Loyalty breeds trust – can telcos breed loyalty?

Telcos are desperately trying to differentiate themselves. Some have been clever and set up ‘innovation labs’ to try and think outside the traditional ‘telecom’ box. Some have been very successful. But even the most successful suffer from light bulb moments, followed soon after by ‘head in hands’ slumps. This is because they are all coming up with the same idea at the same time.

The answer is quickly becoming ‘partner with Over the Top (OTT) players.’ This will provide innovation, and service diversity. Clearly a great concept, but the road between here and there is strewn with obstacles. The main one is trust.

According to research done by Open Mobile Media (nice Infographic), 43 percent of consumers thought that banks were their most trusted mobile payments provider, compared to just six percent saying that mobile operators were.

Add to that the privacy debacle – which will run and run – and we have a problem.

Articles from Canada (not exactly the Yemen, ed) report that 1.2 million information requests were made of telecoms companies in 2011 alone. This is a guess, as it turns out, only three out of nine communications companies responded to the request from the data privacy Commissioner. Generally the responses were, well, very general. You can’t help asking yourself, ‘I wonder how many there were/are in the United States. Or Europe?’ And, ‘I wonder if they asked about me.’

Telecoms companies are stuck between a rock and a hard place with the privacy issue. If they come clean and say, ‘Yup, actually we gave the Government customer data on six trillion people,’ the reaction will be ‘see, we never could trust them.’ If they choose to say nothing, then the reaction will be ‘see, we never could trust them’ on the basis that they are clearly hiding something.

Given this situation, which is a very large dilemma indeed, the battle for loyalty and trust – the only real differentiators – is heating up. And, ironically, many companies, even industries are turning to that global purveyor of coffee like liquid that spends next to nothing on advertising – because it doesn’t have to. Starbucks.

In a recent earnings call, the CEO – Mr Schulz – revealed that they are considering white labeling their card payment scheme because they have solved the loyalty piece. They solved the loyalty piece by giving their customer something of actual value. Coffee. And they are processing over five million transactions a week. And Schulz says that other merchants are not even close to a million. We need to wake up and smell the coffee like substance.

Given the real and perceived problems around privacy. And given that the state of basic service in some countries we could mention continues to be embarrassing, loyalty is going to be very difficult to deliver.

So when Berg Insight – a respected research house – tells us that ‘the total value of the global real-time mobile location-based marketing and advertising market will grow from € 1.2 billion in 2013 at a CAGR of 54 percent to € 10.7 billion in 2018,’ we, frankly, sigh.

Because, for predictions like that to come even close to being true, we have to get all of the above right first. Otherwise customers will be switching off, not wanting to be bombarded with adverts from people they don’t trust.

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Alex Leslie
About Alex Leslie 400 Articles
Alex was Founder and CEO of the Global Billing Association (GBA), a trade body focused on the communications sector. He is a sought after speaker and chairman at leading industry conferences, and is widely published in communications magazines around the world. Until it closed, he was Contributing Editor, OSS/BSS for Connected Planet.

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