Lumen Technologies, comprised of several acquired companies, faces the challenge of every large incumbent provider: how to stem legacy service losses.
The service provider has a large customer base in the business segment and is continually shutting down legacy technologies like MPLS to migrate to SD-WAN or another product.
However, the reality is that many of these customers have decided to shut down legacy services and end the relationship with Lumen.
Chris Stansbury, CFO of Lumen, told investors during the Goldman Sachs Communacopia and Technology event that the company had not spent enough time talking to its legacy business services customers.
“As we think about the customer as a customer first, we no longer can be afraid to talk to customers who are on legacy products,” he said. “Customers were divorcing us regularly and leaving Lumen to replace those services with the next-gen services we sell today.”
Stansbury Lumen’s management team has implemented processes to help its sales team consult existing customers on migrating to new services to counteract this issue.
“The management team has done work to stand up processes and wiring the organization to move customers from old technologies to new technologies actively,” he said. “We’re also giving our sales teams the measurements to learn and grow faster with AI tools.”
Driving customer lifetime value
Lumen had brought in a consulting firm to help it better understand why customers were churning to other providers.
Much of the churn inside Lumen’s business segment was mainly seen with VPN services in the middle-sized business market.
Through its analysis, Lumen found out that customers were leaving because they felt the provider wasn’t talking to them enough about their new products and services.
“The staggering thing was that businesses were leaving and going to other companies because we weren’t engaging with them that we had the next-gen solution in-house,” Stansbury said. “Not engaging with the customer and not thinking about lifetime value is where the opportunity comes.”
Lumen is looking to help customers migrate to new services like SD-WAN and leveraging the security capabilities of its Black Lotus Labs. Lumen’s predecessor, Century Link, rebranded its Threat Research Labs as Black Lotus Labs earlier.
Stansbury added that it could help stem churn by driving customers to new services from Black Lotus Labs or optical wavelength services. “We have those next-gen solutions such as Black Lotus Labs and the SASE SD-WAN product, which allow us to bring incremental value that our competitors can’t,” he said. “Resourcing the mid-market team so they have the right tools allows us to reach those customers and engage in those conversations.”
Leveraging public sector’s playbook
One segment where Lumen’s customer approach seems to be paying off is in the public sector.
In February, the service provider won a $223 million contract from the U.S. Defense Information Systems Agency (DISA) to provide services to the U.S. Department of Defense. As part of that contract, Lumen will supply DISA with hybrid-cloud voice and audio-conferencing services that support the Department of Defense (DoD)'s mission inside and outside the U.S.
Stansbury said that Lumen's success with public sector customers like DISA and others is “early evidence” that it can help customers migrate to more efficient technologies.
“We can do it, but we must think about mid-market as we think about the public sector,” he said. “The public sector team has deep customer knowledge and understands what the customer is trying to solve.”
Lumen's solutions to large public sector customers like DISA are complex and have elements of VPN, SD-WAN, SASE, and different security offerings.
“What we are trying to do in large enterprise looks a lot like what we do in the public sector,” Stansbury said. “It’s about that deep understanding of the customer.”
Focus on NaaS
As more business customers migrate to cloud-based services, Lumen has introduced its Network as a Service (NaaS) offering.
One of the first service elements of the NaaS focus is Internet On-Demand.
Through a digital portal or API (Application Program Interface), a business customer can order internet connections to public data centers and port-enabled business locations. Customers can also quickly assign an existing port at a new enterprise building, connecting them to Lumen's network.
When Lumen surveyed 1,000 business customers, the common question was whether it could provide it with a mechanism to scale services up and down as needed quickly.
“Not surprisingly, no one came back and said I love my telecom provider,” Stansbury said. “It was really that they needed fast flexibility in consuming services.”
As Lumen continues to expand its 400G optical wavelength network, it has incorporated NaaS into various network locations. This includes the 240 third-party data centers Lumen works with.
“NaaS is a digital experience where the customer can self-provision network connectivity point to point without needing a truck roll,” Stansbury said. “It allows them to move a large block of data, consume it for some time, and then turn it off, so it’s a much more user-friendly service experience.”
Further, the NaaS capabilities are a gateway to growing next-gen services revenues, including security or its edge computing platform. “It opens up the network consumption model we’re trying to build,” Stansbury said.
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