A New Digital Pathway for Small and Medium Enterprises

Paul Gainham
Jan 31, 2022 B2B SME

Gather a number of small and medium-sized businesses together for a game of word association; set the context as “telephone company” or “mobile phone company,” and then float the word “experience” and see what responses emerge. My guess is that the majority of responses would range from negative to caustic.

A relative of mine runs a mid-sized construction company. Typical of that company size, he has no IT department, is time-poor and wants a hassle-free, straightforward relationship with any supplier he deals with. I know from conversations with him his response to the word association game would be both expletives ridden and unprintable!

Many SME survey responses point to the same frustrations in dealing with telcos: complex offers, difficult organizations to navigate, being pushed into call centers as the primary engagement channel and a lack of commercial transparency. This drives a feeling of alienation and a lack of trust that ultimately results in them placing their ICT business elsewhere, most typically via local value-added resellers or similar.

Engagement, Experience and Growth

Why does that matter to telcos? Quite simply, with consumer business relatively flat in most geographies, growth and margin expansion expectations are increasingly falling to the B2B groups in the telco to deliver, covering both large enterprise and the SME segments. That enterprise business typically accounts for between 20-40% of overall revenue on average and is forecasted to be 50% plus by 2025. Most notably, small and medium-sized enterprises make up well over 50% of that overall enterprise segment. They matter.

The on-the-ground reality is that for every SME business that goes to local VARs or similar, telcos miss out on high-growth IT revenue such as cloud, security and content PLUS high margin integration and SLA opportunities. Instead, they end up with the “messages, megabytes and minutes” scraps — commodity business that alone will not help meet the goals of revenue and margin growth.

None of the above is revelatory. The SME segment has been underserved by telcos for many years, driven by an often stated high cost to serve, leading to call centers becoming their primary engagement channel or being account managed on a ~1:300 account basis. The high volume of SME organizations, their diverse vertical spread, lower revenue per account compared to large enterprises and awkward portfolio position between large enterprise and consumer are behind that approach. Simply adding dedicated SME call numbers to call centers or small business signage in retail stores perpetuates the issue. A far more radical approach to customer engagement and experience is required.

Weaponizing Experience

A recent McKinsey report carried some fascinating insights into the increasing digitization of customer interactions, observing that the pandemic has driven a seven-year acceleration of digital adoption into a three-year period. That serving model is now responsible for over half of all trading interactions across a broad eco-system and growing rapidly. Step-changes like this and the desire and need for an increasingly digital engagement approach cannot be ignored, nor can it be met by “faux-digital” approaches such as delivering static marketplaces or simple mobile apps.

McKinsey and Company chart

Source: McKinsey and Company

On the path to restoring trust and driving revenue and margin growth in this segment, telcos have to weaponize both the commercial engagement and experience model and elevate that to the same level of importance they do for their portfolio offerings. One without the other is commercial suicide in this digital world.

That trusted engagement model needs to be built on five fundamental pillars, all of which are geared towards empowering the SME with an engagement model that enables them to make informed real-time business decisions that benefit them AND the telco:

  • Take it digital – use call centers and retail stores as places of last resort, not primary channels.
  • Make it easy to do digital business – give control of the relationship over to the SME in an increasingly self-help model across the complete portfolio.
  • Provide commercial transparency – tell them what their second spend level and utilization of all services is for fixed, mobile, cloud or content.
  • Deliver accuracy – provide them with one source of truth and one alone for that spend and utilization data.
  • Offer flexible payment terms with incentives based on a transparent and accurate balance view – gives the SME choice and minimizes late payments, bad debt and improves cash flow for the telco.

That real-time digital marketplace becomes a key weapon in the differentiation armory of the telco. A place where real-time spend control and utilization management is delivered, portfolio services across mobile, fixed, cloud and content are offered, flexible and accurate payment terms are executed and, crucially, self-help control and visibility for the SME is exercised. All of this results in a new and progressive model of engagement for the SME and a platform for growth for telcos.

There is a saying that trust arrives on foot and departs on horseback. Building and restoring trust is not easy, but engaging with SMEs on their terms via a progressive and engaging digital pathway will drive sustainable high satisfaction levels, advocacy and increased lifetime spend. For telcos, that’s a journey that simply cannot wait.

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