How economic tides may shatter the illusion of consumer inertia

This is how the history of #telecommunications could read in the near future:

Once upon a time, #telco giants reigned supreme. Their prosperity was hinged, less upon customer loyalty, than the powerful spell of customer inertia and the dreaded hassles associated with switching carriers.

Even cheaper wireless plans failed to dislodge customers from big national carriers where plans cost twice as much.

However, the sorcery of “contentment” might soon be broken as global economic changes threaten to expose the vulnerability of these wireless titans.

Echoing one of our previous articles – “Inflation’s toll: can telcos survive the shake-up?” – we discussed how telcos are feeling the heat as consumers are pressured into tightening their purse strings. That gloomy sentiment hasn’t dissipated.

With economic uncertainty casting a long, dark shadow over people’s willingness to spend, consumer inertia to switch may be approaching the tipping point sooner than later. For telcos with their sights set on long-term customer acquisition and retention, it’s no longer a question of “if” but “when” consumers will switch. Most probably to a competitor that’s newer, shinier, and, most of all, truly digital.

Digital generations want it all – and they want it now

The rapid development of digital transformation and a new generation of digital consumers are chipping away at the once impenetrable fortress of consumer loyalty. As economic conditions shift, with inflationary pressures and job market uncertainty becoming the new normal, consumers will be compelled to reevaluate their spending priorities.

This newfound frugality puts pressure on traditional carriers to adapt or risk losing market share. Millennials, who have surpassed baby boomers as the largest age group in the workforce, look set to lead the charge against wireless titans in profound ways. Joined by Gen Z, they want more than just affordability. They want it all: a smooth, seamless digital experience, personalised #customerexperience that wows them, unbeatable value, freedom to switch plans, and more. And they want it now.

Call them the “convenience customers” if you want, but this kind of digital-based shopping, social purchasing, and DIY ethos popularised by tech companies like Amazon, Netflix, Spotify and Uber no longer impresses today’s digital generation. Because it’s all they know – it’s not unique. Having a digital brand has become table stakes and operators without a digital telco are already missing out.

Focus on adding value to command a premium

Moreover, the rise of 5G technology adds fuel to the fire. In a world shifting towards lightning-fast connectivity, consumers will seek carriers offering affordable and reliable 5G services. Should the upstarts, like Boost Infinite and MobileX, deliver on quality, the giants may find themselves in a modern-day David and Goliath battle, albeit with fewer slingshots and stones involved. Traditional carriers need to find innovative ways to leverage 5G to maintain their competitive edge, perhaps through partnerships to deliver 5G-enabled experiences in the B2C marketplace.

As smaller carriers gain market share, their increased visibility and credibility will attract more customers to their cost-effective offerings. The larger carriers must justify their price premiums, especially if their lower-priced counterparts can offer comparable services and customer experiences. It’s like choosing between a posh cup of coffee and a cup from your favourite local café – both provide the caffeine kick you need, but one is significantly lighter on the wallet. In an era of economic turbulence, the temptation to switch for better value may soon become irresistible.

Make loyalty the reason customers stay

So, what can traditional carriers do to prepare for this impending shift? The key lies in adaptation and innovation. Whether through delivering aggressive pricing strategies, groundbreaking service offerings, or exceptional #customerexperience, staying ahead of the curve is crucial.

Loyalty is not just about customer retention; it’s a powerful protection against the ills of inflation. Brand preference and engagement create a sense of attachment to a company, making customers less likely to switch to competitors when prices rise. Having the power to offer value beyond just the price tag is key to keeping customers loyal. When businesses prioritise customer needs, and offer experiences that align with their values, they establish a connection that extends beyond just the transactional relationship.

The #telcoindustry is on the cusp of a revolution, with consumer inertia’s days numbered. The consequences for traditional carriers could be as dramatic as the next big tragedy on #Netflix. As consumers awaken to the appeal of more affordable, high-value plans, traditional #mobileoperators must evolve or risk becoming a footnote in the annals of telecommunication history.

Yet, with change comes opportunity. By embracing the winds of change and adapting to the new landscape, telco giants have the chance to weather the storm and emerge stronger than ever before. It’s time to break the spell, shake off the dust, and forge a new path in a world where consumers are no longer blinded by the illusion of inertia.

Let’s talk about giving power back to your customers. Email us at [email protected]

This article was originally published by Danny Huang on LinkedIn. Like what you read? Follow us for more news and insights from Circles.