Five reasons why telcos should come back to brand

Will Collin
Source: Admap Magazine, January 2018
Downloaded from WARC

Details five ways in which defining a brand's purpose brings benefits and explains why those with a
clear and genuine brand purpose will be the ones to thrive the most.

As the category has matured, it has become as much about retention as it is about growth, and
bringing magic into the lives of consumers has taken a back seat.
In an age of near-total transparency, consumers expect more from the brand they buy and this
also applies to telecoms.
Telcos need to ask themselves whether their organisation’s purpose is clear, and if so, how this
manifests itself in the customer experience of the brand.

Marketing Telecommunications
This article is part of a series of articles on marketing telecommunications. Read more.

The accelerating pace of mergers and acquisitions within the telecoms industry shows that financial deal-making
is now the big story in this sector, not marketing. With narrow margins, high costs and onerous regulation, it's no
surprise that scaling up by consolidation and cross-border acquisition is increasingly the favoured business
strategy.

There was a time when marketing was the big news, not deal-making. It was good to talk; the future was bright;
we could believe in better. The category was sexy and brands could credibly promise a better lifestyle. There
was still headroom for growth and brands competed for this upside by offering different versions of a better
tomorrow. Now the narrative has shifted as the category has matured. The game is as much about retention as
it is about growth. The move towards quad play (a service offering in which four services are offered together,
especially television, broadband, and fixed and mobile telephone) is a mix of industry push and consumer pull;
more about increasing ARPU (average revenue per user) and decreasing churn than about bringing more magic
into consumers' lives.

If the category story is increasingly about smart solutions for value-conscious consumers, there is a risk of
telecoms brands becoming hollowed out until they're just the identifying labels on otherwise identical 'bit pipes'
(a bit pipe being industry jargon for a direct data communication channel between two points that provides no
value beyond basic transport).

So where can these brands look to rediscover their mojo? We believe that consumer expectations have shifted
dramatically in the past two decades. In an age of near-total transparency, people now expect more from the
brands they buy. They will routinely question how a product is made, how it's supplied, and more fundamentally
they will judge the motives of the company behind the product. Is the brand simply a marketing tool – a cynical
ruse to increase free cashflow and shareholder value – or is there more to it?

It's our belief that those brands with a genuine purpose, those with a reason to exist beyond just generating
profits, are the ones that will thrive most. A clear purpose signals the brand's motives to customers and
employees alike – irrespective of how emotional or rational the category may be. So even when the sector is
maturing and consumers' choices become increasingly rational, the importance of a brand's purpose remains. If
product and price are at parity, we'd generally prefer to spend our money with a company we feel is in business
to change things for the better (whatever form that may take).

Some commentators have questioned the commercial rationale for adopting brand purpose as the basis for
managing the brand's strategy and marketing. The critique runs along the following lines: by seeking to appeal
to the customer's loftier ideals (as opposed to simply dramatising the product's benefits), brands risk
overestimating their role in people's lives and losing connection with how people actually choose. 'Brand
purpose sceptics' view purpose-led marketing as a well-meaning distraction which may have an impact on
marketers' morale but rather less on the bottom line.

My response to the sceptics is that, in some cases, they are absolutely correct. In low-cost, low-interest, low-
consideration categories – such as many packaged goods markets – then the customer's interest in brand
purpose may well be minimal. But I believe that where the purchase decision is more considered, and especially
where the brand provides a service and not just an isolated product, then potential customers are more drawn to
companies they trust, and who they believe will stand behind their products and do right by their users.
Telecoms is just such a category.
This is why we believe that telcos should ask themselves whether their organisation's purpose is clear. If it is,
great – the next step is to ensure that purpose is manifest in a customer's experience of using the brand. But if
not, the opportunity is to dig down into the origins and values of the company to find the belief system that
animates the business and articulates this as a statement of brand purpose.

Deal-making may be the big news in the technology, media and telecoms sector right now. But by keeping their
brands' purpose to the fore, telecoms businesses can maintain their historic role as enablers of a positive future
– and avoid sliding down into becoming mere corporate vehicles for shareholder enrichment.

Here are five ways in which defining the brand's purpose benefits businesses in the telecoms sector.

A clear purpose acts as a north star

In a market such as telecoms, where innovation is constantly and rapidly changing, it is probably unwise to
define a brand's purpose in terms of any particular technology or platform. Were Orange still around in the UK
today, its 1994-era manifesto for a world without wires might jar with the goal of selling fixed-line voice and
broadband subscriptions as part of a quad play bundle. A brand's purpose should be enduring because it's not a
response to immediate market pressures and sales targets, but rather a reflection of a fundamental belief system
within the business. As such, it helps a brand maintain consistency even as the market around it changes. This
is never more true than in the telecoms sector.

A compelling purpose creates a differentiator

It is a particular characteristic of the telecoms market that specific product innovations are launched by every
brand more or less simultaneously, driven by global technology developments that are available to all. This can
make it more difficult for telco brands to maintain distinctiveness since they often tend to talk about the same
things at the same time (e.g. picture messaging and 4G within mobile, and 4K, 3D and hard disc recorders within
pay TV). The universal technology road map therefore imposes a degree of similarity across every brand, which
risks exacerbating the belief that they're all just bit pipes where the only difference is the colour of the logo.

That is why a compelling brand purpose is so relevant within the telecoms category: even if a brand's
technology is the same as its competitors', it can have a very distinctive underlying purpose as a business,
which in turn will ensure its brand is presented to customers in a unique and recognisable way.

A strong purpose opens up the 'adjacent possible'

Service providers have ongoing customer relationships that (often) involve regular billing, so they are well
placed to cross- and up-sell their user base. This offers the possibility of both increasing ARPU and reducing
churn. Indeed, the drive towards quad play relies on this very opportunity.

However, while there may be a valid business rationale for offering a mobile payments system or music
streaming alongside the basic voice and data service, consumers are likely to question anything new. The key
element for success is trust. If customers trust the brand, then they are more likely to 'take a chance' on new
services.

A strong brand purpose can be the rationale for consumers establishing and building trust with an organisation.
Where that business exists to address a need that's broader than just that one service type, customers are less
likely to resist anything outside the core business.

A shared purpose unites an organisation

Having grown rapidly from startups to FTSE 100 businesses in a few short years, many telcos have
organisational structures where different functional roles sit in separate silos. Network/technology, customer
service, sales, marketing, and so on: what was an enabler in a business of 150 can become a hindrance when
the workforce grows to 15,000.

A commonly understood brand purpose can play a vital internal role, by providing a shared belief system that
can unify disparate teams. This point was well made by Professor Rebecca Henderson of Harvard Business
School, as reported in 2015 by the Harvard Business Review: "The sense of being part of something greater
than yourself can lead to high levels of engagement, high levels of creativity, and the willingness to partner
across functional and product boundaries within a company, which are hugely powerful."

A business united behind a brand purpose, with a vision for what the customer should expect, is better placed to
overcome any technological or organisational barriers.

A deeply held purpose holds a brand to a higher standard

As telecoms brands look to broaden and deepen their relationship with customers by cross-selling additional
services in non-core areas, the issue of trust becomes ever more important and the reputation stakes are raised
higher. Flames of controversy sparked by a relatively minor decision in one product category could be fanned by
press and social media, tarnishing brand trust across the board.

When a brand diversifies its service, the number of areas of risk is multiplied, and the number of decision
makers whose choices impact brand health increases. In those circumstances, a brand purpose that's deeply
held can help these decision makers avoid making expedient choices that risk damaging long-term value –
whether in their product line or elsewhere.

So as telcos move ahead and attempt to address the challenges of launching new services and managing
customer churn in an increasingly commoditised market, there is one core tenet for them to rally around: brand
purpose. Become more than just the service, and customers will become more than simply users of the service.
They will become loyal advocates.

About the author

Will Collin
Strategy lead, Karmarama
will.collin@karmarama.com

Will previously spent 17 years as a partner at Naked Communications, an agency he co-founded.

Prior to Naked, he was at media agency PHD, after seven years as a planner at BMP DDB.

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