Digital Marketing Strategy
Situation Analysis
O2 is the trademark used by Telefonica U.K. Limited and one of the largest telecom companies in Europe. It is part of the global telecommunications group Telefónica S.A. with headquarters in Spain and service areas comprising Europe and the Americas (O2, n.d.) O2 is the British department of this larger conglomerate, serving as one of the leading mobile phone service operators in the region. Reiff (2021) places the Telefónica S.A group in the seventh position among Europe’s leading telecom companies. According to the data, the overall net income of the group was on the level of $505.3 million (Reiff, 2021). Over the recent year, the group has seen a significant decline in its financial performance, which correlates with the Covid-19 pandemic and its effect in terms of customer purchasing power decrease (Figure 1). As for the U.K. department of the organization, it currently runs over 450 stores, providing approximately 6.700 jobs (O2, 2021). Overall, while the company ranks among the leaders of its industry, the situation requires additional improvements in order for Telefónica to retain its position and enable further development.
Considerable efforts are required to withstand the growing competition in this innovative and highly changeable market of telecommunications in Europe. According to the information presented by Reiff (2021), the range of rivals for O2 is quite broad, comprising the renowned leaders of the industry, such as Virgin Mobile, Vodafone, and E.E. The European Commission (2020) promotes the importance of a single telecom market across the continent, meaning that the global competition is only going to increase. This tendency is reinforced by the E.U. General Court’s ruling to overturn the prior decision blocking the merger between O2 and Three Mobile (Wave of consolidation, 2020). In such an environment, additional emphasis is required on customer attraction and retention through effective communication (Asimakopoulos & Whalley, 2017). O2 maintains an active social media presence, but it is limited to common platforms, possessing limited functionality for proper customer management. Therefore, new strategies of customer management will allow the company to remain relevant.
Objectives and Strategies
First of all, Telefónica U.K. needs to find new effective ways of expanding its customer base. The aforementioned movement toward consolidation of the European market entails both risks and opportunities in this regard. While the competition is expected to grow, the range of potential clients will increase, as well. Accordingly, O2 should find an effective way of becoming a valuable element of the global Telefónica S.A framework, appealing to the international audience. In order to attain this objective, the organization should be able to utilize modern digital solutions relevant to the new, expanded market (Venkatesan, 2017). Social media and e-commerce are highly effective instruments, but major companies should aim for more sophisticated solutions, as well (Chada, 2020). A new electronic platform is required for a facilitated presentation of the company and its advantages, providing easier ways for potential customers to experience the benefits of joining O2.
Next, the existing clientele should also be retained, which will be more difficult in a consolidated European market. Current customers of O2 may be tempted by modern solutions proposed by the competitors, the range of whom will expand along with the industry. In fact, proper customer retention management is said to be the crucial factor determining the brand’s value (Chahal and Bala, 2017). The client base needs to be developed through the implementation of new services, which are enabled by the technological progress of the 21st century. Experts also propose a highly personalized approach to customer retention management. Mahmoud (2019) investigates the impact of gender on customer base development, concluding that it is, indeed, an important factor. Babu and Masthanvali (2017) also confirm that the current market tendencies demand a transition from detached strategies to personalized customer management. Therefore, O2 needs to understand its diverse customer base deeply and utilize this knowledge through viable digital solutions.
Finally, customer engagement is another critical component, defining the image of a brand, as well as its financial performance. While it is important to acquire new clients, it is their experience with the product, which makes an even stronger impact. Negative reviews, which have become more frequent in the age of social media, generate publicity damaging the image of a company (Lis and Fischer, 2020). In this regard, existing research also points toward the importance of bespoke practices. Bleier, De Keyser, and Verleye (2017) discuss customization and personalization of a company’s marketing mix as a priority in the 21st century. Each customer wants to feel special for the company, in which they put their trust, which is natural. Therefore, another objective for O2 will be to integrate digital customization tools into its products, allowing clients to benefit from a personalized experience throughout the engagement cycle.
The aforementioned objectives form the core priorities for the stable development of Telefónica U.K. in the 21st-century competitive environment. In order to respond to emerging and existing challenges, the company’s management should devise and implement effective customer management strategies. For the acquisition stage, global expertise and cultural awareness are required for the expansion into new markets. An electronic platform is required, allowing potential customers to provide sufficient information in terms of their purchasing behavior in the new markets (Gupta, Pansari, and Kumar, 2018). Further promotion is possible through influence marketing, which is adapted to the audience and successfully implemented, for example, by H&M (13 Winning Customer Acquisition Examples, 2017). However, this data should be properly analyzed and utilized in production and marketing. Therefore, an integrated CRM system would be able to systemize and categorize the information, which would make it possible for O2 analytics to be precise in customer behavior evaluation.
Customer Service Metrics Analysis
Net Promoter Score
Integrating a CRM system into the global operation of O2 will be the first step, which should be developed further by the accurate analysis of data through relevant metrics. First, the Net Promoter Score (NPS) is instrumental in tracking the proficiency of customer retention (Net Promoter Score, n.d.). It is a golden standard metric, showing high likely a customer is to promote a product to their acquaintances (What is NPS? n.d.) O2 should track the fluctuations of this parameter after the implementation of new strategies in order to evaluate their impact on customer retention.
Customer Lifetime Value (CLV)
Customer Lifetime Value is a metric of paramount importance in the corporate setting. Customer Satisfaction Score (CSAT). It shows exactly how much a client is worth to the company throughout the engagement cycle (What is NPS? n.d.). CLV will allow O2 to evaluate the effectiveness of its general strategy and identify new profit growth points. The presentation of this metric in the integrated CRM enables the segmentation of customers based on their worth to the company (Kellett, 2020). This way, O2 will be able to optimize its budget, knowing how much it can safely spend on customer acquisition.
Customer Retention Rate (CRR)
Evidently, each organization wants to know its exact customer retention rate, and an integrated CRM is instrumental for this purpose. CRR shows the percentage of clients, which have remained loyal to the company across a specific timeframe (Definition of customer retention rate, n.d.) O2 will be able to track any changes in the customer base range, thoroughly analyzing the impact of recent decisions (What is customer retention?, n.d.). This metric is tracked easily within an integrated CRM space, in which it is possible to categorize customers by the level of their current engagement with the company.
Customer Satisfaction Score (CSAT)
In the 21st century, customer satisfaction has become the key point of reference, determining the success of an enterprise. Nicastro (2021) writes that the focus on this aspect has increased even further in the fallout of the Covid-19 pandemic, which damaged the purchasing power of the population. Accordingly, CSAT is the crucial metric calculated by an integrated CRM system, showing whether an organization is capable of meeting the expectations of clients (What is CSAT?, n.d.). In the case of O2, the figures will provide additional insight into the changes in other metrics, such as CLV and CRR.
First Contact Resolution (FCR)
Finally, there is another important metric, which can be effectively tracked by an integrated CRM system. First Contact Resolution provides critical information for the management, as it shows whether any troubles with customer experience are resolved efficiently (Evolve I.P., 2018). Most interactions with customer support are unpleasant for people, as they are associated with problems by default. Ratinham (2018) states that modern technological solutions can help track this metric and respond to any emerging issues. Therefore, FCR analysis will help O2 improve its customer experience, positively influencing all stages of the cycle.
Conclusions
In conclusion, the business landscape of the 21st century has become highly changeable due to the increasing globalization rates and rapid technological progress. A similar tendency of market consolidation is observed in the European telecom industry, as well. Telefónica S.A, in general, and its U.K. subsidiary O2, in particular, face increasing competition from global players. In this regard, the resources and assets are to be optimized, as well, in regards to customer base management. This aspect is crucial in the contemporary environment with its increasing emphasis on customer experience. An integrated CRM space will be a crucial instrument in this regard, allowing O2 to track relevant metrics throughout the client engagement cycle. All important data will be presented in a convenient form, and the management will able to distinguish significant patterns. This way, the company will be able to evaluate the impact of its strategies both in the short- and long-term. The correct identification of growth points will positively affect customer experience, as O2 will have an opportunity to detect flaws in its policies in advance. Overall, an integrated CRM has the capacity to help Telefónica ensure its competitive advantage and withstand the increasing competition in the European telecom industry.
Reference List
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