Opinion: How telcos can succeed in the B2B market

By Vincent Rousselet, an experienced TMT strategist and founder of V Rousselet & Associates

The last four months can’t have been a heap of fun for BT Group CEO Gavin Patterson.

At the end of January, the BT Italy scandal blew up, shaving $10 billion of the telco’s value and claiming the head of BT Europe’s boss.

Then came this month’s announcement of the radical restructuring at BT Global Services (GS).

The plan now includes the departure of the current Chief Executive of GS, together with 4,000 staff, and possibly a change of strategy: no need to own local networks globally.

Ah, and yes: Gavin is foregoing his bonus for 2016/17.

Unsurprisingly, the rumours of a GS sell-off have grown more insistent.

This pile of woes lands at a particular moment in the economic cycle of the communications market.

For a couple of years, a raft of experts, consultants, vendors and indeed operators themselves, have been talking up the B2B market as the next big thing for telcos.

A Google search of “B2B Opportunities for Telcos” returns 130,000 entries.

From McKinsey to Bain, from Deloitte to PwC, from STL Partners to Ovum, the literature on B2B as the new value engine for operators has been growing exponentially.

So, if 2017 is the B2B moment, how come BT is moving away from this segment?

To answer this, there are two fallacies to refute.

First, 2017 is not the year of B2B for telcos. Not even close.

In fact, the 2010s is not the B2B decade either. Why?

As many colleagues working in Verizon, Vodafone, Telefonica Business Solutions, Orange Business Services, Globe Business and a myriad of other operators will attest, they have been present in the business market for years.

There, they serve customers large and small, in the private and public sectors, anticipating their needs and delivering innovative solutions.

Second, BT is not moving away from the business segment.

It is, rather, deciding to address international customers with a slimmer organisation and a different strategy.

And the UK operator has, in total, four B2B units: GS, Openreach, BT Wholesale and BT Business & Public Sector.

In truth, BT Consumer plus EE only account for just over 40 percent of BT Group Q4 revenues.

With 60 percent of the total generated from the B2B market, perhaps BT stands for Business, rather than British, Telecom.

There are, however, three lessons to be drawn from BT’s tale:

1. Obsess about the customer. Relentlessly

A study of 80 mid-market businesses by Analysys Mason reveals the poor level of service delivered by operators to their B2B customers.

Lengthy delays in getting a quote, with 20 percent of respondents having to wait over a month, and 50 percent experiencing a problem, such as an inaccurate bill, once the service had been provisioned are just two examples from a long catalogue.

In repositioning themselves as IT players in the eyes of their enterprise customers, telcos need to apply the same obsessive focus on customer satisfaction as they do in the consumer market.

The root causes of the problem may be multiple – such as incomplete inventory, channel overlap or inadequate metrics.

But the end-goal is simple:  delivering right first time and driving customer advocacy.

2. Partner for portfolio relevance

The same Analysys Mason report shows that B2B customers buy on average six services from their carriers – half of which were co-created and co-marketed, such as IT services.

In many cases, cooperation with presumed competitors has enabled this cross-selling success.

Partnering requires a cultural shift (we can’t do everything ourselves) and a financial trade-off (the margins are shared, sometimes across four or more partners, therefore thinner).

Portfolio relevance can be accelerated by M&A; the next phase is to verticalise what has remained, to date, a largely horizontal set of offerings.

BT’s acquisition of IP Trade, cleared late in April, is one such example. AT&T Fleet Center and Fleet Manager are another.

3. Structure follows strategy

In a 2013 benchmarking exercise, McKinsey found that, of the 20 operators surveyed, all had a B2B unit.

Eleven even had a dedicated SMB unit. This clearly shows that establishing a dedicated team does not suffice on its own.

Setting a customer-centric, partner-friendly strategy and executing it, with due respect to policy and financial regulations, still does not guarantee success in B2B.

But, in my 20-year experience, it does raise the odds substantially.

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