Running a business in this digital era is truly challenging. And in light of this, Joerg Niessing shares the three chief takeaways for digital players about Telenor Banka’s story and importantly, discusses that customer experience should be at the heart of every digital transformation.
Adapting to the ongoing digitisation of the economy, and of society in general, is arguably the most challenging transformation every business is currently facing. Digital tools and trends are invading the business environment faster than companies can react, provoking significant changes in the way we communicate, consume, work, buy and sell.
The scale and pace of the change brought by “digital” is matched only by large-scale industrial revolutions that leveraged coal or electricity and energised entire industries by removing fundamental constraints under which manufacturing operated, leading to unprecedented increases in productivity and lower costs. Digital media and application platforms are now driving a new revolution, creating richer dynamics between people and disrupting business. But where the electricity revolution empowered and enriched businesses rather than directly individuals, the digital revolution has the potential to empower everybody. Pre-digital revolution, the function of companies was to produce, the function of media was to broadcast and consumers consumed. Digital tools have broken the monopoly of the media, enabling everyone to become a publisher and in some sectors they’ve broken the hold of companies on their industries, such as taxis and hotels. Companies no longer control their own narrative nor do they control the provision of goods and services.
All these changes do not mean traditional companies are doomed to fail. Companies who embrace the vision and customer centricity necessary to impress consumers across every channel can in fact maintain and even strengthen their position, as examples from L’Oréal, Red Bull, to Maersk or GE show. Although digital technologies are changing the rules of every industry one of the most important “laws in business” has not changed at all: customer centricity and customer orientation. At the end you can only create value and drive profitable growth if you understand not only what customers “need” but also what customers really “want”. However, creating customer value and building long-term relationships are even more challenging in a digital world where customers (a) expect more, (b) are well-informed, (c) trust their peers, (d) have more choices and (e) have a voice.
In today’s “Age of the Customer”, digital technologies and customer centricity have to go hand-in-hand: new channels and touchpoints, new devices, diverse data, multi-dimensional customers, new competitors, social networks, new ways of interacting with customers and other stakeholders. Today, every business is, in part, a digital business and successful companies embrace and deploy digitisation in right places at the right time and are up to 30% more profitable than digital beginners.
A true digital transformation confers lasting advantage by revolutionising the entire customer experience across all digital touchpoints. The customer experience should be at the heart of every digital transformation. Steering the digital transformation by only transforming organisation, processes, and technology without putting the customer at the centre of your digital strategy simply does not work. In several studies “improving the digital customer experience” was ranked as the top strategic priority by senior executives. Technology and organisational change, though the backbone of every digital initiatives, is not as important indicating that digital transformation is a customer-driven business transformation initiative rather than a strictly technical or organisational challenge. With customers in the driver’s seat of their interactions with brands, businesses must create positive and relevant customer experiences across all channels and touchpoints.
One company that illustrates this very well is Telenor Banka, Serbia’s first purely mobile bank, which opened in September 2014. Its name alone presents a uniquely 21-century paradox: The Telenor Group is not an established finance player but a telecoms firm majority-owned by the Norwegian government. It took Telenor just 9 months to build its mobile bank and by the end of its first year in the market, the service had welcomed almost 140,000 customers in a country of just seven million people.
Telenor Banka’s triumph was only partly to do with technology. The same service, executed and marketed differently, could easily have failed in Serbia. Telenor deserves credit for a series of shrewd yet nervy marketing decisions, all crafted with the customer journey top-of-mind.
Telenor perceived that the banking sector in Serbia was ripe for a shakeup. The top five Serbian banks absorbed only 48 percent of market share. Customer loyalty was lacking for good reason: Banking in Serbia was infamously inconvenient, marked by out-of-the-way branches, hours-long queues, and mountains of paperwork. Though galling to everyone, this was especially out of step with Serbia’s rising urban professional class, who were growing increasingly accustomed to living life at iPhone speed.
Three Lessons
Telenor Banka’s story offers three chief takeaways for other digital players:
1. Niche trumps average. Telenor knew from the outset that not all Serbians were ready for mobile banking. In a country so small, aiming for mass appeal would seem to be the common-sense approach. This would have entailed a more compromised service, e.g. a conventional retail bank augmented by a strong mobile presence rather than a “pure mobile” bank with no physical branches. Instead, Telenor targeted a small slice of the population, those who would be most likely to love the service: the most tech-savvy, urbane, and leisure-loving Serbians rather than more family– and tradition-oriented rural dwellers. As Telenor predicted, these customers also made ideal brand ambassadors, quickly spreading the word on social media to their peers. Had the service been less innovative, it probably wouldn’t have resonated as strongly with this core group. The takeaway: Segment your customers, sell to fans, and let the fans do the talking.
I often tell students that technological developments such as e-commerce and mobile apps have created a space of “infinite niches”. There are endless opportunities to woo even tiny market segments with a “best-ever” product designed just for them. Deep-but-narrow has often become a more viable strategy than shallow-but-broad, especially when engaging with online communities.
For Telenor, concentrating on isolated segments of a diverse population also made some crucial decisions a lot simpler. For example, the company knew its target audience had positive brand associations with Telenor as a safe and reliable service provider – so it branded the mobile bank as a Telenor service. By keeping the target audience fairly small, Telenor minimised the likelihood of negative brand transfer if the initiative failed.
2. Market lifestyle, not technology. Telenor Banka’s first round of TV commercials did not emphasise the app. Rather, they showcased customers enjoying leisure time made possible by mobile banking. “Visit friends, not branches”, enthused one ad. The tagline “Simple. Safe. Anywhere.” crystallised the message that opening an account at Telenor Banka would help one lead a freer, more enjoyable life. The ads left it up to customers to find out more about the logistics and material benefits of doing so.
With well-executed emotion-based marketing, Telenor Banka built strong brand equity in a very short time, with a Net Promoter Score topping 67 percent four months post-launch. The company understood that brands are even more important in the digital world, because customers (a) expect more, (b) are well-informed, (c) trust their peers, (d) have more choices and (e) have a voice and (f) co-build brands.
3. Simplify the approach. Telenor took pains to make its product as simple and transparent as possible. A two-tiered pricing structure made the process of opening a bank account as easy as subscribing to Spotify. Emphasising ease-of-use offered Serbians an unprecedented banking experience, prompting consumer comments such as: “I opened an account at Telenor Banka in seven minutes while running on a track” and “Smells like a revolution”.
If you are leading a digital transformation of the customer experience you have to simplify the business. For example, the core purpose of traditional retail banks is to make it easier for customers to manage their financial lives. Instead, many banks still sit behind regulatory walls and make their processes complex for their customers. In today’s digital world, customers want a consistent and seamless experience across all touchpoints. The moment complexity arises, they start looking for alternatives.
The Truth About Digitisation
It wasn’t technological superiority alone that facilitated Telenor Banka’s blockbuster entrance into the Serbian market. Everything about the service was carefully designed to provide an experience diametrically opposed to the headaches of dealing with Serbian banks. Knowing what customers needed was the first step. Focusing on earned media rather than paid media as the main driver of brand loyalty, and targeting exactly the right customer segment to make that happen, made Telenor Banka a disruptive innovator.
This supports my contention that steering the digital transformation by transforming organisation, processes, and technology, devising new business models, etc. without putting the customer at the centre of your digital strategy simply does not work. If you don’t make providing for your customers your top priority, you’re inviting competition from anywhere and everywhere. Being successful in a digital world requires both learning about new skillsets about how to successfully leverage new platforms, but fundamentally, it requires going back to the grass roots of business: the customer, and understand how the digital revolution has transformed customer behaviour. Building on these insights, companies can put back customers at the front and centre of the strategy and design an experience that will turn each one into an influencer, pulling customer trends into decision-making and product creation.
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About the Author
Joerg Niessing is an Affiliate Professor of Marketing at INSEAD and the Programme Director of Leading Digital Marketing Strategy, one of INSEAD’s executive development programmes. Niessing has over 13 years of consulting experience building leading brands and delivering profitable growth through distinctive customer insights and data analytics. His expertise includes marketing and branding strategy, marketing analytics, digital and social media marketing, and customer relationship management for different industries.
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