| Telstra's grand plan to know and serve its customers |
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| Written by Stuart Corner | |
| Tuesday, 21 February 2006 | |
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The grand plan was set out by CEO Sol Trujillo in a briefing to analysts on the company's half year results earlier this month. He revealed that Telstra had completed over 22,000 interviews across its consumer and small and medium enterprise base. "We now have a much greater depth of customer research from which we have identified seven needs-based segments, 18 product segments and 126 micro segments," Trujillo said. And he boasted: "no segmentation work like this has ever been done in the industry....What we have created is a segmentation model that is very complex but it's going to enable us to be very, very targeted in terms of how we sell to our customers, how we define a customer experience and ultimately how we operate our business." If this sounds impressive, it's nowhere near as impressive as the way this scheme was first presented by group managing director, strategic marketing, Bill Stewart, at Telstra's strategy briefing on November 15 last year. Then, he claimed that when the market research had been completed, Telstra would have interviewed over 90,000 consumer customers and created a small business 'panel' of 16,000 businesses. If research on this scale is still in train, Trujillo wasn't letting on, but he did reveal how Telstra intended to use this level of customer understanding to beat the problems of the mobile market beset by falling margins, saturation and all-you-can-eat bucket plans. Asked by one of the analysts how he was going to get growth back into Telstra's mobiles business, he replied that Telstra was going to use its new-found knowledge of its customers to figure out "who to target with what offers and how much." He said that Telstra would be "much more selective by segment in terms of what is the driving value proposition. Sometimes it is price, sometimes it's more than price in terms of integrated features, [sometimes] the simplicity of experience and other capabilities." If Telstra's competitors feel threatened by this promised new level of sophistication, they can take solace in the fact that it has all been said before, almost ten years and two CEOs ago. Telstra has been building data warehouses of customer information for years, so should not really have needed Trujillo's mammoth market research project to get a handle on what customers want. And it has talked up similar plans for boosting its performance based on deep understanding of individual customer preferences on at least two occasions. In early 1998, the Sydney Morning Herald claimed to have gained details of a new policy by Telstra dubbed "Operation Customer Intimacy" in which Telstra set out plans to introduce three levels of service for residential and small business customers based on their value to Telstra. Ms Gerry McNamara, assistant secretary of the Communications and Public Sector Union, was quoted saying that Telstra planned to build customer profiles so that it could "push sell" new products to those customers most likely to buy them. Telstra denied these claims but 'customer intimacy' was exactly what CEO Frank Blount had bragged about a few months earlier in a speech to a major international communications conference in Sydney, when he said: "The determining convergence in our industry will be the convergence between customer demands or desires and the service offerings of companies who cross any necessary boundary or tradition in order to wrap around those demands and therefore establish crucial advantage". Well, it clearly hasn't happened. And there was another similar promise quite recently, in mid 2003, when Telstra added George Patterson to its panel of agencies that provide below-the-line media work. Telstra said it would outsource key functions such as data analysis and econometric modelling of its customer base. The then Telstra group managing director, Consumer and Marketing, Ted Pretty, said: "We are now trying to track the preferences of our customers. George Patterson Bates will help us do that more accurately. They have a long track record in this area and they were the first to bring this capability into the Australian market." Even if Telstra achieves this goal of understanding customer wants and needs to an unprecedented level of granularity what is still cannot do is efficiently tailor products and services to suit these 'micro segments'. That's another aspect of Trujillo's grand plan alluded to at the November 15 strategy briefing. And it's something every telco is striving to achieve. The potential rewards are tantalisingly huge. Lucent Technologies recently announced the results of a survey in the US in which it claimed that US service providers could tap a market potentially worth almost $10 billion a year by offering personalised services that blend voice and data applications across fixed and mobile networks enabled by something called an IP Multimedia Subsystem (IMS)-based network. If you hadn't heard of IMS, it's not surprising. It hasn't exactly had a high profile in the media. Until now. But a flood of announcements coming out of the 3GSM congress in Barcelona have put it firmly on the agenda. What is it? Well that's not so easy to define: it's basically a network architecture, a way of doing things rather than a specific application. Here's how Lucent defines it. "The IMS services architecture is a unified architecture that supports a wide range of services enabled by the flexibility of Session Initiation Protocol (SIP). The services architecture is a collection of logical functions, which can be divided into three layers: End Point and Gateway Layer Session Control Layer Applications Layer" A year ago, US market research company, Heavy Reading: prefaced a report on IMS by saying "Many vendors and service providers now see it as the single most important telecom technology development of this decade." Heavy Reading went on to say: " Over the past 12 to 18 months, IMS has enjoyed an extraordinary rise to prominence. As recently as the end of 2003, IMS was still widely seen as an interesting but limited mechanism for offering new multimedia services on 3G cellular mobile networks. Now it is variously seen as: the anchor for next-generation networks (NGNs); the underlying mechanism for delivering a host of new IP services at a fraction of the previous cost; the basis for a complete convergence between fixed and mobile networks; and the salvation of incumbent telcos as they prepare to battle Skype and other challenges presented by IP and the public Internet. Telstra CEO Sol Trujillo was at 3GSM in Barcelona last week, and an on-the-spot report in the Australian gave great detail about who he talked to and what interested him. IMS wasn't mentioned (like I said, it hasn't had much of a profile locally) but you can bet it was high on his agenda: especially as rival mobile carrier Vodafone announced at the show that it had chosen Nokia and Ericsson to supply IMS for its networks around the world. Detlef Schultz, head of global supply chain management at Vodafone said: "IMS is going to play a strategic role in our future service delivery." And you can be sure Telstra will have the same view.
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