Telcos Must Evolve Beyond Boomer-Centric Business Models to Stay Relevant

But while the digital landscape has evolved drastically, many telcos remain stubbornly anchored in the past, crafting offers and services that cater predominantly to Baby Boomers. This conservative approach leaves a gaping disconnect between what modern consumers expect and what is available to them. We are three generations beyond Boomers, and it’s high time telcos truly cater to the needs of Millennials, Gen Z, and even Gen Alpha. Transforming the business model to meet the changing customer needs and making some bold choices is not an option anymore — it’s a necessity.

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Demographics and Buyer's Motivation

‍Demographics play a crucial role in shaping buyer behavior. Digital Natives—Millennials born between 1981 and 1996—grew up with technology and tend to naturally adopt a digital purchasing mindset. Digital Immigrants, or Gen-X’ers born between 1965 and 1980, witnessed the digital transformation and have largely embraced it. In contrast, Boomers and those older, born before 1965, often struggle with the online experience as late adopters of technology. Naturally, Buyer motivation varies by generation. According to McKinsey & Company, each generation's consumer behavior is shaped by the environment they grew up in.  Baby Boomers often express their ideals through consumption, Gen X seeks to elevate their status, Millennials are driven by the pursuit of experiences, and Gen Z values authenticity. The COVID-19 pandemic further accelerated shifts in buying behavior. Accenture surveyed 25,000 consumers across 22 countries and 14 industries and found that the pandemic caused 50% of consumers to rethink their purpose and reevaluate their life priorities, leading to a group called the Reimagined, who are more inclined to buy digitally. These Reimagined consumers expect companies to understand their needs during disruptions, and they value factors like Service, Trust, and Health over traditional motivations like price and quality, which are more significant for in-store shoppers. A digital, customer-focused experience is essential to capturing this evolving market.

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Telecom Consumers' Preferences

Like other changes that impact consumer buying behavior, the telecom industry has had particular impacts of its own. The preferences of telecom customers vary significantly between baby boomers and digital natives, such as Gen Z, as outlined in the EY report on telecom retail evolution.

Preferred Channel
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The Boomer group tends to favor traditional methods of interaction. They are more comfortable with in-person visits to telecom retail stores and prefer direct human interaction when making purchases or seeking customer support. In contrast, Digital Natives prefer online channels for most interactions due to the ease and convenience. While they grew up in the digital age and are comfortable with online shopping and self-service tools, they still value the in-store experience, particularly for purchasing electronics. This demographic expects a seamless, omnichannel experience that integrates the digital and physical worlds, often using multiple channels throughout their customer journey.

Experience Expectations
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Boomers expect a straightforward and reliable customer experience, with an emphasis on personalized service through traditional channels. Their preference for physical stores often stems from a need for trust and reassurance, especially when dealing with complex or high-value purchases. Digital Natives expect highly personalized, connected experiences that leverage technology. They value community, sustainability, and affordability and are attracted to retail experiences that reflect these values. Even though they are comfortable with digital interactions, they expect innovative and engaging in-store experiences, such as those enhanced by AR/VR technologies.

‍Adoption of Technology  
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Boomers may be slower to adopt new technologies such as self-service kiosks or mobile apps, preferring instead to stick with tried-and-true methods. This group may find the rapid technological changes challenging and may require more support and education to adopt new tools. Digital Natives are quick to adopt new technologies and expect telecom retailers to offer cutting-edge digital solutions. They are more likely to engage with brands that offer innovative, tech-driven experiences and are more open to using AI, automation, and immersive technologies like AR/VR in their shopping experience.

‍The Buying Power  
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There is a difference in how much consumers are willing to spend for their telecom services, and what truly motivates their willingness to spend.  Boomers tend to question less their often costly contracts than the digital natives, who are likely to shop around regularly for more value for their money and the latest innovative services.

‍Ethical Consumption
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Ethical consumption behaviors differ significantly across generations. Boomers tend to focus on ethical consumption but may prioritize convenience and price over deep ethical scrutiny. In contrast, Gen Z, as true digital natives, are highly informed and expect brands to align with their values consistently. They are quick to research and hold brands accountable for any discrepancies between their messaging and actions. This generation also favors authenticity and transparency, often trusting smaller brands over larger corporations, which they view with more skepticism. For telcos, this generational shift presents both challenges and opportunities to engage more ethically and transparently with their consumers. A great example is Bouygues Telecom’s digital brand Source, the first brand in France and likely in Europe promoting eco-sobriety and social responsibility.

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What This Means For Telecom Operators

Telecom operators are torn in different directions, while recognizing that one shoe will not fit all their customers, choices will need to be made to maximize return on investment, while staying competitive. Discouraged by past multi-year costly IT transformation projects without justifiable returns on investment, many telcos today are reluctant to adopt a business model for the changing customer. Furthermore, Telecom providers need to cater to these different preferences by offering a hybrid approach that combines personalized in-store experiences for boomers with seamless, tech-driven omnichannel experiences for digital natives​.
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What we can state is that telecom operators:
1. Cannot afford to ignore any customer generation
2. Doing nothing today is the path to market irrelevance        
3. Must transform to an agile business model, cost-effectively

The good news is that the choices are here to explore:

Multi-brand strategy
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While in the past telecom operators were limited by technology and had to build one offer that fits all, needing endless costly IT projects each time they had to innovate their offer, today technology offers much more flexible solutions. Telecom operators indeed today can work with innovative solutions on the market that enable fast launch of offers and multi-brand strategies, better tailored to different customer groups, serving their loyal customers still, while winning new customers with very differing needs and usage habits.

Riding the eSIM Wave and Adopting Digital-First
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eSIM technology represents a monumental shift in the telecom landscape. As physical SIM cards become relics of the past, eSIM adoption is skyrocketing and eSIM technology becomes standard in lower-cost smartphones, telco operators can increasingly launch targeted second brands. According to GSMA, 2021 saw 850 million eSIM-based smartphone connections. By 2025 it estimates that will approach 3.4 billion with a low adoption model. By 2030 they expect to see 6.7 billion connections (76% of all smartphone connections). In 2022 Apple created the first big wave of eSIM growth when they launched the iPhone 14 as an eSIM-only device.  This boosted consumer awareness and forced eSIM adoption beyond the early adopter community. A second wave is now starting to occur in the U.S. and Europe as travelers seek to reduce increasingly expensive roaming costs using dual eSIM-enabled devices.  Juniper Research projects travel eSIM users to grow 440% globally over the next 5 years.

Focus on Apps
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While global app stores dominate the landscape, there is still an opportunity to guide consumers to your company apps through bundling and guiding the customer journey.

Monetize Online Preferences
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“Online sales of telecom services” accounted for 20% of sales but 39% of consumers said they preferred to shop online rather than in stores.  In other countries – Germany (56%) and Norway (53%) they prefer more than half make their telecom purchases online.

Operator shops
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63% of those who shop in stores prefer operator-owned shops over indirect retailers.  In those offline stores, reduced wait times, qualified sales agents, strong customer service, and the ability to touch and feel handsets were all cited by a majority of respondents. Less important are omnichannel integration, store design, and location.  By better segmenting their customers, and offering online and physical experiences to the right customer segment, the quality of the in-shop service can also increase cost-effectively.

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Can Telecom Operators Have The Best Of Both Worlds?

Telecom operators value the loyalty of their boomers’ customers, but they must set for the future, which is closely linked to investing in new technology. While upgrading legacy software and hardware can often require years-long focus, staffing reallocations, and monetary investment, there are other alternatives that nimble operators can leverage to move quickly.

Launching a digital-only second brand that connects with a targeted audience, whether that is prospective customers tired of high-cost plans, travelers who are done with expensive roaming charges, or community-focused groups like gamers, environmentally conscious consumers, or music fans, can be a successful brand launch option.  Here we explore some alternatives such as Greenfield deployment or launching a Digital attacker brand

Greenfield Deployment

For some companies, a greenfield implementation is the right call.  This may be where you don’t have a legacy brownfield business to compete with for attention and resources.  This includes startups and smaller, more nimble market entrants who see an opportunity to go digital right away.In that case, you can leverage the benefits of the continued evolution of the customer base towards the ubiquity of digital and not be held back by a hybrid company shop/digital model.But many larger telcos, or companies who have been in business for decades or longer, do not have the luxury of jettisoning their core business approach to shift entirely to digital.  They have too many complex systems, processes, and technologies that hold them back from jumping all-in to 100% digital.That’s where some telcos have chosen another alternative…

Digital Attacker

For those unable to completely overhaul their existing operations, the digital attacker model offers a pragmatic alternative. This strategy involves launching separate digital brands that operate independently from the parent company. These brands can quickly adapt to market changes, offering flexible, innovative solutions that attract tech-savvy consumers.

A McKinsey report explores this model as well as when and how it might be a potential opportunity for telco operators. ”There is nothing simple about most telcos’ product portfolios, and that complexity is part of their problem. What started as a broad range of plans for a diverse customer base has evolved into a dizzying array of options that are difficult to understand and navigate, damaging the customer experience, especially in comparison with that offered by ascendant digital-native alternatives. Before the advent of the smartphone, you either went into a physical store or placed an order by phone.  The internet changed that, and more people started ordering online.”

‍Telcos who are taking the digital attacker approach are finding it is less expensive, less disruptive, and more successful than a wholesale changeover in their core business.  Within a year of launch they are finding the digital attacker contributes:
· a 25% increase in gross subscriber adds and a 5% bump in total profitability.
· 23% share of new customers
· 49% of what it costs the parent company to acquire a customer
· 25% of gross adds (70% new to the operator and not cannibalized from the legacy business)
· 50-70% reduction in “cost-to-serve”
· NPS 30-40% higher than incumbent competitors

Many telecom operators face the urgent challenge of adapting to evolving market conditions but often struggle with implementing a full-scale organizational transformation. Establishing distinct digital attacker brands offers a strategic alternative, enabling operators to quickly meet the shifting demands of their customers. As these digital brands gain momentum, they can emerge as the primary growth engine for the parent company, driving innovation and market expansion.

The Digital Attacker approach can be seen as an insurance policy for the future. It allows existing customers to continue enjoying the service they’re accustomed to without disruption while introducing a cost-effective, modern platform. This platform not only caters to customers who prefer a digital-first experience but also serves as a safe space for traditional telecom operators to innovate and test new business models. This way, they can explore new opportunities without risking disruption to their loyal customer base.  Discover further the success story of Yoodo, the first digital telco in Malaysia that won the hearts of the digitally savvy youth.

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About triPica

triPica is an innovative SaaS subscription and billing platform that empowers telcos and utilities to reinvent their business models. With a focus on delivering personalized user journeys and maximizing resource efficiency, triPica leverages advanced technology to drive innovation and sustainability in the telecom industry.

For more information about triPica and how it can support your digital transformation journey, visit www.tripica.com.

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