I’ve commented here before how the overall mobile market growth (for US and EU that is) is slowing down, but there is a segment that is currently growing – B2B customers. According to Bain, the B2B market growth for telcos will be 2.6% annually for the coming three years. And B2B customers are not bad to have. They generate a higher ARPU than the average consumer, you can secure a large number of users for each customer over a long time-span and they are willing to pay for additional services. That being said, B2B customers are demanding as well. Being less price-sensitive they normally put higher demands on CSP:s when it comes to service and performance. And for additional services, it’s of course a good opportunity for the operator, but given they are actually able to provide these.
What do B2B customers want?
So what do B2B customers want then? Well, as with customers in general the answer of course is that it “depends on the customer”. For being able to understand and capture B2B customers, Bain recommend below three steps:
Understand customers better and tailor products and services to meet their needs
Add one or two growth domains to the core business
Industrialize the product portfolio with a scalable and modular set of offers
For understanding customers, Bain goes on to compare how a plumber company out a lot in the field might prioritize fast replacements of damaged phones while an accountant firm has security as top priority. To generalize a bit, Deloitte lifts how large enterprises spend more on IT related services while small- and midsize companies are more focused on voice and data. The last bullet about industrializing the product portfolio lifts how to not get caught in the customization trap, tailoring endless new solutions for every new customer. Bain mentions 80% of the offering standardized while customizing 20% as a rule of thumb, while Deloitte recommends 70% standardized, 20% additional modules and 10% tailored. But interesting here is the second bullet, adding growth domains to the core business. Or thinking about it slightly differently; why would customers turn to CSP:s rather than IT companies like AWS or Microsoft for their enterprise solutions? What’s the edge CSP:s can offer? It’s the combined offering of their growth domains with the expertise in their core business.
The competitive edge of CSP:s
So first, what are typical growth domains for a CSP? PwC lifts cloud services, IoT, unified communications, big data, and the outsourcing of many IT capabilities. As an example, British BT have their Cloud of Clouds portfolio offering B2B customers private/public cloud compute and storage as well as applications on top and unified communications for fixed and mobile. Coming back then to the question of why not choosing AWS or Microsoft instead for your cloud. Well… actually you do. Though BT do offer their own data center services, they also offer third party solutions including AWS, Microsoft Azure, Oracle etc. In fact according to Deloitte, CSP:s who have been most successful with their cloud offerings are the ones integrating third party services. The unique selling point for them is instead how a CSP can offer an e2e solution with secure connectivity while also guaranteeing a certain performance when using enterprise services. Or as BT expresses it: “at the heart of our Cloud of Clouds is our global network, our core business.”. Another example of B2B solution is Telenor Sweden offering cloud solutions from Microsoft lifting the advantages of going with Telenor as having a full communication solution from one place, getting dedicated support, but also getting a top-quality network – the “precondition for cloud services to work properly” as they put it.
So being able to offer compelling services to enterprises, a key selling point for CSP:s is they need to be able to show they excel also in connectivity to stick out from IT companies and their solutions. This means defining SLA:s (service-level agreements) for the network performance customers will get. While back in the day, this could be known as the “black art of SLA:s” with vaguely defined KPI:s and tricky ways of measuring, today it is absolutely crucial to manage SLA:s with total control. Both when it comes to defining them (and securing they can be delivered), but also monitoring them to be able to capture potential issues directly and be on top of the situation when interacting with customers. To differentiate, a CSP might even allow customers to see their KPI:s directly, e.g. through an app dashboard. Managing this well, while understanding which B2B customers to go after and moving into the right new areas with standardized offerings, preferably through partnerships, seems to be the recipe to capture the enterprise segment.