Saturday, August 22, 2020

"High Tech, High Touch" Patterns Will Return

The prevailing wisdom about business life after Covid-19 often is that “nothing will be the same.” In place of “high touch” face-to-face meetings, businesses are going to substitute “high tech” virtual sales and marketing. That might happen, to a significant and permanent degree. 

At the same time, firms are going to rediscover the value of face-to-face, “high touch” activities, perhaps to the same degree as they shift to virtual “high tech” operations. It has been a 40-year trend. 


Some of us remember a 1982 book called Megatrends by futurist John Naisbitt that popularized the phrase “high tech, high touch” to describe a coming trend: that as we began to use more technology, we would equally appreciate “high touch” human or non-technological interactions. He explored how that had evolved in his follow-on book High Tech, High Touch


Here’s the important insight into post-Covid-19 business behavior: High-touch refers to the human and emotional aspects of business interactions, including the establishment of trust


Virtual support can be quite effective once a business relationship and trust have been established. But it arguably will be harder to create trust with a new prospect using only “high tech” tools. 


High-touch refers to close relationships with customers, interacting with people, not just machines.  To be sure, that arguably can be done, up to a point, virtually. But high-touch also arguably requires above-average interaction with customers, and that includes face-to-face contact. 


High touch--helping customers on a human level through various stages of the buying process and lifecycle--involves a much higher participation, and usually relies on one individual or team within the company to maintain direct, personal and frequent contact with accounts, says ESG. 

“Humans crave the kind of interaction that only other humans can provide,” and likely cannot always be provided by conferencing tools. 


It’s one that places the priority on human interaction and human relationships, not on efficiency or speed. That is why travel services emphasize both touch and tech. 


“In a high tech world, people are longing for balance,” notes EHL Insights. As important as technology has become for customer experience and support, “authenticity” and “emotion” also are emphasized. There is an analogy for business-to-business sales as well. 


This “reversion to mean” happens quite often. Right now, professionals now rely on videoconferencing to supplant face-to-face meetings because nothing else is possible. But after the pandemic ends, prior trends will reassert themselves.


That has proven to be true for industries and economies in recoveries from major economic disruptions in the recent past. 


If evidence from three past global recessions--but not the Great Recession of 2008 and the Great Cessation of 2020--provide any useful insight, the recovery might take between three and 4.5 years, perhaps three years for public companies, perhaps 4.5 years for the overall economy. 


Some 17 percent of public  firms will not survive. That is the percentage of public firms that went bankrupt, were acquired, or became private, in the aftermath of the Great Recession. 


About 80 percent of the survivors had not yet regained their pre-recession growth rates for sales and profits three years after a recession. 


About 40 percent of the firms had not returned to their absolute pre-recession sales and profits levels after three years. 


Ranjay Gulati, Harvard Business School professor and Nitin Nohria, Harvard Business School dean, conducted a study in 2010 of corporate performance during three global recessions: the 1980 crisis (which lasted from 1980 to 1982), the 1990 slowdown (1990 to 1991), and the 2000 bust (2000 to 2002). 


Obviously, the two big events missing from the study, because of the timing, were the Great Recession of 2008 and the current “Great Cessation” of 2020. Still, their findings are useful for charting the likely path of recovery after the Covid-19 pandemic recedes into history.


They studied 4,700 public companies, breaking down the data into three periods: the three years before a recession, the three years after, and the recession years themselves. 


At a macroeconomic level, the U.S. economy had not recovered its pre-2008 levels by 2011, three years after the Great Great Recession of 2008. 


source: Bureau of Economic Analysis


U.S. growth rates returned to 2007 levels about 4.5 years after the Great Recession. Latin America and some Asian countries bounced back really fast, in about 1.5 years.


So if the recovery from the Great Cessation follows the Great Recession pattern, it will take about four years for gross national product to return to 2019 levels. 


The impact on household wealth was starker, as median household net worth still had not reached 2007 levels by 2018, 10 years after the Great Recession. Job levels in the United States had returned to 2007 levels by 2014 (about six years after the Great Recession). 


Still, prior trends reasserted themselves. That is likely to happen with face-to-face “high touch” sales in the business-to-business markets as well. It might take some time, but it is almost certainly going to happen. 


Friday, August 21, 2020

Are Satsified Customers More Loyal? Maybe Not.

Are “happy” customers “more loyal?” It might be hard to say. Satisfied customers--it often is believed--lead to loyal customers, which in turn leads to profits. 

Customer satisfaction typically is thought of as a predictor of customer buying intentions and loyalty, propensity to desert one provider in favor of another, account longevity, revenue per relationship and financial performance. That is perhaps one reason so many executives take stock in the net promoter score, a measure of customer satisfaction, in telecom and other industries. 


“Customer satisfaction is a leading indicator of company financial performance,” says the American Customer Satisfaction Index. “Stocks of companies with high ACSI scores tend to do better than those of companies with low scores.” 


But the relationships are not always so clear. 


“What we’ve found is that the relationship between loyalty and profitability is much weaker—and subtler—than the proponents of loyalty programs claim,” say Werner Reinartz, Professor of Marketing at the University of Cologne, and V. Kumar, executive director of the Center for Excellence in Brand and Customer Management at Georgia State University’s J. Mack Robinson College of Business.


source: Harvard Business Review


“Specifically, we discovered little or no evidence to suggest that customers who purchase steadily from a company over time are necessarily cheaper to serve, less price sensitive, or particularly effective at bringing in new business,” they argue. The researchers find “no evidence” to support such claims.


In fact, some would argue, some potential buyers should be actively discouraged. In the colloquial, “there are some customers you do not want.” 

source: Harvard Business Review


I’ve never been completely convinced that satisfaction and loyalty are related in a linear way, though. For starters, satisfaction and loyalty have different reference points. 


“Customer satisfaction is a self-reported measure of how much customers ‘likes' a company and how happy they are with goods purchased or services obtained from the company,” says Mark Klein, Loyalty Builders CEO. “Customer loyalty, on the other hand, is a company-calculated metric of likelihood to purchase again or not defect to a competitor.”


Also, customers can “like” a product and yet buy a competitor’s offering, without having any change in a “satisfaction” score. “Just because they’re happy with their current brand doesn’t mean they won’t switch if a lower price is offered elsewhere,” notes Actionable Research. 


Loyalty is what firms want, and satisfaction is seen as a proxy for loyalty. That might not generally be the case. 


But some question net promoter score relevance and predictive power, as popular as NPS is in many firms. “Two 2007 studies analyzing thousands of customer interviews said NPS doesn’t correlate with revenue or predict customer behavior any better than other survey-based metric,” two reporters for the Wall Street Journal report. “A 2015 study examining data on 80,000 customers from hundreds of brands said the score doesn’t explain the way people allocate their money.”


Of all the criticisms, lack of predictive capability might be the most significant, since that is what the NPS purports to do: predict repeat buying behavior. 


“The science behind NPS is bad,” says Timothy Keiningham, a marketing professor at St. John’s University in New York, and one of the co-authors of the three studies. “When people change their net promoter score, that has almost no relationship to how they divide their spending,” he said. 


Others might argue that social media has changed the way consumers “refer” others to companies and products. Some question the methodology


As valuable as the “loyalty drives profits” argument might be, it is reasonable to question how well the NPS, or any other metric purporting to demonstrate the causal effect of loyalty or satisfaction on repeat buying, actually can predict such behavior. 


Some argue that “satisfaction” might not predict very much. What might have predictive value is “totally satisfied” customers. Mere “satisfaction” is not predictive of loyalty, in other words. 


Xerox, for example, discovered that Its totally satisfied customers were six times more likely to repurchase Xerox products over the next 18 months than its satisfied customers. Merely satisfying customers is not enough to keep them loyal, in competitive markets. 


In other words, “satisfied customers” can, and will, defect. Totally satisfied customers tend not to churn, and tend to buy more from any supplier. 


source: Harvard Business Review


It might be hard to find anyone who believes there is no relationship between customer satisfaction and business outcomes. But the relationship might well be more complicated than we suppose. 


Thursday, August 20, 2020

Vodafone Makes Huge Commitment to Gigabit HFC in Germany

In the fixed networks access business, most of the price competition arguably has come through wholesale access to the network, using various forms of network unbundling or simple resale, and not facilities-based competition. 

Just as arguably, most of the innovation has come from facilities-based competition. Mobility provides the most widespread example, but there is a growing amount of fixed network innovation from firms using hybrid fiber coax instead of traditional telecom industry platforms.


Vodafone, for example, predicts a massive expansion of its gigabit speed fixed network broadband services in Germany by 2022, using the HFC platform, not the more-traditional fiber to home platforms. 

source: Vodafone


Vodafone also notes that HFC gigabit platforms are expanding across Europe as well. One tends to see more innovation from suppliers using different platforms (mobile and HFC) in large part because those platforms offer the ability to differentiate service.


source: Vodafone


Wholesale basically restricts competition to price, with network capabilities essentially the same for all suppliers, who, by definition, are using the same network. Sometimes, using a different platform also allows a supplier to disrupt industry pricing because the cost basis is qualitatively different. 


At scale, a facilities-based approach also allows better “owner’s economics,” compared to a leased facilities approach. The same trade-off occurs for hosted voice versus owned switch business voice or cloud computing as a service versus owned computing facilities. At low volume, leasing often makes more sense.


At scale, owned facilities often offer lower total costs.


PTC Academy Online Training Sept. 14-30, 2020

The PTC Academy now offers an online and virtual training course featuring the same content as our live events, and also now comes with 1.2 Continuing Education Units provided by the International Association for Continuing Education and Training. The IACET is an accredited continuing education provider.

Attendees also receive a PTC Academy Certificate of Completion


 

The course will be held between 14 September and 30 September, roughly every other day for about 90 minutes, 0900 SGT (Singapore time zone) Here is the registration information


At the completion of this course, participants will understand:

  • Key business model changes in the telecom industry since deregulation and privatization

  • Business models and revenue drivers in key industry segments

  • The ways OTT apps and services shape provider strategy

  • How the telecom ecosystem has changed since deregulation and Internet emergence

  • How cloud computing and data centers shape the connectivity business

  • How C-level executives can satisfy key stakeholders and constituencies while growing revenue

  • Thinking like a top executive about revenue, competition, cost, innovation, and social responsibility

  • Tips for making the transition from mid-level to C-suite

  • How changes in regulation, consumer demand, technology, and the Internet shape the connectivity business

Wednesday, August 19, 2020

Why Some Execs do Not See 5G as a Fix for 4G, or Wi-Fi 6 a Fix for Wi-Fi

Deloitte recently conducted a survey of 415 executives deploying either 5G or Wi-Fi 6, to find out “why are you doing it?” Some 57 percent of respondents report that their organization is currently in the process of adopting 5G and/or Wi-Fi 6, while another 37 percent plan to adopt these technologies within the next year.

Right now, as you would suspect, 4G and Wi-Fi 5 are the mainstays. But respondents expect 5G and Wi-Fi 6 to be mainstays in three years. 


source: Deloitte


Those executives view 5G and Wi-Fi 6 as a force multiplier for other innovative technologies including AI, IoT, cloud, and edge computing. Indeed, 95 percent of respondents believe 5G and Wi-Fi 6 will be important to unleash the value of cloud computing. 


About 83 percent of respondents believe wireless will enable the internet of things, the same percentage that believe edge computing will rely on advanced wireless. 


About 91 percent believe analytics for big data also depend on advanced wireless. The vast majority of enterprises surveyed say they are targeting a blend of scenarios with their adoption of advanced wireless networks.


source: Deloitte


Both indoor and outdoor usage, stationary and mobile devices are expected. Respondents expect to connect employees, machines, and customers. Employee use cases include workplace communications such as messaging and file sharing; device management; collaboration (video, augmented reality, virtual reality, remote workplaces), analytics and virtual network support. 


Machine support for sensors and analytics for machine-generated data also will be key. Autonomous vehicles, robots, unmanned aerial vehicles or delivery vehicles are other machine networking use cases. Asset tracking, safety and assembly processes also are expected to be enabled by 5G and Wi-Fi 6. 


Customer behavior analytics (shopping, buying, price trends, recommendations, location-based apps); security and fraud prevention (biometrics, location checking and blockchain); asset tracking; enhanced customer experience and supply chain efficiencies are expected. 


source: Deloitte


“5G is not just a faster and more reliable access technology, but also the genesis of a new communications network architecture,” Deloitte argues. 


What you might find surprising is that 5G and Wi-Fi 6 are not said to be important because the current networks are failing or troublesome. 


More than 80 percent of respondents are “satisfied” or “extremely satisfied” with a range of traditional performance characteristics of their current wireless networks,


Likewise, 80 percent of respondents are “satisfied” or “extremely satisfied” with the security of their networks and data, ability to control and customize their networks, interoperability, scalability, technology maturity, and ease of deployment. 


Nor is network age an issue. Some 75 percent of respondents say their networks are less than three years old. 


Instead, they are hoping to “unlock competitive advantage and create new avenues for innovation in their operations and offerings.” About 57 percent of respondents believe their company’s current networking infrastructure prevents them from addressing the innovative use cases. 


About 87 percent believe their company can create a significant competitive advantage by leveraging advanced wireless technologies.


It perhaps is mildly surprising that so many enterprises envision investments in 5G and Wi-Fi 6 at a time when the current networks actually are working well and are newly-deployed. 


To be certain, people and organizations buy “solutions to problems” expressed in concrete software, hardware and connectivity products. In this case, there are no apparent failures to counteract. 


The new investments are not being driven by performance issues, coverage, reliability or other network shortcomings, but by hoped-for business advantages the existing networks cannot support.


Sunday, August 16, 2020

Utility Regulation of Broadband?

 It never is entirely clear to me what proponents of regulating broadband “as a utility” have in mind. You might recall that we once regulated telecommunications as a “utility,” with limited market entry and price controls. Over a process of decades, starting in the mid-1980s, U.S. regulators slowly began to loosen those regulations, which originally were put into place as telecom was seen as a “natural monopoly.”

Natural monopolies, it is argued, must be regulated because only one supplier can exist. In such cases, market competition cannot act to restrain predatory behavior. But there is no such consensus anymore. Mobile and fixed communications market have been proven not to be natural monopolies, at least in the U.S. market. 


As often is the case, good intentions can be thwarted by inappropriate policies that actually create the opposite of intended benefits. You might recall that under monopoly regulation, business communication prices were quite high, to subsidize consumer services, which were moderately priced if not characterized by innovation and creativity. 


Prices fell, and usage rose as competition was introduced for long distance services, even before passage of the Telecommunications Act of 1996, which substantially deregulated the fixed network business. A look at AT&T revenues between 2000 and 2013 illustrates the point. 


Revenues from the deregulated fixed networks business dropped about 50 percent. Mobility nearly tripled. Cash flow from fixed network operations was slashed nearly two thirds. Mobility, historically unregulated, boomed and prices fell. As always, the changes have many drivers. Demand changed as consumers preferred new services. 


source: Deloitte


The same happened in other markets, as deregulation lead to lower prices, higher innovation and much-higher usage, with a huge amount of new investment. Global prices have fallen because of competition. 


To be sure, some prices--such as for consumer fixed network voice service--have risen. That is because the actual cost of service cannot be subsidized any longer by profits from long distance service. That being the case, retail prices must reflect actual costs. 


What is never clear to me is why some regulators and policy advocates think matters would be better if we reversed course and returned to monopoly regulation of fixed network services. That would doom a business with declining revenues and slim to no profits to further decline, were prices to be regulated. 


Unable to raise prices, ISPs would logically allow service quality to degrade, reduce costs, continue to downsize employment and slice investment, as profits would be very difficult to earn.


Has Pandemic Really Slowed 5G?

There is a tendency to input causation whenever there is correlation, and permanent changes caused by big--yet transitory--phenomena.We never act as though any single volcanic eruption or hurricane will “forever” change business and life in the affected area. Rather, our assumption is that life will return to normal over a period of months to years.

And yet it is most common to hear arguments that global life and business will never be the same after the Covid-19 pandemic, even as life already is returning to normal levels and behavior in many countries that are further along the recovery curve. 


An analysis of the way 5G is being used to ameliorate pandemic problems might be interpreted as conventional wisdom suggests, namely that the pandemic has slowed down all economic activity and 5G roll outs. 


In fact, the report suggests slowdowns and accelerations both have happened, the World Economic Forum suggesting that fixed wireless efforts have accelerated. One might have made that case before the pandemic, though. 


source: Maximize Market Research


Likewise, some infer and believe that bandwidth consumption patterns are permanently altered by the pandemic. That might be the case, but not for the “because of the pandemic” reason often cited. Every next-generation mobile platform since 2G has resulted in higher mobile data consumption. 


So we should not be surprised to hear that per-user mobile data consumption has increased 300 percent since 5G was commercially launched in South Korea. That is what we should expect. It has almost nothing to do with permanent changes directly caused by the pandemic, though people forced to stay at home from work and school have boosted their video streaming hours. 


That will change as they go back to work and school. 


It is likely more accurate to say that the pandemic and forced stay-at-home rules accelerated some already-occurring changes, ranging from a shift to video streaming from linear TV, more gaming, more work from home and online shopping. Pushing volume “up and to the right” is a permanent change, to be sure, but not a new trend; simply an acceleration of what had already been happening. 


We might ultimately be surprised that many predicted permanent changes did not happen in a way we will be able to capture quantitatively. Though the Great Recession of 2008 caused a massive change in economic activity, it was not “permanent.” Activity more than rebounded. The internet bubble burst of 2001 caused massive asset value changes. But valuations of new and surviving firms rebounded. Smooth out the data by looking at a decade or two worth of data and one can detect no permanent change. 


Neither 5G or other ongoing trends will be immune from that reversion to mean.


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