Are segmentation mistakes costing your business millions?

Customer segmentation is an important part of the sales and marketing process that leads to increased sales. But get it wrong and you end up missing opportunities and frustrating customers. And many telecoms service providers are doing just that.

In fact, poor segmentation means that telecoms service providers are losing untold billions of pounds, euros and dollars in missed opportunities. To make matters worse, customers are spending this money with rival OTT providers, while at the same time being frustrated that their telecoms service providers are not better addressing their needs.

“It’s curious that although just about everything else in telecoms – networks, handsets, business models, experience and services – has changed beyond recognition, customer segmentations are still fossilised in 90s thinking.” Teresa Cottam, Chief Analyst, Omnisperience

So why is segmentation so poor? Part of it is a mindset issue. Part of it is because 1990s segmentations have set in concrete inside the average telecoms service provider. Legacy segmentations are reinforced by legacy IT stacks, organisational structures and, even worse, political cultures.

What this means is that SMEs are still badly served by the average large operator. Instead, it’s left to resellers to address their needs. This means handing off large slices of profitability into the reseller layer, because the operator is not agile enough in its thinking or selling processes to address the needs of SMEs.

As if that were not bad enough, household are no longer simply places of Netflix watching and social calling. They are now a hive of commerce – including homeworking and nanobusinesses. Yet even though everyone who works in telecoms lives in a household and is part of these changes, the way we sell to households hasn’t altered much in 20 years.

Telecoms service providers are failing to cross-sell services within the household. They are failing to upsell solutions tailored to the needs of the new activities that are taking place there.

But initiatives to better address this market are not failing due to lack of awareness, imagination or technical capability, but because no-one can agree if they are business or consumer services and therefore which division should be responsible for addressing them (with resistance from other divisions that fear loss of revenue).

In other words, poor segmentation is really a symptom of a bigger disease – organisations that are structured to meet internal ideas of what they want to deliver and not according to the needs of their customers. Internal barriers and structures should never get in the way of meeting customer need or making more revenues, but frequently do.

On the other hand, integrated business means not having divisions that compete with one another and cannot co-operate to meet the overall organisation’s best interests. Better addressing the needs of customers not only results in an overall increase in revenues, but means customers are happier and less likely to leave. It’s been said many, many times but the message still hasn’t got through: instead of embarking on a fool’s errand to chase the next customer, telecoms firms would do far better to expend more energy on meeting the needs of the customers they already have.

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Morgan Lewis
Morgan Lewis

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