Some thoughts of Achim Hebestreit, Global Lead SAP Mobile for Telecommunications, and myself on proximity marketing and innovation and telcos….
You are at a bus stop. The timetable says the next bus arrives in 5 minutes. You wait for 10 minutes. No bus in sight. Another 10 minutes. The bus is overdue for 15 minutes now. What do you do? Keep waiting or walk home? The longer you wait, the more you invest. And the higher the investment, the higher the risk to lose it, once you decide to walk.
When it comes to mobile technology, I think the telco industry is in a similar situation. There are many mobile solutions that are yet to arrive. But they will not unfold by themselves. Even though there are huge opportunities, many innovators are hesitant to take bold steps. Mainly, for imponderables regarding consumer demands.
But waiting for the consumer is waiting for the bus. A sure thing once it comes, if it comes. This was not the way innovation worked in the last decade when OTT-player and the internet revolutionized business and the world around. And it is not the way innovation will work in the new mobile age. If telcos do not start to believe in their ability to innovate and make use of the assets they still have, the world will get mobile while the telco industry stands still. Again.
Therefore, I am happy to see that the industry starts to move. Last month it was declared that Weve is set to start innovating. Weve is a joint venture of the three largest service providers in the UK: EE, Vodafone and Telefonica. It focuses on mobility, including mobile advertisement, mobile payment and the mobile wallet. It was quite openly articulated that these three industry giants stopped competing against each other to start competing against others. Above all, the already mentioned OTT-players. Having a single base of 50 million opted in customers in this joint venture, these telcos seem to have eventually realized how muscular they still are.
Location-based promotion is indeed a mobile innovation that telcos are in a position to lead. One Canadian service provider, STM, has just started to offer a proximity marketing service to their customers, using its unique market position. First and foremost, the financial relation to its customers. STM has a full plate of partners which range from retailers like coffee-shops or super markets to event managers for concerts and museums to other transport options, e.g. bike rentals.
In this way STM becomes a real social aggregator of the 21st century. Providing on one hand a better service to their customers by using a partnership network, and leveraging on the other hand their relationship to customers in these partnerships. STM showcases how service-providers innovate in the face of a changing business environment, monetizing business and customer relationships, and offering an added value to their customers. But for the telco industry there is a little twist with this model of innovation. STM is indeed a service-provider but the Société de transport de Montréal is actually a public transportation system in Montreal, the 4th largest in North America, dispatching 400 million customers every year and in fact not a telco!
We are back at the bus station. So, what to do for a telco? Keep waiting or start walking? When you wait you do nothing but stand still. Waiting is not an investment in time but a waste of time. Starting to walk means starting to invest, to innovate and most importantly to adapt to a new situation. So, I am wondering why telcos struggle so much with new business ideas such as proximity marketing. What assets does a public transportation system like STM have which a telco doesn’t? I would actually claim that in terms of technology a telco is in an even better position to provide a proximity marketing service to their customers. Instead, their customers become the other’s customers.
So, Weve is a necessary right step. At the same time there is no reason to celebrate too long. This joint venture is no end in itself. Waiting with others at the bus stop will not make the bus arrive any earlier. But maybe there is in fact one occasion where it might actually make sense to wait at the bus stop: If you are in Montreal. You might experience a showcase for innovation entering a bus of STM. Otherwise the answer is quite clear. Start walking.