What is a Marketplace?
Although a hot topic in the telecommunications space, marketplaces are surprisingly hard to define.
At their core, they function much like branded marketplaces like Amazon or eBay. But the more people you ask, the more disagreement you encounter.
A 2021 survey conducted by TM Forum for their report Exploring marketplaces for software and services found the following split in opinion among CSP respondents:
of respondents define it as a simple B2B2X portal selling their own services and those of partners.
of other respondents instead define it as a neutral, third-party platform business
Here is our definition:
Marketplaces enable carriers to sell SaaS, IaaS, and XaaS products many times without having to set up individual commercial relationships, while also enabling them to update, change or remove SKUs with minimal operational expenditure.
This permits customers to innovate and respond to market demands quickly without large IT overheads.
To learn more about what a marketplace is, and how to build a successful one, download this complimentary guide, published in collaboration with TM Forum.
Why are they so important now?
The numbers are compelling: With 130% YoY growth in collective sales in marketplaces in 2021, accounting for $56 billion in overall revenue, digital marketplaces are undoubtedly a vital area for CSPs to create new digital offerings for business growth.
But why is this?
With the telco industry reaching market saturation when it comes to mere connectivity and communications services (good luck finding a significant pool of people who still need internet), CSPs are having to expand and diversify their offerings to stay relevant, and steal market share.
To achieve this, many are beginning to target SMEs with B2B marketplaces that include a robust ecosystem of partners that can collaborate around sustainable, continuously improving solutions.
With the number of applications and devices rising quickly thanks to the likes of IoT and 5G, carriers need to start thinking how to partner with all of these quickly and easily.
Telcos are now in a position where they can go beyond connectivity and partners, and get access to an even larger customer base. Through developing a marketplace platform, telcos are able to leverage their existing customer base to offer connectivity solutions, bundled products and services and much more.
78% of CSPs cite keeping control of the customer as the top driver for developing a marketplace
The main point of attraction of marketplaces is its simplicity, removing any heavy lifting, and through creating a digital ecosystem that meets the needs of customers, CSPs are able to control their relationships with consumers
Why should CSPs care about marketplaces?
We have been exploring the intricacies of B2B marketplaces in the telecommunications space with partners CloudBlue in a series of webinars, and conclude that marketplaces allow businesses to expand quickly and accelerate growth.
Vish Kumar, VP Industry Solutions, CloudSense
Darek Tasak, Global Head of Strategy & Commercial Operations, CloudBlue
Watch our full webinar "What is a Marketplace?" on demand.
Marketplaces are a complex topic
Marketplace ecosystems are helping businesses remain competitive and accelerate growth, but business still face significant challenges of how to stay ahead of competition and offer new solutions quickly.
The digital transformation opportunity is forecasted to exceed $10 trillion spend over a five year period
“Everything-as-a-service” business models will represent a major telecom B2B opportunity: a $400 bn+ market by 2025
Source: Allied Market Research
of telcos are pressured to adopt digital transformation within their companies to get a piece of the action
Telcos believe that there is a lack of internal skills when it comes to sales processes, operational and technical capabilities. There is a naive thought process that sales teams need to be equipped with new offerings and products to enhance revenue and reduce churn. Due to the complex nature of digital products, the average sales rep is unable to understand, answer technical questions and translate its value effectively.
46% of executives feel that the high costs of transformation inhibits them. Telcos have experience in provisioning telco services, but lack knowledge provisioning services from third party providers. Working with back-end systems and APIs is both time consuming and costly. Costs rise further with telcos already trying to close resource gaps, leaving the current architecture and IT teams under pressure.
Integration with Existing Channels
A major issue for telcos is how to integrate new digital products and offerings with existing technology and systems. Whilst this may seem like a simple task, telcos are unable to completely abandon their legacy systems given its complex and intertwined nature.
Establishing a Workable ROI
How telcos make marketplaces available to their customers is a challenge they have to overcome. Telcos are faced with their customers demanding they solve all of their issues instantly and offer them flexible solutions. Telcos need to determine how to bring these demands to life using their IT stack, whilst juggling different applications and suppliers.
To learn about how to solve these challenges watch our webinar "How to build a successful and scalable marketplace strategy in the XaaS economy" on demand now.
An award winning CPQ and Order Management solution
How CloudSense can help
Marketplaces promise to be a powerful avenue towards revenue growth for CSPs, as well as allowing them to broaden the scope of their relevance in the modern digital landscape. In order to capitalize on this trend, CSPs need to keep the overall customer experience at the forefront of their operational marketplace strategies.
Working within a marketplace allows telcos to pick and choose the solutions they want, but then also work through relationships and price points that they want to show to their customers. 63% say that technology is the most important thing to get right in an ecosystem. As such, combining marketplaces with a CPQ provider, allows telcos to bundle things in the right way.
CloudSense has partnered with CloudBlue, to create a platform that allows CSPs to bundle seamlessly, creating bundles that are relevant, as well as creating a unified place where products can be sold, using one billing system.
Vish Kumar, VP Industry Solutions, CloudSense
A CPQ platform will play a critical role in enabling your vision. CloudSense’s CPQ platform handles the complexity of managing a large, fast evolving portfolio and helps guide your customers through a smooth buying journey. With the capacity to scale and integrate easily with your delivery systems, CloudSense’s robust CPQ ensures that customers are confident about increasing their use of your most cost-effective channel.
Download our Spotlight on Marketplaces, created in collaboration with Infosys, for a round up of everything you need to know to succeed in a marketplace ecosystem.
Glossary of terms
What does CSP stand for?
CSP is the acronym for Communications Service Provider.
CSPs provide telecommunications, media, entertainment and other services over the network infrastructure, transporting information electronically.
You can download our free definitive guide for modern communications service providers here.
NPS (Net Promoter Score)
NPS stands for Net Promoter Score, the benchmark used in Telecommunications and other industries to measure how likely customers are to recommend your business to a friend.
NPS measures customer experience by asking a series of questions that should be answered on a scale of 1-10.
For example, how likely is it you would recommend [company] to a friend?
ARPU stands for Average Revenue Per User.
Revenue generated per user is a useful way for companies to track growth.
Calculation: Total revenue ÷ Number of subscribers.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.
EBITDA is a widely used measure of core corporate profitability.
Calculation: Interest + Tax + Depreciation + Amortization Expenses + Net Income
Churn rate is a measure of the number of customers leaving during a given period.
It can also refer to the amount of revenue as a result.