An analysis of the US reseller market illustrates that enterprise telecoms service providers worldwide need to embrace smarter customer segmentation, says GlobalData, adding that about 1 800 significant resellers in the US account for as much as 20% of the enterprise telecoms market.

Their intensely customer-focused approach means that all service providers need to get smart in their market segmentation.

“Resellers succeed by meeting the needs of their customers,” says Robert Pritchard, principal analyst, Enterprise Technology and Services at GlobalData. “Their portfolios are sourced from companies with whom they compete so they have to be better at putting together customer propositions using the margin between wholesale and retail prices, backed by better customer service and by sourcing a mixture of best-of-breed and best-value products and services.”

With such a laser focus on customers, resellers have effectively achieved hyper-segmentation. While network services providers target the broader enterprise market usually – using off-the-shelf dumb databases of company data such as employee numbers and zip codes – resellers work alongside their network partners to scoop up contracts from businesses who are either too expensive for telcos to serve, or who prefer not to deal with telcos.

This approach theoretically maximises the addressable market for carriers, but they are losing share – and they still have expensive sales operations to pay for at a time of cost optimisation.

“In the mass market, telcos are looking to shift to the digital channel where small businesses can self-select, self-provision, and self-manage their services,” says Pritchard. “At the very top end, the most sophisticated corporations and organisations are well served by highly customised solutions.

“But what to do about enterprises in between?” Pritchard asks. “There are over 1,5-million US companies with 10 to 999 employees whose needs are too complex and varied for the digital channel, but who will not require a bespoke solution. The answer is smart segmentation.”

To start off with, telcos need to segment their markets based on historic and current behaviour by identifying clusters that have similar needs. Research and the accumulated knowledge of sales and marketing teams can be leveraged here but, increasingly, segmentation will be guided by the analysis of huge amounts of customer data amassed over the years – an obvious target for the deployment of AI (artificial intelligence) tools.

“With pressure to reduce the cost of sales teams, network service providers need to develop smarter segmentation of their target enterprise customers to optimise their resources,” says Pritchard. “The correct blend of digital channels, bespoke solutions, and target clusters is vital. The alternative is to focus on networks and services, and continue to see the resellers grow revenues, take market share, and control customer relationships for long-term profitability.”