For many companies, product differentiation is the path to growth and profitability. Yet, product differentiation can be fleeting.
For example, early providers of Apple iPhone devices or the first to deploy 5G networks led to short-lived differentiation for telecommunications providers. So, what’s a company to do when operating in a commodity-based category? Competing on price may lead to a race to the bottom. Companies can invest heavily into advertising in hopes of creating image and reputation differentiation; but those efforts are hard to measure and shouldn’t be done alone. The reality is most turn to a services differentiation strategy. The best commodity market players deliver value across the customer’s value chain. Consistently delivering quality experiences by optimizing customer support-facing functions like call centers, technical support, and personalizing services and offers lead to a stronger value proposition in the market. These commodity leaders increase loyalty while reducing churn, creating more revenue per customer (ARPU).
Telefónica Spain is the leading telecommunications company in Spain by access, including voice, data, television, and internet access services operating under the Movistar and O2 brands. Its mission statement brings services differentiation to bear --“at a time when technology is more present than ever in our lives, we cannot forget that the most important connections are human connections.”
The operator is breaking out of a generic communications category by shifting value creation to the consumer needs for an increasingly digital life. Using cloud, data and analytics, and automation, Telefónica Spain’s customer-centricity is resulting in a double digit increase in Net-Promoter Scores year over year and an industry-leading churn rate well under average.