Features and Analysis

Telefónica’s digital transformation success: From enablement to exploitation

At TM Forum Live! (May 15-18 in Nice, France), Jose Manuel Gascon Carus will present a case study on ‘Business transformation and end-to-end digitalization at Telefónica‘. In this post, he gives an introductory overview.

We need to prepare Telefónica for the digital world, and therefore it’s urgent to accelerate the transformation we started years ago, deliver the capabilities that our customers now demand and lay the foundation for the future telco.

To compete in the digital world, at Telefónica we have developed a company program to transform ourselves to be an end-to-end digital business, focused around the customer and data, and ready to compete in an open ecosystem.

What is end-to-end digitalization and what are our aspirations?

End-to-end (E2E) digitalization is a complete business-led transformation focused on the customer and on the company dimension. It:

  • Changes the way we interact with our customers: Digitalization enables omnichannel experience, so the customer can seamlessly change from one channel to another. We are boosting online channel and self-management in a personalized way, allowing our customers to buy and change products and services or solve problems without being assisted by an agent.
  • Enables flexible portfolio management and an nPlay offer, integrating third parties in a faster and easier way.
  • Simplifies and automates operations, improving processes like billing, provisioning and service assurance. Automation reduces back-office needs, reducing errors and protecting our revenue streams. Thanks to better data management, we can now also make more informed and agile decisions.

E2E digitalization will impact each of our 350 million customers along their entire value chain:

  • Before buying, the customers expect accurate information on the products and services that are available, and to get the most suitable personalized marketing offer that best suits them. Products need to launch in a fast and agile way (low time-to-market), in a clear way (accurate information) and in a personal way (customized offering).
  • When buying, our customers expect the best offering, clarity and fast delivery, and to be able to do it online and paperless. They want to pay by any means, easily and under clear terms and conditions. And they expect to receive the product on time and to be able to know at any time what is happening with their order.
  • When using and paying, they want to control their expenditure with a secure, personalized and frictionless experience, and get an easy-to-understand bill that they can consult at any moment from any device. They expect a personalized experience, and for the way we interact with them to change based on their context.
  • When solving questions, claims or technical problems, they expect an immediate and accurate answer. They want simplicity and the same experience for these procedures as for purchasing, providing visibility in the entire process.
  • In all situations, we need to empower the customer and give them choice. It is important to use the knowledge we have about our customer for loyalty but even in termination, they must be able to leave us in an easy way, providing trust and transparency to foster a much closer relationship

And all this, with the best customer experience. Customers need to manage their relationship with us in real-time, have the ability to engage us through any channel, and stop and start where they want. They can increasingly do everything they need to from an app on their smartphone, and much more. We are truly changing the expectations and feelings our customers have about a telco.

Look behind you

But to make all these digitalization benefits real for the company and have a real impact on customer experience, we have to make real changes deep inside Telefónica.

To make digitalization happen, we need to transform around the customer, and thus, transform the whole customer value chain (from conceptualizing a service to ordering, billing, customer care and retention). We are digitalizing these processes and the systems that support them, in a deep and structural way. To change our business, we must change our processes.

In addition to this, we are enabling capabilities that are required to support customer expectations of a digital company like omnichannel, unique and 360-degree customer view, data-centric, full convergence, unified billing, and single catalog that provides fast and easy integration, security and privacy etc.

Structural core BSS transformations (full stack, pre-integrated best-of-suite) complemented with other projects (called satellite domains — workforce management, logistics, etc.) are the main examples of powerful enablement in Telefónica.

For enablement, we are measuring the level of digitalization of our customer-centric processes through the E2E digitalization KPI. It measures the ability to be real-time and automated in every step of our processes, for each channel and each product line. This KPI will double in the next three years.

From enablement to exploitation

Capabilities enablement is not enough, though. In addition to enabling the capabilities and transforming the processes around our customers, we need to ensure that the business is actually using them, exploiting all the possibilities that they provide, and using them through the channels that we want to, fostering the adoption.

In each step of the customer lifecycle, exploitation of capabilities is needed – there are so many interesting opportunities that we cannot miss. In this example, we are looking at a leading convergent operator in a mature market, but the situation and the initiatives are very different in mobile-only markets or countries with low smartphone penetration and bank penetration:

  • Before buying, when launching products and services. Focused on improving customer experience and fostering digital channel adoption:
    • Redesign the product development process to avoid unnecessary approvals to deploy a product (time to market).
    • Product conception targeted at digital channels, launching them afterwards in assisted channels.
    • Boost recommendations and shared customer reviews.
  • When buying and using, we are focusing on delivering the best possible customer experience and promoting the use of self-assisted channels. This means communicating that they’re available proactively and even offering promotions for online purchases. Additionally, there are actions that can potentially reduce the volume of interactions like claims or calls:
    • Redefine processes for the optimal customer experience in online channels. Enabling customers to choose to finish the purchase online (automatic fulfilment) or to receive a call from an agent (click to call).
    • Foster online sales by enabling promotions and redesigning the commercial and commissioning models.
    • Provide proactive notifications with personalized offers when recharging balance to increase conversion rate.
    • In installations, calculate technician routes based on customer schedule rather than pure optimization
    • Set up e-billing as the default invoicing option, or charge for paper invoices
  • In care, when our customers have questions, problems or complaints, they expect an immediate and accurate answer. We need to enable self-diagnosis tools, but also encourage customers to use them:
    • Disable certain specific actions in assisted channels like call centers.
    • Adapt landing page or IVR messages depending on pending requests/orders from our customers.
    • Proactively provide customers the visibility in real-time of relevant status changes on requests/orders
  • Finally, for termination and loyalty, customer empowerment has proved to be positive for the company:
    • Enable termination in self-assisted channels, prioritizing trust and transparency. This simple action has actually increased the sales of data packages.

Exploiting these capabilities will have an impact on four main streams:

  • Improving customer experience
  • Increasing automation
  • Reducing volume of interactions
  • Fostering adoption of self-assisted channels

Achieving the right mix of channels and boosting automation will have an impact on customer experience and on operational performance (faster time to market, increase in online recharges, payments and e-billing, reduction in call centers and back-office activity, first call resolution increase, etc.)

End-to-end digitalization acceleration plan

We are articulating all this through our End-to-End Digitalization Acceleration initiative. With this approach, it is possible to assess the local operating business (OB) situation and the main opportunities against end-to-end digitalization objectives.

To address where to focus the transformation, for each OB we characterize the volume of monthly interactions per E2E process (the size of the ball in the below chart). The X axis shows how automated it is (how many of those interactions are done without errors and/or manual interventions). The Y axis shows the percentage of self-assisted/managed operations and the color represents customer satisfaction.

We don’t only transform for efficiency but also to improve customer satisfaction and reduce the number of non-desired processes (like problems or claims), etc.

Transformation plans are built considering the particular situation of each OB (including market conditions) and analyzing it in a holistic way. They are also prioritized based on the need to deliver impact in the short-term and strike a balance between structural and tactical initiatives.

With the right focus, we can achieve real impact on the operations and accelerate the wins. As an example, for a leading convergent operator in a mature market, we have already achieved:

  • Automation and fostering use of digital channels will have a direct impact on financials by reducing the cost of the contact center. Since the beginning of the year we have seen a reduction of 1 million calls per month (out of 4.8 million calls per month).
  • This efficiency is also reflected in the increased usage of digital channels and digital contacts from 77 to 79 percent in 2017, and users from 40 percent to 48 percent.
  • Stuck and manual orders will also be reduced from 0.19% in 2016 to 0.11% in 2017
  • We are also seeing a reduction and optimization of the back-office: Removing the need for human intervention through reducing errors and automating processes (such as billing, ordering and assurance process) is a first step. It’s also about making sure processes that always need human intervention are as efficient as possible.

In other geographies, especially in Latin America, the context is different and so are the initiatives. But in the end, similar results are being targeted in a big three-play operation in South America:

  • Reduce calls by 21 percent per month in 2017, and an additional 26 percent in 2018
  • Increase digital contacts from 46 percent to 50 percent in 2017 and 57 percent in 2020
  • Top-ups are also a priority based on the large prepaid customer base. The goal is to have 12 percent of top-ups via digital channels by 2020, from 1.2 percent today
  • End-to-end digitalization will increase efficiency in the operation reducing the AHT (average handling time) in the contact center from 391 to 363 seconds in 2019
  • Additionally, stuck orders will be reduced from 16 percent in 2016 to 15 percent in 2017 and 3 percent in 2020

To be able to get the most out of this transformation, a transversal view of the company is needed, with many areas involved at global and local level (OB CEOs, strategy, control, digital-commercial, CDO, etc.)

Transformation is real, and it is happening now. Furthermore, we are accelerating it, making the most required capabilities real and fulfilling business demand in a faster and smarter way.

TM Forum Live! takes place May 15-18 in Nice, France.  Find out more at www.tmforumlive.org


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    Transformation & E2E Digitalization Director

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