The telecommunications industry is grappling with several challenges impacting profitability. Declining revenue from traditional services like voice calls and SMS, combined with increased competition from over-the-top (OTT) services such as WhatsApp and Zoom, has intensified the need for diversification.
Additionally, the rise of 5G networks has led to higher infrastructure costs, putting pressure on operators to identify new revenue sources. Meanwhile, customer expectations for seamless, personalized experiences have never been higher—80% of consumers say they’re more likely to do business with companies that offer tailored interactions. For telcos, adapting to these trends is not just an option but a necessity.
Telecom companies need to find new ways to increase their net profit without losing sight of consumer affordability or expectations. Diversifying into under-explored areas of smartphone management, deploying innovative technologies, and implementing analytical marketing tactics to cross-sell products are all of paramount importance in this fast commoditizing market.
Personalized outreach has proven to be a game-changer for carriers, dealers, and retailers looking to foster stronger relationships, drive customer retention, and ultimately unlock new revenue streams. By leveraging modern tools like business texting platforms, telecom companies can engage customers in meaningful ways while optimizing their communication strategies.
In this article we cover:
- Why telecom operators need to focus on ancillary revenue
- What are the opportunities to increase profitability
- How telcos can use a 3-step personalization process to up-sell and cross-sell
Why telcos need to focus on new revenue streams
Higher price tags, improved device performance, and broken upgrade cycles have resulted in customers using their smartphones longer than ever before. Here are some statistics that shed more light on the current state of the smartphone market:
- Global smartphone shipments remain relatively flat, with approximately 1.2 billion units sold annually, down from previous highs due to market saturation and longer upgrade cycles. - IDC 2024 Report
- The average smartphone upgrade cycle in the U.S. has lengthened to 36 months, reflecting changing consumer behavior. - CIRP 2024 Study
- By 2025, the global average smartphone replacement cycle is projected to reach nearly 4 years due to technological advancements and economic considerations. - Statista 2024 Forecast
According to study by Counterpoint Research, the combination of durable smartphone technology and higher device prices has reduced the urgency for consumers to upgrade. Peter Richardson, Vice President at Counterpoint Research, notes, “Smartphones today are more advanced and durable, meaning consumers no longer feel the need to replace their devices as frequently.”
This highlights the importance for telecom providers to adopt an end-to-end lifecycle management approach while exploring new revenue streams, such as device protection plans, trade-in programs, and value-added digital services, to secure higher profits and adapt to shifting consumer behaviors.
What are the opportunities to increase profitability
According to Deloitte’s 2024 telecommunications industry outlook, creating smarter retail experiences remains a critical growth area. Innovations like smart shelves, cashierless shopping, digital signage, dynamic pricing, and contactless purchases can revolutionize the wireless retail space. Furthermore, the report highlights several key focus areas for telecom operators:
- Reimagining how customers transact with retailers, including adopting omnichannel strategies.
- Strengthening digital interfaces to improve customer experience and satisfaction.
- Exploring new business models, such as subscription services or bundled offerings, to better understand and serve consumer needs.
- Offering diverse communication channels to enhance convenience and accessibility.
As device sales stagnate, telecom companies are increasingly turning to ancillary revenue streams like accessories, smartphone insurance plans, and connected devices. The global smartphone insurance market, for example, is now valued at over $20 billion and is growing at an annual rate of 12%, driven by consumers’ desire to protect their investments.
Additionally, bundled services such as combining home internet, mobile, and entertainment subscriptions have become a significant driver of profitability. Operators offering tailored bundles often report 20% higher retention rates, demonstrating the value of personalized offers.
How telcos can use a 3-step personalization process to up-sell and cross-sell
To create new revenue streams, companies have to work on marketing and customer outreach strategies that go beyond traditional mass promotions. To drive additional purchases which are not conventionally perceived as essential in the smartphone market, tailoring the marketing message based on usage patterns of the customer and recommending relevant offers is key. Statflo recommends the following 3-step process to personalize customer outreach in telecom and wireless retail:
Leverage hyper-personalization to tailor customer engagement campaigns
To address customers’ changing expectations and needs, telcos have to take an all-inclusive approach to marketing that goes beyond just selling. When marketing campaigns take into account user habits and expectations, they are well-received by customers and play a pivotal role in establishing trust. The first step in the process of developing reliance and relevance is that of creating a stellar brand experience for each customer. The cornerstone of great customer experience is engaging customers with suitable content and pertinent interactions, making it easier to cross-sell and up-sell products. Also, to ensure that the process of customer engagement doesn’t turn into a time consuming one, companies should deploy customizable campaigns to personalize outreach at scale.
Often, companies are sold on the benefits of personalization but don’t know where to begin. Running promotions and campaigns without interpreting the customer mindset correctly isn’t an effective way to try and sell more accessories and add-on plans. The strategy should start with customer data. An in-depth understanding of the customer’s purchase patterns and problems has to come before any offer is designed and implemented.
Deploy analytics to add context to customer conversations
Data silos are the biggest roadblock to efficient analytical marketing. Companies collect customer information but fail to consolidate it. As a result, this valuable data, that has the ability to inform marketing decisions, is scattered over different teams of the organization, and never makes it to the customer-facing staff. It’s necessary to break these data silos, consolidate customer data, regularly scrub it, and organize it in a way that’s easy for everyone to interpret. That’s half the battle won when it comes to deploying analytics.
Once telecom companies have a concise representation of the customers’ history with the company, their marketing teams can get a better sense of the customers’ usage patterns. This will help the sales reps understand the individual’s needs and pain points and add context to customer conversations. Additionally, sales leaders can also use the data to identify patterns in user behaviour and apply the patterns to create prompts that trigger specific product offers.
According to this report by Strategy&, Turkcell, an Istanbul-based cell phone provider started reviewing customer data in realtime to get a better sense of how customers were interacting with their products. As a result, they were able to shorten the sales cycles from several months to few weeks and saw an increase in revenue by $15 million. And Turkcell did this a decade ago, when data mining softwares and CRMs were not as advanced as they are now. That’s the power of data-based personalization.
Create rich content experiences to elevate customer experience
The last piece of the telecom marketing puzzle depends on technology and innovation. Complex products and unsatisfactory explanations are the key issues affecting customer satisfaction in the telco space. Thinking out of the box and experimenting with various content formats during product promotion and onboarding will move the needle for telecom companies looking to differentiate themselves from competitors. Sending helpful resources and distributing content over channels such as text messaging will make information more accessible as well as shareable.
Rich Communication Services (RCS) and multimedia content can make outreach more engaging and interactive. For example:
- Send video tutorials on setting up new devices.
- Use RCS messaging to enable customers to explore plan options within a chat interface.
These enriched experiences not only enhance customer satisfaction but also increase the likelihood of upselling and cross-selling success.
The telecom industry is at a crossroads, and personalized customer outreach is no longer a “nice-to-have” but a critical strategy for driving revenue growth. By adopting tools like business texting platforms, leveraging hyper-personalization, and incorporating AI-driven analytics, telcos can unlock new revenue streams, improve customer retention, and stay ahead of the competition.
To learn more about how Statflo’s solutions can help telecom providers achieve these goals, check our texting for telecom page or book a demo today.
