By: David Norris, Practice Leader - Analytics, Bloor Research
Published: 27th December 2013
Copyright Bloor Research © 2013
Telcos face a major dilemma; they are unloved. We all tend to have a real emotional attachment to our smartphones and feel that they add real value to our lives; but we are all but completely indifferent to our service providers. What we do recall about our telcos is when they let us down with faults, or bills that far exceeded our expectations. Most telcos spend a very large sum of money on marketing, and whilst they all claim it is successful, in terms of bang per buck a more rational observer would see it as a desperate attempt to win hearts and minds that is not achieving its goals. As proof of that point I would ask you to look at the rates of churn that telcos have, which remain stubbornly high as each new competitor enters the market and lowers the price of their offering, and since we all think that all of the companies are the same we move to take advantage of the lower price. Further evidence of the ineffectiveness of telco marketing is seen in the levels of marketing opt-outs, a request to not be marketed to any more, usually caused by receiving too many irrelevant communications.
Telcos need to change their business model to add real value to their customers. If the basic products are similar then the services that surround them has to be tailored to the real needs of the customer base, but how are they to understand those needs? I know that at present they spend a lot of money on focus groups and paying attention to what is said on social media, but I have always thought that the problem with that focus is that too many people these days tell you what they think you want them to say, and not what to really intend to do. At the end of the day you need to look at what really they do mean and how they spend their hard earned cash. Within the heart of the operational side of every service provider there is a potential source of that insight. In many ways, until big data opened our eyes to how to use such operational data, we have shied away from its use, but now people have the tools to tackle it and find out what people are really doing, and this is where Nominum come into play.
Nominum have been at the heart of the Internet and its phenomenal growth over the last decade and more. They are the inventors of the Domain Name Server, (DNS) the software that translates the domain name that you use - for instance Bloor Research.com; (the thing you hopefully can remember) - into the relevant IP address (the thing which you probably would not remember). It is the IP address that is required by the network, which is the internet, to actually connect. Within the DNS system there are millions of these connections being made every day; the data is truly massive, and it is one of the most valuable sources of data that any marketer could desire, because it records who looks at what, and when, to the lowest level and in real time. That data is the very lifeblood of the business operations of a telco. With that data it is possible to build a meaningful relationship with the customer, one deemed to be of value by the customer.
By lifting the lid on the data in the DNS, Nominum are opening up the possibility of offering new business models to the telcos. The DNS data shows clearly what the real interests of the users are, with that data it is possible to really target the users. Just as Tesco and American Airlines famously found with their loyalty cards, once you can identify what customers are really interested in and can use that to make relevant targeted messages to a customer, you can start to build a new relationship with the consumer. This relationship engages them so that they feel that they are receiving value, and are not just a cash cow, being plied with every and any offer that comes around, to feed a faceless commodity provider.
Nomium, with their N2 Platform, are making that data accessible. This is of massive value - it's relevant, it's timely and, as Nominum are looking to use it to build things of value, it should be capable of quite fundamentally changing the telco value proposition. So analytics running against the DNS can identify a trigger that will be based on highly relevant activity by the consumer, it's also timely because the consumer has just performed the triggering action. So, at present, if you go onto a department store web site and look at televisions you tend to see adverts for televisions on every screen that you look at on the web for next few weeks. Using the DNS, the trigger can be far more granular so if they buy you know not to send them further ads; if they do not buy you know the brand that interests them so what is the next best action to follow up? You could offer a list of additional sites known to have competitive prices: that is far less likely to be seen as intrusive marketing and perceived as a value adding enhancement to the experience.
N2 is not just about targeted advertising. Nominum are looking to provide a range of services based on an understanding of the customer that will engage them, build loyalty, reduce churn, and provide opportunities to monetarise the relationship between the consumer and the network provider that the consumer sees as adding value. Having confidence in your provider to use your data with care, security and understanding is a vital part of breaking this perception of all providers being the same and just a commodity. We accept that the technology is all but identical, but how it is used and the services that surround it can be personalised to the interests and needs of each consumer. I think that Nominum are doing something really exciting here, something that can fundamentally shake up how telcos operate and how we view them.
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