In our experience, the organization’s leaders need to address several key questions before taking the plunge: When launching a digital attacker makes senseĬhoosing to embark on a digital-attacker strategy in the first place is not a simple decision for a parent operator to make. These units not only can reduce the “cost to serve” per customer by 50 to 70 percent once they reach scale but also consistently deliver a better customer experience, with an NPS that can be as much as 30 to 40 percentage points higher than the incumbent competitors. Most importantly, 70 percent of these gross adds are new to the operator and not cannibalized from legacy parts of the business, with an acquisition cost that is roughly half that of the parent brand. Within four quarters from launch, the typical digital attacker has contributed close to 25 percent of overall gross additional subscribers (gross adds) to the incumbent operator, while showing total profitability that is more than five percentage points higher (exhibit). The nimble, new brands are also proving to be strong growth vehicles for their parent companies. This approach has turned out to be less expensive and disruptive-and in some cases, more successful-than a holistic digital transformation of the core business.
To better satisfy and hold onto their customers, some operators have started to build their own separate digital-native-attacker units. 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.
There is nothing simple about most telcos’ product portfolios, and that complexity is part of their problem.
This article was a collaborative effort by Rehman Adil, Cenk Erdogan, Vikas Gour, Nicolas Maechler, and Karolina Sauer-Sidor, representing views from McKinsey’s Technology, Media & Telecommunications Practice.
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