Telcos need to stop selling minutes, megabytes and tariffs and start understanding the needs of their customers. This Telco Pyramid model could help.
I have spent the last 20 years in the telecoms industry. I have been working with vendors who provide hardware, software and services to telcos. I have managed fixed and mobile network operations selling and serving both consumer mass market as well as business to business. One of my findings – and perhaps most importantly, frustrations – is that our industry, especially on the telco side, is so weak in understanding the fundamental customer needs we are serving.
We have been selling tariffs, minutes and megabytes, which has nothing to do with real needs of our customers. Yet in 2016, much of marketing communications from both fixed and mobile operators focuses on exactly those three things. How sexy is that? It is a miracle that the industry is still doing well with this approach. My assumption is that customers do not care much about what we communicate except for the price point. Customers know themselves why they want our services, and it is not because we were great in explaining it to them.
Considering this, I came up with a rather simple approach that provides a way to explain the world and customer behavior. I took the classic pyramid model of Maslow’s hierarchy of needs and adapted it to the telecoms world.
Logic of the Telco Pyramid
First level of needs: physiological (get connected)
If you are not online, you do not exist. For many of us today, being ‘always connected’ over a trusted secure access is almost as important as having food on the table. Ask any teenager what they would choose – being out food for the day or not having any access to internet? Or think of how a workday with no access to internet, company IT systems or email would look like. There is even a new acronym for this, ‘FOMO’ (fear of missing out). But it also has to be reliable and secure. This is the fundamental and lowest level in the Telco Pyramid, upon which everything else rests.
Second level of needs: safety (communicate, surf and search)
Once you are connected, there are three basic things you will do: communicate, surf, and search the internet. As we are human beings, we love to talk and communicate. We surf and search for useful information, news, public information, etc. The basic need is to feel informed, secure and safe. How are you doing? Are the kids back from school? How is your business doing? This gave telcos a growing business for a hundred years and it has given Google its worldwide dominance today. However, without being connected, obviously you cannot do much.
Third level of needs: socialize (and collaborate)
If you have secured a connection and have access to good communication and internet services, you will move to the next level – socializing with friends and loved ones, and feeling that you belong to a social context. P2P apps like WhatsApp and Facetime with video communication serves this need in a very good way. In business, we not only talk to each other – we start to collaborate in teams, sharing info, documents, projects and results. Lync, SharePoint and similar products do the job for professionals.
Fourth level of needs: esteem (play and work, act and transact)
This level is about self-esteem. I play to enjoy myself. I play to compete and to feel I have improved. My work is about achieving results, reaching my goals, and prestige. I want respect from others both when playing and working. The other side of the coin is the ability to act and execute transactions as an extension of play and work. Maybe that is what dating sites are all about – getting self-respect and admiration from others, and ultimately being able to act upon that.
Fifth level of needs: self-actualization (express yourself)
When the lower levels are satisfied, you move to the top level where the ultimate goal is self-actualization – expressing yourself as a person, defining who you are, feeling that you can have peak performance and peak experiences. A tick off on the bucket list. Social media is all about expressing yourself – showing the best of yourself through the nicest or funniest pictures, travels, cats or dogs. In social media, you can express your real thoughts and ideas to the rest of the world. This is very powerful and creates an almost drug-like dependency. Content publishing serves the same purpose. YouTube is perhaps the best example of showing the different ways people express themselves, and if you get fame and acknowledgment in the online world, some may say you have reached the top of self-actualization.
Application of the Telco Pyramid
By using the Telco Pyramid model, you can immediately see that there is an untapped potential for business that goes far beyond the traditional definition of ‘telco business’. Regardless of whether you want to serve all or only specific levels of customer needs in the future, you have to have a proper infrastructure that can connect people, the cloud, and machines of various kinds.
You need an access and core network, service platforms, open APIs for third-party integration, and special IoT platforms for managing machines and devices. You will need analytics of your big data to get better at serving your customers and being able to drive a two-sided business model. With the Telco Pyramid model, it is easy to dissect the different layers of customer needs and identifying the requirements to serve these needs. This is the first use of the Telco Pyramid. However, the pyramid can be very useful for at least two other purposes as well:
- Innovate by understanding what human needs you serve: First, you need to understand what needs you are currently serving. If you want to innovate and expand your business, it is fundamental to understand the underlying needs and problems of your customers. By relating to the different levels of needs and services in the Telco Pyramid, you can understand how to be both innovative and useful beyond current solutions. You also need to understand if you have the proper infrastructure and customer reach to serve these needs. Furthermore, how will this create an advantage in order to compete successfully on these new levels of business?
- Define your value proposition: Finally, the Telco Pyramid can help in understanding how to serve these customer needs better than current players do. The better you understand what underlying needs and problems you actually solve for your customers, the better you can formulate your offerings. The solution, value proposition, customer promise and corresponding communication based on the Telco Pyramid will be very different from today ́s selling of minutes, megabytes and tariffs.