Customer Experience as a competitive advantage

Customer Experience is a trending topic in Telecom industry…for the last 3 – 4 years everyone talks about it. Mainly driven by the fact that Telecom industry is facing extremely competitive market conditions driven by price competition, making necessary to differentiate in the market by some other factor than price (extremely painful in companies financial results). Telecom industry is a newcomer into the Customer Experience paradigm, almost no focus was put in the previous years to provide an enhanced experience. Other industries such as online retailing or airline industry are far more advanced in this domain.

Let’s take a look to Airline industry, and let’s focus on 2 completely different companies from the strategy perspective (Premium vs. Low cost) but with the same goal: provide an extremely pleasant experience.

Emirates

One of the best airlines in the world with no doubt, we could refer to it as a Premium airline due to their image, state of the art planes, excellent customer support, easy to manage online service and overall excellent flying experience. Emirates is a clear example on focus on details, and also a good example that providing an enhanced experience does not mean to invest tones of money on it.

One small detail (and cheap to implement) providing a better experience to their customers is a set of 3 tags that every passenger on their planes is provided. These tags allow users to let the flight attendants let them know if you are willing to be waken up for meal, duty free or not to be disturbed. The passenger just needs to stick the tag in the header of his seat, in order to inform the crew about his will. It is simple, cheap and makes much more comfortable to travel and sleep with no worries to miss the meal, duty free or simply not to be disturbed. This same model has been implemented by other airlines such as Singapore Airlines, Cathay Airways, etc..

 

Air Asia

Nominated as the best low cost airline in five consecutive years, it is easy to understand why. Usually low cost airlines pay no attention to detail, just manage the cost of their operations in order to be extremely efficient. However, Air Asia makes flying with them easy, smooth even comfortable…online services are just great and ticket purchasing process is easy to follow. Comparing to other low cost airlines WW they don’t try to trick in the purchasing process with insurances, VIP services, food, etc…although these services do exist. At the same time, they offer “Business class” type cabin space for long distance trips for a small fee..they are trying to be different based on the same strategy and innovate in new services making easier and more comfortable to fly with them.

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Facebook hunger for acquisitions

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It is obvious already that FB is a giant cash cow sitting on more than 1 Billion people information and monetizing on it. It is a big advertising company like Google, but on a social network version instead of a search engine. Similarly to Google, and other tech giants, it is using its revenue stream to consolidate its leadership through acquisition, but following different strategies case by case that we are going to analyze.

As a latecomer in the tech industry FB has been really cautious with acquisitions (till Instagram in April 2012), mainly because the first purpose was to build a huge customer base, prior to generating any profit. Until today FB has acquired 41 companies, till Instagram the acquisitions were niche startup companies providing an added capability to FB (mainly in the technology side), but not directly to the end user. FB was the one building the added value to the end user through its integration into FB.

Let’s take a look to the different strategies:

  • Technology and platforms: mainly all the small acquisitions of startups providing a technology that FB was not able to create and that will allow FB to enrich the customer  experience through new services in FB. Almost 90% of acquisition were performed following this pattern, for an instance Face.com (allowing FB to automatically recognize who is who in your pictures); Gowalla (location based service); Hot Potato (status updates, check ins.). These acquisitions are “low budget” ones (less than 100 M. $).
  • Expand reach into mobile world: one of the big issues of FB (back in 2009-2010) was the low penetration of FB on Smartphone users, people started on a PC screen to use FB and the experience they were getting in their Smartphone was not even close to this one they were used to. This was a big issue for FB as the World population was going mobile and it was clear that Mobile was the place to be. Moreover, the Smartphone screen made difficult to publish advertising in FB without compromising customer experience. As a result, FB acquire some technology companies to help them cope with this challenge (as in prior bullet), and made the biggest acquisition at that time: Instagram (1 B. $). Instagram was the joy of the crown in the mobile industry, their users are young people, connected and love to post about their lives using mobile.
  • Buy or die: maybe this is too dramatic…when FB realizes that somebody is getting too big and it is a real threat in its ecosystem, it is a kill or die thing. Other competitors in the domain (Google, Yahoo, Amazon..) could be buying it and be a serious threat to the company. This is what happened with Whatsapp, so…FB is not growing crazily lately but Whatsapp it is and in the mobile environment. Taking into account the business model in Whatsapp (merely 1 $ a year/user), there is no way to justify the price tag on this deal ( 19 B $, biggest one in tech history), but FB is not just thinking on Whatsapp as it is right now…he wants more and I believe the time for Whatsapp to expand into other communication areas (voice, video, etc..) will come sooner than later (Whatsapps MVNO In Germany in 2015). Time will tell…but Telcos are already shaking.

All these acquisitions are serving a single purpose, more and more info in a single ecosystem (more rich information about individuals), with the main objective to be able to sell much more targeted campaigns and advertising, leading to increased revenues in time despite the fact of a shrinking number of subscribers in the platform.

Unwrapping paper

Sometimes is about a fresh start…about having a new experience and of course, about enjoying what you do, and specially what you really fancy about. In my case, this is my chance to share my view and opinion in a set of topics that I really enjoy discussing and talking about.

From my perspective people opinions matter, and a different point of view is always enriching, this is just my purpose with this blog. Provide my view in the most understandable way about matter that I really love to discuss: Business. But with a special focus on the Technology and its strategic implications in our Business landscape. At the same time, I would like to have it as a discussion forum where anyone can provide input to the matters I have written about.

Variety of topics should be vast, ranging from the Telecom industry transformation; to the Airline business innovation…no boundaries are being initially established.

Hope you enjoy this journey that it is just beginning, same way I do.

Jon.