An analysis of the US reseller market illustrates that enterprise telecoms service providers worldwide need to embrace smarter customer segmentation. About 1,800 significant resellers in the US account for as much as 20% of the enterprise telecoms market. Their intensely customer-focused approach means that all service providers need to get smart in their market segmentation, according to GlobalData, a leading data and analytics company.
Robert Pritchard, Principal Analyst, Enterprise Technology and Services at GlobalData, comments: “Resellers succeed by meeting the needs of their customers. Their portfolios are sourced from companies with whom they compete, so they have to be better at putting together customer propositions using the margin between wholesale and retail prices, backed by better customer service, and by sourcing a mixture of best-of-breed and best-value products and services.”
With such a laser focus on customers, resellers have effectively achieved hyper-segmentation. While network services providers target the broader enterprise market usually, using off-the-shelf dumb databases of company data such as employee numbers and zip codes, resellers work alongside their network partners to scoop up contracts from businesses who are either too expensive for telcos to serve, or who prefer not to deal with telcos. This approach theoretically maximizes the addressable market for carriers, but they are losing share – and they still have expensive sales operations to pay for at a time of cost optimization.
Pritchard adds: “In the mass market, telcos are looking to shift to the digital channel, where small businesses can self-select, self-provision, and self-manage their services. At the very top end, the most sophisticated corporations and organizations are well served by highly customized solutions.
“But what to do about enterprises in between? There are over 1.5 million US companies with 10 to 999 employees whose needs are too complex and varied for the digital channel but who will not require a bespoke solution. The answer is smart segmentation.”
To start off with, telcos need to segment their markets based on historic and current behavior by identifying clusters that have similar needs. Research and the accumulated knowledge of sales and marketing teams can be leveraged here, but increasingly segmentation will be guided by the analysis of huge amounts of customer data amassed over the years – an obvious target for the deployment of AI (Artificial Intelligence) tools.
Pritchard concludes: “With pressure to reduce the cost of sales teams, network service providers need to develop smarter segmentation of their target enterprise customers to optimize their resources. The correct blend of digital channels, bespoke solutions, and target clusters is vital. The alternative is to focus on networks and services, and continue to see the resellers grow revenues, take market share, and control customer relationships for long-term profitability.”
