of acquisition.

Respondents identified another driver, too: a strong desire to improve brand value and perception in the Internet age, where OTT players grab the headlines and are perceived as customer experience leaders. As many CSPs begin to transform into "digital lifestyle" or "digital services" businesses, the need to view that business through the customer's eyes becomes imperative. The research confirms that CSPs see CEM as a means of rebuilding customer trust in their brands, both by improving communications with customers and by faultlessly delivering services.

The barriers to implementing CEM are those we expected: Difficulty in securing organizational cooperation typically comes out as a top barrier for any kind of transformation program, and CEM-based transformation is particularly far-reaching, involving the sharing of information and intelligence across organizational boundaries. Early adopters point out the importance of senior executive support for any CEM initiative – CEM has to be championed from the top down, and the network and IT domains have to be given good reasons to cooperate and share data. In many respondents' cases, this reason was an urgent need to reduce churn.

So CSPs are out shopping for CEM solutions that will help them bridge the information gap between network operations and front-line staff, and for the customer experience-related analytics and corporate dashboards that can guide decision-making with regard to people and process improvements and technology investments across the organization. The survey found that IBM, Ericsson and Alcatel-Lucent are top of mind for respondents when asked which vendors show "strong leadership" in CEM. It should be noted that survey-takers were not aware of Alcatel-Lucent's sponsorship. The survey was presented as a Heavy Reading exercise, so no bias can be attached to these results.

Although IBM is a market-leading supplier of CEM products and technology and has made large investments in business intelligence and big data products and mobile analytics over the past few years, it came second to Alcatel-Lucent in survey-takers' satisfaction rankings. Ericsson, which carries out customer experience-driven business transformation/operational improvement programs but which does not yet have a CEM solution as such, came third. The North American bias in the survey may have told against Nokia Siemens Networks and Huawei, which have had successes elsewhere with their CEM On Demand and SmartCare solutions respectively. The survey showed that Hewlett-Packard, too, has more work to do to raise its CEM game.

Alcatel-Lucent had the highest proportion of customers that said they would stay with their existing CEM supplier for current and future CEM needs, again followed by IBM and Ericsson. Vendors should take care to back up their customer experience talk with excellent experience of their solutions, given that there is plenty of innovation bubbling up in the CEM market from new players.

Interestingly, CEM represents a fairly level playing field for vendors at present, with respondents ranking low the fact that a vendor may be an existing supplier as a criterion for CEM solution selection. Thus, incumbent suppliers need to remain on their toes, while there is significant opportunity for new market entrants with differentiated CEM solutions.

Further insights from the research are discussed in a recent Light Reading webinar, "CEM Budgets on the Rise; Key to Service Provider Profitability."

— Caroline Chappell, Senior Analyst, Heavy Reading

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