Be More Than a Bit Pipe 

Mobile Communications as a Commodity
 
When I started in business, I was equipped with a calling card to keep in touch with the office whilst I was travelling.   To make a call back to the office meant that I first had to find somewhere to park the car (not always easy, especially in London),  and find a phone box that was both empty and in working order (even more difficult).   Making the call was no easier as I stood in the phone box with my notes balanced on the shelf.   I summer in meant that I roasted inside the closed box and in winter I froze as the wind whistled through broken panes.

The invention of mobile telephony was a great boon for me and for thousands like me.   It made a great improvement for business effectiveness and efficiency and I was prepared to pay for the privilege.   For most businesses it was a “no-brainer” and high growth and profits followed for the operators.

 

But now mobile telephony is becoming a commodity.   Most subscribers are only dimly aware of any difference at all between the networks.    Developments such as number portability also mean the traditional barriers that tended to prevent subscribers switching easily between suppliers have been eroded and prices have been pushed down.    To make things worse, there has been no compensation for the lower prices in terms of increased subscriber usage.      As a result both ARPU and profit has drifted downwards.

 

Mobile data held out the promise of increased revenue for a while.    However, now the major benefit seems to be reaped by the application developers and application store providers.    Operators are increasingly being relegated to becoming a “bit pipe”.

A Cool (ish) Response
One common operator response to this commoditisation has been to invest heavily in “branding”. Unfortunately though, in many cases, such exercises have been about trying to persuade users that the services on offer are better than they actually are.
 
Campaigns usually involve saturation advertising, sports sponsorship and “cool” design, with endorsements by pop singers, film stars and other ‘celebs’ as other popular methods.    Some of these campaigns have been highly original and have certainly attracted attention.   However, mobile phone subscribers are highly sophisticated, and often cynical, consumers and the evidence is that, although branding exercises can call attention to new players in the market, they do little to increase long term usage or to build customer loyalty.

 

The reality is that, in the long term, the promotion of “cool” just isn’t good enough.   Like an ice lolly in the sun, it simply can’t last.   Fashion is, by its nature a transitory, ephemeral, fast-moving and fickle thing.   In other words, probably not the wagon to which a serious company, in it for the long-term, would want, or ought, to hitch its star.

 

The point is that “branding” exercises can be useful, but only as part of a cogent strategic approach to the market.   The brand is the promise and once people are persuaded to try out a service they must discover substance behind the marketing blandishments.   They must gain some genuine advantage.   If there isn’t any, they are going to look for it elsewhere.

Sources of Advantage
The $64,000 question of course is how is such advantage to be delivered?   After all, most subscribers will not appreciate differences in network quality between one operator and another.   The plain fact is that many such differences are so subtle that, in terms of consumer experience, the great majority of users simply wouldn’t be able to differentiate between them.

Meanwhile, the old notion of competing on price terms is a sure-fire recipe for long-term disaster.   In the end, pricing wars are always won by the company with the lowest costs and deepest pockets.

 

However, little things can mean a lot.   In fact, they can make all the difference between winning or losing a subscriber.    They can help to justify a price premium over competitors.   However, these “little things” are often personal, and what’s important to one customer may well be of complete disinterest to another.

Confused of Cheltenham
Let me give you a ‘for example’.   Fairly recently I found myself having, for the very first time, to buy a mobile phone for personal use.    Please, though, bear in mind that I am experienced in the ways of the technology as I have been using business mobiles since the early 1990s, when they first became light enough to lift.

It was a Saturday morning as I strode purposefully along Cheltenham high street looking to get myself all mobiled-up.   On entering the first of several phone shops on that fashionable thoroughfare, I was confronted by walls festooned floor to ceiling with different handsets and adverts for different tariff packages.   In ten minutes I was confused and after fifteen I was terminally baffled. I had absolutely no idea which package would be right for me and neither did the shop’s staff, who were a) not particularly helpful and, b) apparently even more confused about the choices on offer than I was.
 
Not surprisingly I voted with my feet and walked out – without a phone.

 

Now that was a single sales opportunity lost.   Everyday, that scenario is repeated all over the place and countless unknown multiples of sales opportunities go down the pan.    People will not buy when they are confused, it’s a simple as that.

It’s a truism I know, but modern life is very complex and everyone has a lot to cope with.    Everyone has many, and multiplying, calls on their time.   On a day-to-day basis, it means that unless something is of earth-shattering importance to us we are very unlikely to spend a lot of time and effort in understanding it.   What is needed are product solutions that are clearly tailored for us as individuals.

Divide and Conquer
To be able to provide that, it is necessary to first divide customers into different groups with different characteristics.   Then to provide each group with the services and applications that they want and will value.   This may well mean constructing a bundle of services and branding identity for each group.
 
For example, we could launch a package for children, a group of first time users of the network.   The decision to purchase is going to be made by their parents so, the sensible thing is to focus on the parents’ concerns.    Knowing that, we might therefore launch a package where the parents were copied with any SMS message sent to the child’s phone.   Perhaps we would also allow the child to call their parents even if they had no credit.   We might even add the ability for parents to restrict the numbers that the child could dial or indeed, even restrict the numbers that could dial their child.    These features would give parents a strong set of reasons for choosing our network.

Or we could launch a package for the small businessman.    In this case we might give him two numbers for a single phone.   This would allow him to treat business calls differently.   He might want, for example, to direct business calls to voice mail outside of business hours whilst still accepting calls from family and friends.   We might also give him the ability to have his colleagues log on to role based phone numbers.   This might mean that one member of staff could log on to be responsible for support over the week end.   We could also send him a list of numbers that had called him whilst he was on another call or out of service for some reason.

 

In each case the “branding” for each service can be much better focussed and therefore much more powerful.   Furthermore, behind the gloss of the branding is a real reason for subscribers to use the service, which develops a clear “position” for the service in the user’s mind.
That simple and clear ‘position’ is also easily communicable by the user to associates and friends – and ‘word-of-mouth’ recommendations can be massively more effective than any amount of expensive advertising, celebrity endorsements or sponsorship.

Encouraging New Habits
We could also try to build ARPU by encouraging new behavioural patterns amongst subscribers.   For example, students might be encouraged to phone home more often if offered short-term low rates or ‘free minutes’ to specific numbers.   Once a new habit is established the operator is then able either to reduce the discounts and/or offer new services

The point is that subscribers can be wooed into long-term, even permanent, increased ARPU if operators are prepared to offer a flexible array of services that are relevant to them as individuals and accompanied by gentle price rises invoked at the subscribers’ request.   When subscribers know that the services deliver clear, tangible benefits, are easy to use and understand and cost comparatively little to trial, then take-up should be steady and progressive.

 

Nobody minds the ties that bind if they are benign enough.    So, network operators and carriers should be looking to provide their subscribers with features and functions that they come to rely on almost without being aware of it.

It’s The Real Thing
So, over the long-term, pure branding exercises do not work, fashions fade and users learn quickly.   However, when subscribers believe that services will provide them with an advantage, they will try them and stick with the operators that give them what they want.   Likewise, if a genuine need for any service can be developed and deepened, it will increasingly be used.

 

Remember, a ‘cool dude’ one day can often look like a ‘fool dude’ the next.   Consistent and continued value will always win out over fashionable fads.

 

 

Please get in touch for information on how you can differentiate your service using innovative value added network services.