Rather than second guess the market, the CMO commissions a large-scale quantitative study to help understand how core personas in a variety of target segments take decisions at key stages of the buyer process.

It might be the only time in the annual planning cycle that the CMO gets the chance to take the pulse of market sentiment, so they are keen to maximise the value the company can get from the research.

Having agreed the research objectives, audience and methodology, the next step is to agree the questionnaire. And it’s here that for some CMOs the wheels can start to fall off, all be it often unwittingly.

MISTAKE #1 – TELLING THE RESEARCHER WHAT QUESTIONS TO ASK

It’s surprising how many times clients approach researchers with a list of fully fleshed questions they want to put to their market.

Quite often they do it with a sincere wish to be helpful, or to save time but it can often be counterproductive.

Think of it like this; you wouldn’t hire an expert ad agency to run an ad on TV that you’d filmed yourself, would you?

How to avoid mistake #1

Provide the researcher with the business context in which you are commissioning the research.

Don’t pre-judge what questions you think you should be asking. Tell the researcher what it is you want to find out, from whom, why, and what you will do with the information when the results come in.

Be clear about what you need to find out but leave the writing of the actual questions to the researcher.

A good researcher well-versed in your business context should be able to craft a succinct questionnaire that intelligently draws out the themes you wish to explore and give you the answers you need.

They will structure it logically, phrase questions in a way that maintains the respondents’ engagement and avoid asking questions that lead to respondent bias.

In return, you should get genuine insights that help to drive your business forward, rather than a set of numbers that simply confirm existing prejudices within your business.

MISTAKE #2 – ASKING TOO MANY QUESTIONS

As we’ve said, the research being commissioned will likely be the only opportunity the CMO gets to gain a window on their customers’ world. This is true in B2B, where research budgets can be much more restrictive than in the B2C world.

This brings with it a huge temptation to ask as many questions as possible to wring every last drop of value from the project.

Paradoxically, this too can be counterproductive (though for some reason not all agencies seem to be keen for their clients to understand why.)

The reason is to do with the mechanics of quantitative research.

Sad to say, but a fact nonetheless, most respondents taking part in a quantitative survey are far less interested in the outcome than the marketers that commission the research, even if the respondents are incentivised.

This means that researchers and their clients can’t expect participants to commit to giving their undivided attention and full consideration to every question.

You only have to listen to a respondent being taken though a lengthy, directionless questionnaire to sense the increasing frustration at how long the process is taking. The disinterest in their voice rises as their concentration diminishes, and the thought they give to answering each question consequently declines with each passing minute. The value that could be gained from asking the questions simply slides away.

It can get even worse with questionnaires that are completed online. Within a remarkably short time, respondents can get bored and start to click on random answers just to get to the end.

Expert researchers can generally spot the point at which this starts happening as the  response data starts to get flatter and flatter. But what they can’t do is filter out the respondents that were genuinely paying attention versus the ones that got bored.

As a result, the client is left with results to multiple questions that are inconsequential or, worse still, unreliable, contradictory or misleading.

How to avoid mistake #2

In B2B research, a good researcher, given a solid brief, should be able to construct a meaningful quantitative survey of 15 questions that gets to the nub of the client’s core issues and takes no more than 15 minutes to complete.

(To be clear, a question that gives six statements and asks a respondent to review each in turn and indicate to what extent they agree or disagree with each would count as a single question.)

Choosing your questions wisely and keeping your questions crisp has the added advantage of speeding the rate of data collection. That’s because the longer the questionnaire, the greater the drop off in completion rates. Therefore, the more respondents the researcher approaches to complete the questionnaire, the longer it takes to get a quorate number of responses. (It’s for this reason that shorter questionnaires tend to cost less to put into field, by the way).

This is particularly important in B2B research if the personas you wish to survey are relatively niche. High respondent drop-off is less of an issue if you are researching UK households who buy mayonnaise, for example. If some respondents drop out, there’s probably another 20 million households you could go out to.

But if you need to survey Procurement Directors in the UK telco infrastructure supply chain, there may only be a respondent universe of a few hundred people qualified to answer your questions. It’s therefore imperative they remain engaged throughout the process.

MISTAKE #3 – EXPECTING THE RESPONDENT TO DO ALL THE THINKING

When devising multi-answer questions, it’s always tempting to add a catch all “Other (please write in)” response option.

The thinking is straightforward enough: “We may have missed something important – the respondents will tell us if this is the case”.

However, most clients are disappointed in how few respondents bother to complete the “Other” box.

As we’ve already explained, respondents’ commitment to completing the questionnaire can fall frustratingly short of the client’s commitment to uncovering the answers they need. So questions that ask respondents to think and type for themselves tend to be given less thought than questions where the answer range has already been thought through for the respondent to consider.

Not only that, having a question with an open answer field option creates a challenge in accurately interpreting the answers. That’s because this kind of question ends up blending prompted and unprompted answer sets in the same question. Consider it this way; had any relevant “please write in” answer been included in the original answer set, would more respondents have chosen that option as an answer?

How to avoid mistake #3

The best way to mitigate this outcome is to do some qualitative interviews with your core audience prior to constructing the quantitative questionnaire. A skilled interviewer can then use the insight to tease out what the most likely answer set will be for a quant questionnaire.

The second-best way to approach the problem is to pilot the questionnaire with a relatively small sample of respondents prior to rolling out the full survey. This is good practice in any case as it can help show up unanticipated flaws in the questionnaire logic or help reveal where an unintentionally ambiguously worded question is throwing up some bizarre answers.

By reviewing where pilot respondents have completed any “Please write in” answers, the client and researcher can decide whether these extra answers are sufficiently insightful to be included in the prompted answer set when the questionnaire is rolled out.

Though it’s worth noting that even doing this can distort the validity of the final data. That is unless the pilot respondents’ answers are disregarded and then replaced with an equivalent cohort of additional respondents, ie all final respondents see the same answer set.

In summary, if you are thinking of commissioning market research:

• The best research briefs inform the researcher what the client needs to find out, not what questions need to be asked.
• The best questionnaires are crisp and engaging. Remember that over a certain boredom threshold, the more questions asked, the less reliable the answers will be to the later questions, and the more contradictory the data.
• It’s always wise to do some qual research prior to running the quant, even if it’s only amongst four or five subject matter experts. It’ll tease out angles that neither the client nor the researcher have anticipated and ultimately lead to better insights.

If you need help shaping your research strategy, we can help just contact us.

The post The 3 key mistakes marketers make when commissioning quantitative research – and how to avoid them appeared first on Graystone Strategy.

To think Britain no longer has an independent large brand for mobile sales on the high street seems unthinkable. But it’s happened. Once the brand than operators fought so hard to get in with is now lost and forlorn.

The writing has been on the wall for a while. Networks have filed out the door. Branches have had to close, the Irish operation pulled altogether.

My immediate thought was for all the people who now join the job market. And I hope operators, distributors and vendors will see the value they can bring to their operations.

For consumers this is bad news. It’s bleak on the high street. There’s now next to nothing in terms of choice for consumers. The few electronic retailers that there are pose no real threat to the operators. Customers won’t have an easy task of shopping around especially if they are the high percentage of people who still like to touch and feel a real phone before making a decision.

You’ll also have to weigh up the sales pitch – four operators each with different and conflicting sets of advice. Of course we all know CPW wasn’t truly independent given the sales incentives and targets. But in its heyday, it did offer relative impartiality and give consumers space to make a choice.

Looking at the market now, it’s my opinion it won’t be long before Curry’s winds down its mobile category. It’s not really got the right ingredients, environment or brand, to appeal to the more mobile savvy consumers who probably still prefer some specialist assistance. It’s top of mind for the latest Samsung washing machine not the latest mobile.

But as an MVNO expert I have to also turn my attention to what it means for iD Mobile. It was a great business at launch and gathered pace well. But now, it’s likely to face the challenge of dramatically reduced customer acquisition. I expect there’s a frantic look by management going on, assessing how other channels to market, be it online or other retail partnerships, can shore things up.  Could it exit altogether? Don’t bet against it. Today’s news is a reminder of how tough things can get and the tough decisions market forces provoke.

And as for Currys? Well sadly it wouldn’t surprise me at all to see it going the way of Rumbelows and Comet. Yes, remember them? It’s a brand I hold a lot of affection for having been a store manager for Currys, Dixons and their CPW competitor The Link – a brand Curry’s exited from about 20 years ago. But it’s going to take a huge amount of effort to salvage.

It’s all a reminder that having a clear brand vision and focus on specific customer segments, as well as innovation in service is absolutely essential to thrive and grow.

If you’re interested in discussing what this means for your company, or need help with segmentation, and/or operational turn around drop me a line…..

The post Carphone Warehouse, death by a thousand cuts appeared first on Graystone Strategy.

The answer is reasonably clear cut in my mind – quite simply, mature mobile markets are a problem for operators, especially when the economy has been battered and this strategy helps to overcome the associated problems.

There is always going to be a limit to the number of customers you can attract from segments outside of the core customer profile if you haven’t got the right brand appeal. And right now, though consumers value telecoms and app, they are still keen to save money making for tougher competitive dynamics than normal.

Getting back to the question then, ‘why bother launching a sub brand now?’, you have to look at what’s going on irrespective of the current pressures. Rewind a couple of years and Vodafone launched Voxi in the UK to appeal to a market that its own brand couldn’t reach.

Indeed, Voxi is designed to solve a very specific problem –  how to get your arms around a youth segment that usually considers the Vodafone brand as irrelevant. Voxi is the answer providing a vehicle to address the audience without diluting the value of its master brand.

Remember that in the UK, Voxi is not the only sub brand that Vodafone has access to. Vodafone also has Talk Mobile, a former MVNO that it acquired from Carphone Warehouse, which allows it to access additional market segments.

But in Ireland, where the overall market subscription size is 5milllion and there are fewer MVNOs compared to other markets, Vodafone’s had to take a very different approach and launch Clear Mobile.

Clear Mobile offers calls, texts and unlimited data for €12.99 per month without a contract. This deal works out at less than half the price of Vodafone’s own similar monthly tariffs and is bound to spark what the press refers to as a ‘price war’ on the lower end of the market.

But as is so often the case, you need to lift the bonnet on the headlines. While Clear Mobile offers unlimited data, it’s been able to discount it to the rate it has because the data speeds are much reduced.

It’s therefore built on a calculated premise – Voxi won’t work in Ireland. Clear Mobile is clearly not one for the kids – as Voxi is – and much more likely to appeal to value conscious “settled seniors”. Vodafone has identified a segment it can compete in, and address the discounting war at the same time. The overall brand strategy is a good example of applying multiple sub brands to deliver the same gains – Voxi aimed at the youth segment, while Clear is aimed at the opposite end.

And at the moment I’d say it’s more important than ever to adopt the right model. You need to read the market and ensure the money you invest pays dividends.

Why? Well, let’s get back to basics: economics drive the mobile market. The more customers you have using your network the better the revenues and profits. With a sub brand there are no wholesale costs and every penny of the margin is banked.

What’s more, the parent network can trade on the credibility of it’s brand, control the segments that the sub brand targets and most importantly influence its pricing and offers to ensure it’s not competing head to head.

That’s why the approach Vodafone is taking makes sense. It gives Vodafone more control over the offers it puts into the market and the segments it pursues with those offers.

Of course, parent brands have to put a lot of faith in the power of it’s brand to drive the success of the sub brand. And to be blunt, that’s not enough to attract customers, in fact it could actually detract from its appeal.

Brand awareness is therefore vital to ensure sub brands feature on the list of operators people consider. But that doesn’t come cheap. Millions are spent every month by operators persuading us to switch, stick and/or buy more. Releasing funds to do it for another brand isn’t going to be easy for a CFO and many will be looking to other distribution channels to ease the financial burden.

But even they cost money to set up and maintain. It’s a fine balance and so entering the market with a sub brand is a massive strategic decision.

The outlook for sub brands and MVNOs

There are still brands out there that would make very appealing MVNO partners that would fit a multi-brand strategy. With the right model, there’s much to gain and I expect we will see some high street brands seriously consider mobile as a way to generate a recurring revenue.

That said, I do expect some MVNOs to find it tough in the next few years as Brexit and the long term economic consequences of the pandemic exert real pressure on business models and people’s pockets. Some MVNOs will survive, some will merge, some will fold.

Operators will feel this, and those that have MVNO brands that are grossly affected will have to ensure the hole in their finances is plugged. Sub brands are likely to be the answer but they have to be built on a proposition that will appeal to a specific target segment. It’s too big a gamble not to, plus if they fail to do their homework then they ultimately fail their customers and their shareholders.

The post Are sub brands the way to go as operators grapple with changes to consumer behaviour? appeared first on Graystone Strategy.

It’s evident that retailers are among those closely following this mantra. Criticised in the past for bringing out Christmas goods too early, this year it seems the public is receptive. Christmas trees can already be seen through windows in our neighbourhood and recent research by M&S found that Christmas-related searches had increased on its website by 80%.

We are now well into the ‘Golden Quarter’ for retail when most will deliver the majority of their annual sales and profit. Without a strong Christmas we will see challenging retail outlooks in the new year. It’s therefore justifiable to meet an unusual customer demand for an early Christmas.

The sense of needing something to look forward to in a lockdown, and a hesitation to queue outside a shop in the cold or rain or be in a crowded place when it lifts will drive people online. Consumer confidence figures and redundancy numbers also indicate a large number of people will be budgeting more this year, buying special long-life foods and treats to get ahead, and gifts for friends that can be delivered for them.

This Christmas will be a true test of ‘omni-channel’. However, I believe it will be the retailers that still try and achieve a feel good Christmas experience for their customers that will win more than any other. Shopping is a sombre transactional affair right now and adding magic and sparkle really is so important.

So how do you translate the normal Christmas retail atmosphere into an online setting? Virtual Santas, Zoom gift elves, virtual tours of the shop floor, the use of video and music all have a role.

Of course, it’s important to accept that footfall will be way down on normal levels and for the customers who do brave it after lockdown there should be the reward of receiving a special Christmas experience. From carol singing, mulled wine and chestnuts to stunning lights, it’s the retailers who deliver this that will be on the good list.

In some ways that’s the easy bit. The biggest challenge will undoubtedly be planning stock and resources around the lockdown and into tiered levels again. It’s why I think we’ll see more retailers centralise their stock and use online, and click and collect (or when we can, instore ordering) to manage the risks.

Helping customers get what they want in a timely way will help differentiate the brands that do well and those that struggle. Much of this will be about supply chain planning and technology, staff training and great communication so people know what to expect and receive a consistent and positive experience.

In some ways the rules haven’t changed – deliver the best experience, a great line up of products (not necessarily exhaustive but perhaps original), competitive pricing and easy ordering and delivery models. It will rely on going the extra mile with supply chains that are clockwork and employees who are super engaged in the plan, more options to pay, extra resource to provide help and support, flexible delivery options and longer return periods.

It won’t be easy, but it is possible if you understand your customer, can anticipate their needs and find ways to deliver the extra mile.

Get it right and it can be a case of ‘winner, winner, turkey dinner’.

The post Winner, winner, Turkey dinner! Can retail have a golden quarter? appeared first on Graystone Strategy.

Yet one of the biggest challenges I encounter when working with MVNO clients that want to make a splash and gain share, is their lack of appreciation for, and therefore their commitment to, the proposition. They are often blindsided by their technology investment. And, dare I say it, there’s a cohort of consultants that are just as easily side-tracked by the hype of the technology. Try to avoid them as you develop your proposition as it could inhibit your potential.

Why would I say that? I have worked on many projects where the tail wags the dog and propositions are built to fit the limitations of the technology. It rarely leads to a successful roll out. It just undermines the business case and minimises the revenue potential.

I can sympathise though. In an industry that loves its LTE, VoLTE, 5G, OSS BSS – I could go on – it is not uncommon to lose sight of the fact that the technology is just an enabler. People don’t care about the bits and bytes they simply want it to work and help them in their life or work.

That’s why we always advise MVNOs trying to unlock growth to start with the strategy and the customer proposition and use them to define what the hardware needs to deliver. There are three rules we always encourage:

• Start with how you want to differentiate. Is it in service, price, or offering something unique to your customers?
• Then identify who your customers are and if they truly want it. In many of our engagements we have worked with clients to segment their base and/or the market to identify groups of customers most open to their proposition.
• Re-evaluate your strategy knowing more about your customers’ behaviour and if you have a match assess the hardware to deliver it.

In an ideal world you would segment customers first and then build propositions for them. The days of segmenting customers by postcode and age are long gone. No two people or families living next to one another on a street are identical. They have different demands on budget, hobbies, aspirations. These nuances all need to be understood to make a proposition fit for market.

It’s one of the reasons we built our market segmentation tool, which all our customers can licence. We have used it successfully in the UK with multiple customers and even helped a multi-play MVNO in Greece to develop its own version of it.

These MVNOs have learnt that you can’t make money without knowing your customers. And you can’t build a clear strategy either. They regularly ask:

• Do I have a clear strategy that covers vision, mission, strategy and tactics?
• Do I really know who my target markets are and why my brand and offer would appeal?

But they also check they haven’t strayed into old territory, away from being a marketing organisation back to a technology one. If they find they have then they reset and re-evaluate brand purpose again.

Working in this way is a step change. But it is well worth adopting the practice. It will accelerate your business and create more opportunities for success.

If you think you may be overly relying on your technology to deliver your brand then talk to us. We can help you maximise the investment you have made by developing propositions that work.

The post Building a differentiated customer proposition. Top three questions to ask appeared first on Graystone Strategy.

A while back TalkTalk walked away from its mobile multi-play strategy and one has to wonder if it’s a decision it regrets. I say this because, multi-play has been the star pupil in lockdown. Never before was a subscription to keep children entertained so needed. Netflix, Sky, Amazon Prime all carved a relevant place in the home and the gaming industry boomed. But it was companies like Sky that delivered mobile, fixed and TV content on one bill to its existing and new subscribers that delivered real value. It gave people an instant solution on one bill.

Looking to the future we’ll undoubtedly see more of this model in use. Is it possible that Disney’s Disney+ launch is a tantalising glimpse of this future? If it can deliver exceptional value and create a sticky brand, then there’s the opportunity to branch out and deliver more services under the brand. It may not have worked out that way in the US, when it attempted an MVNO but all markets are different.

Now with the advent of 5G, consumers have more choice about how and when they access services. A 5G router releases the shackles and you can get instant access to the TV shows you love and move house and take your entertainment with you.

Graystone Strategy research underlines how important this flexibility and choice is. The pull of a fully connected home is encouraging consumers to consider buying other ‘subscription’ services, like their energy, from a single provider. If you have no time and like simplicity then it stands to reason you’d want to get everything that keeps your house ticking from one company. Especially if it’s with a brand you already trust to provide you with other services.

Of course, this isn’t a one size fits all approach. Some consumer segments are more progressive in their thinking than others. For instance, some people like technology not because they are young or old but because it is an important part of how they live their life. There are people from all social backgrounds, a wide range of income brackets and age that are happy to self serve because it saves time or money. Yet there are others who want a person on the end of the phone because they don’t want the risk of something going wrong. That’s a reflection of their disposition not a generational trait.

At Graystone Strategy we have taken the findings of this attitudinal research and developed an easy to use segmentation model. In some instances, such as with Nova in Greece, the model has been tailored to help MVNOs and MNOs identify their segments and go on to build propositions specifically for them.

It’s a model that works beyond mobile too, being used in electronics retail, utilities, and grocery markets. By providing these clients with a better understanding of the needs and motivations of each attitudinal segment we are giving them a licence to cross sell products and increase the amount a person spends with them.

The numbers speak for themselves, and certainly give CMOs something to think about. In general, 74% of people would take multiple services from the same provider. That’s good news if you are thinking of increasing your portfolio.

But things get really interesting when you get sector specific. For instance, almost half of the population would consider buying mobile from their broadband provider and a quarter would buy gas or electricity from their broadband provider. Conversely, a quarter would buy broadband from their energy provider. And interestingly, a third would buy pay TV, and 20% gas and electric from their mobile provider.

With numbers like these, rethinking your segmentation seems a no brainer, yet very few companies are doing it, which is why I think it’s an opportunity for quick witted MVNOs to become broader multi service providers

There’s an unspoken reluctance to completely ditch the age-old approaches of targeting by age, postcode or value spent with the company in favour of attitude. You can’t put your finger on attitude so easily. Plus, with limited budgets and skills it’s hard to develop internal segmentation models to make such a bold switch in approach pay off.

But it’s clear from our application of the segmentation that only when you understand your customers attitudes and motivations can you offer what they want and build a strong brand with values people will trust, and ultimately grow your business. It’s the reason why Utility Warehouse has been so successful at selling gas, electricity broadband and mobile. And they must have confidence that the model will sustain as they have signed up to another 5 year contract with their host network BT.

What’s more it’s very clear that the approach doesn’t just help you reposition your existing products in the market, and who they appeal to, but it can help you determine new ones. Those could be completely new, bespoke offers for a specific segment, or as the research shows, bring additional tried and tested services like telecoms, pay TV or energy to your existing customers. Which takes us back to making multi-play relevant.

When it comes to multi-play this approach helps to identify how many services your multi-play offer should run to, or indeed if it should include any at all beyond your core offering. And most important of all, it determines which customers you should speak to about it, and which should be left to enjoy the current services they buy from you – Technology Trailblazers will buy many services, Settled Seniors won’t be so inclined to.

Bottom line is that there’s lots to gain by being more specific through attitudinal segmentation. Customer attitudes towards brands, and their loyalty to them, are changing – the research is evidence of this. But with 5G landing any MVNO that acts quickly to review its segments and propositions could steal an early share and make a name for themselves in a way they couldn’t before. MVNOs have everything to gain. They are agile, innovative and progressive. It’s this mentality that brings them success and I believe 5G could be a way to catapult the sector to new heights.

If you would like learn more about multi-play research trends, the market segmentation and how MVNOs can capitalise on it all then please contact us. And if you are curious to know how it works then you can take our segmentation test which will tell you which segment you fall into. You’ll also receive a sample of all the information we hold on that segment.

The post Multi-play: An MVNOs’ market for the taking appeared first on Graystone Strategy.

Consumer customer growth will slow further

We’ve seen Covid-19 effect major launches so 5G handset supply was always going to be tricky this year, but this is quite a spanner in the works for any operator with desires to grow their 5G base in 2020.

It’s not helped by the fact that 5G is quite a niche proposition for consumers and that’s even for the really early adopters. We’re talking about the ‘Tech trailblazers’ (30% of the market) wanting 5G to begin with. That said, it’s not an insignificant number so the operators will have planned to attract them early to help showcase the possibilities, and get the revenue in the door. Their initial growth strategy will be pinned on business applications (see final point below) and these Trailblazers. But like 3G and 4G, 5G will go mainstream as more handsets become available and, in particular, once Apple is able to supply a decent quantity of 5G iPhones.

Network complications

Handsets is one thing, using it on a working network is another. This week’s decision will undoubtedly impact the speed of the rollout of 5G coverage. Networks have built plans around the availability and supply of Huawei kit, and now need to see if the more likely suppliers of Ericsson and Nokia through to re-emerging brands like Fujitsu, NEC and Samsung can help fill the gap.

Will they be able to make up the deficit quickly enough? My guess is it will be a perfect collision of not enough kit from any of them quickly enough, and delays on taking out the existing kit. That all adds up to a slower than planned growth of 5G coverage, and, as networks will ultimately need to extract the kit they have already installed, there will be disruption to existing 5G service.

Overall it’s going to be an interesting race between operators to change quickly and with limited impact to customer experience. And it’s a race it will be difficult to judge as networks seldom publish their plans in any great detail, so we won’t really know how they are progressing against the initial plan they had.

Will Customers pay the new 5G bill ?

The cost implications of replacing kit are most likely to be felt by consumers. The availability (or lack of) alternative base station kit may drive up market prices and therefore costs to deploy networks. Plus reversing out already purchased Huawei kit has a double whammy effect, the original investment is wasted and you are effectively installing, de-installing and re-installing which all has associated costs. That has to be financed somehow and while I don’t expect data pricing to go up I do expect data pricing to stabilise and the steady decline we’ve seen over the last couple of years slow down.

It’s very likely this will cause some networks to re-evaluate their 5G pricing strategy. Consumers should therefore expect 5G to be at a premium in terms of handset costs and possible the available tariffs for 5G.

But as ever, it always pays to shop around. MVNOs like Sky Mobile (on the O2 network) already have access to 5G and with recent developments in the MVNO and MNO market, and the announced merger between O2 and Virgin we may see some good deals in the short term.

What do consumers think and what will they do?

The news has made every front page and it’s likely consumers will now be concerned about buying Huawei branded devices as a result. They are likely to think more about the trade-offs than they usually would when investing in a new phone.

Huawei is likely to extend its range of very cost effective 5G devices competing against the more expensive Samsung or Apple (once available). It remains to seen whether price over perceived security wins out.

My hunch is customers will take longer to adopt 5G anyway, simply because we have a shrinking economy and people will be keeping an eye on their discretionary expenditure.

MVNOs left in the cold?

All the complexity in the practicalities of delivering 5G and the added pressure on economics might have mid-term consequences for MVNOs. The big question is will operators offer market parity to their partners? A delay in parity would help ensure 5G is synonymous with the big networks. Yet, MVNOs exist for the very reason that there are sets of customers operators will never reach. Extending 5G to MVNOs early (as some Operators have already done) could boost market traction.

It would not be a huge surprise if Operators take this opportunity to review the 5G MVNO strategy and whether they can delay MVNO access. Their cost base has changed significantly so the question is, do they drive for volume and include MVNOs or pursue a premium strategy for their direct customers only?

I imagine wholesale and finance teams are working intensely on business case calculations now.

Private networks may stall

Finally, we can’t look at the ramifications without talking about the impact on enterprise. This is where the real 5G business case lies, helping companies become more efficient and innovate. Any delay to 5G means a delay to some aspects of digital transformation, which is a strategic imperative at the moment.

The development of private networks, which is probably one of the most interesting use cases, will also take a hit. Private networks are not covered by the legislation but as Huawei has targeted this market and built some innovative RAN solutions I can see another potential problem.

All businesses are very concerned about security and data protection in line with legislation, and as a matter of reputational necessity, so I imagine any business in need of a private network, will be intently reviewing the perceived risk, seeking alternative suppliers and again increasing demand on more expensive alternatives to Huawei. The question is will that blow the business case?

As you can see there’s a lot at stake and as the points above show the strategic choices operators face are complex. From performing technical change through which propositions to define and price first, to whether to launch with MVNOs.

Few will have predicted the scenario five years ago, but real it is and it won’t be reversed. Navigating the short-term upheaval for long-term gain is now the name of the game.

If you need help working through your strategy in response to these changes then get in touch.

The post Six consequences of the Huawei ruling appeared first on Graystone Strategy.

It was going to change the market. Of that there was no doubt, and moreover, it was a very interesting way to forge a partnership that brought mutual benefits, and still swerve the regulatory and CMA review.

But Friday’s news about a potential merger between Virgin and O2 completely changes the game and the market dynamics. Let’s look at the players:

O2 – a problem child

We know that Telefonica has been trying to work out what to do with O2 after the regulator and CMA blocked the merger with Three.

As a by stander, I found it all rather perplexing because previously the regulator had waived through a deal between BT and EE creating a huge telecoms market leader. How was this different? One can only assume, that at the time, the regulator did not grasp the fact that fixed, mobile and media were all rapidly converging.

So, O2’s needed to change tack, and as a result it’s been making some bold strategic moves. Only a month ago it pulled out of its partnership with the indirect reseller Carphone Warehouse, who, by the way, still sell all of Virgin’s products.

You can read more about my full analysis of that decision here, but what’s important to know is that the move opened up a gap – and Virgin is well placed to fill it.

A perfect match for retail, business and the channel

O2 has no broadband customers, nor a TV offer (if you don’t include Netflix and Disney et al) to offer retail consumers, so in partnering with Virgin it can move hook, line and sinker into multi-play.

In business, both organisations have established business sales channels and again the offering is largely complementary. I’d assume O2 takes the lead on mobile and private networks, and Virgin drives the fixed connectivity. This will be good news to the dealer channel too.

A more detailed look at the segments and why the deal makes sense

If we use the Graystone Strategy segmentation to look at the consumer profiles they both attract, then an interesting story pans out, namely they both over index in different segments.

Virgin Mobile has more than its fair share of ‘Service Seekers’, ‘Budget Balancers’ and ‘Settled Seniors’. Whereas O2 over indexes on ‘Digital Devotees’ and ‘Technology Trail Blazers’. It’s clear that there’s an opportunity for both parties to gain access to different segments and hence acquire incremental customers.

In broadband and TV there is opportunity too. O2 has more than its fair share of ‘Digital Devotees’ in its base and currently no TV or broadband offer to sell them.

Looking at the market at large, Sky over-indexes on ‘Digital Devotees’ too, for both TV and broadband. This means that a multi-play O2 / Virgin deal could win over Sky customers pretty swiftly. It also suggests that the O2 / Sky deal may have been cannibalising the O2 base moving O2 customers with a Sky account to Sky Mobile.

Virgin can take advantage of the network economies

In a merger, Virgin would benefit from full network economics – something that the Vodafone wholesale deal is unlikely to have unlocked, unless it was viewed as a highly strategic partnership and had some type of quid pro quo commercials in place.

Vodafone left in the cold

So, what of the wholesale partnership with Vodafone? If the O2 / Virgin deal goes ahead then obviously the Voda partnership will be voided. But I would be surprised if there would not be a pretty punitive cost to Virgin in tearing up the contract.

In some respects, the timing of this may be because Virgin needs to resolve this one way or another before it goes too far down the integration path. And of course, they won’t want to move their wholesale supplier from BT to Vodafone and then to O2. That would be far too much change and impact on customers.

Who will be the winners and losers?

We are many months off a competition review, but already we can make some assumptions about who are going to be the winners and losers in the market.

Losers:

1. Net loser – Vodafone, as it sees Virgin deal unravel…

Vodafone is likely to be a net loser. It had won a significant wholesale contract with Virgin, but as it unravels, even if there are clauses that allow them to recoup some of the margin, it will be worse off than they could have been. And I’d wager that’s even if the resultant impact on other MVNOs allows Vodafone to pick up some new customers.

2. …BT remains a loser

BT continues to be a long-term net loser. The biggest wholesale contract it had has walked away, and now, Virgin, as one of its biggest competitors has the potential to get access to MNO economics.

It also has the potential to give O2 / Virgin the number one spot in terms of mobile subscribers. O2 has always had a strong wholesale business, and a very effective wholesale strategy, and, in terms of wholesale and retail SIMs combined, they have been market leader. This would allow O2 to challenge the number one spot for retail customers as the Virgin and O2 customer bases would likely merge.

There may a short-term upside for BT. If the deal goes ahead, then migrating Virgin customers away from BT to O2 may take longer than it was going to take to migrate them to Vodafone. This gives some upsides in terms of wholesale revenues, and possibly a chance to take a premium! But it is really just sugar coating on the bitter merger pill.

3. … Three lagging their competitors with no fixed infrastructure

There’s no understating that Three will come out of this a loser. It’s the smallest mobile operator and only operates meaningfully in consumer, although it does have business and consumer MVNOs in their portfolio.

If the deal goes ahead then it further highlights Three’s biggest challenge: it does not have any fixed infrastructure and no major play for the home. Yes, the 5G mobile broadband offer mitigates this a bit, but it is far from mass market right now.

4. Sky probably a loser. Could it sell up?

It’s likely Sky will have clauses in its contract with O2 to safeguard change of ownership and potentially ‘exclusivity of category’. If true, it means they might seriously consider moving away from O2 pronto. That will not have been in its plans and will absolutely be a significant upset to its long-term strategy that will impact customer numbers.

Knocking on the door will be Vodafone, BT and Three, all keen to engage and encourage a move to their networks. This of course, could drive more favourable terms and bring an edge to the competition in the longer term, but it will also require a big change project.

Alternatively, and it’s a real longshot, but it’s not unthinkable that Sky might even sell its mobile base to O2. It’s not hard linked to broadband or TV but a move like that comes with some real risk specifically that any Virgin / O2 venture would seek to convert those acquired customers to Virgin TV and broadband.

Neutral:

5. TalkTalk could come looking for a deal

TalkTalk, is probably neutral at the moment. It walked away from mobile a while back, but it may be time to put on its best bib and tucker and see if there’s a partnership or acquisition option for it too. Definitely a space to watch.

Winners:

6. O2 and the consumer

O2 is very clearly a winner. It moves from being a mobile only operator in the market to join BT, which offers mobile, fixed and TV, and Vodafone with its mobile and fixed offer.

Consumers really luck out in the short term. There’s more choice for multi-play for sure. And with fewer organisations in general to buy mobile from, I suspect retention and acquisition offers will be good. But long term, I think it will shift to a more neutral position for consumers.

Virgin brand in flux

Let’s not forget this has ramifications for the Virgin brand full stop. With sell offs happening all over the place, it screams for another piece of analysis on the future of the brand, so look out for that soon.

How should the market respond?

In the meantime, bearing in mind the regulatory hurdles, I’d be advising all operators to be taking a good hard look at their segments, and analysing how well their propositions attract the bullseye and compete as the dynamics shift. We now know O2 is up to something so if this doesn’t pass, you can expect it won’t be dissuaded from trying another strategy. Either way change is coming and preparation will be everything.

If you want to talk the implications through further, specifically for your business, or re-evaluate your segmentation then get in touch. I’m not going anywhere for the foreseeable!

The post Virgin and O2 are in detailed discussions. Here’s my 360 view on things. appeared first on Graystone Strategy.

Without doubt, the questions have to be answered with context. Factors such as market maturity, the regulatory regime and local market competition influence the strategy.

But no matter whether you are in Europe or Mexico, MVNOs only work if there is a snug fit between the operator and the MVNOs target market. The customer portfolio must be complementary for a successful long term relationship.

So, what do operators want from a deal? I’ve broken it down into five considerations:

Poaching In my experience, every MVNO is met with a concern about how it would cannibalise operator revenue. Ultimately every wholesale team starts with the question ‘will the MVNO steal a disproportionate share of our customers?’.

Good question and always worth asking. Just like any distribution strategy, incremental customers has to be the name of the game. So, to answer the question, MVNOs must prove that they have better access to customer segments than the operator.

That has to be the starting point for any MVNO pitching an idea. Doesn’t matter if it’s to target a business or consumer audience, if it will attract different demographics and / or introduce new distribution channels that aren’t readily available to the operator then you’ll have the board’s attention.

Market value Operators will also be concerned about the market being devalued. You can only avoid this through differentiation. Aggressive pricing action is a short-term tool from which nobody really wins, possibly not even the consumer if it is unsustainable, so operators will want to see some real difference in an MVNO’s proposition – something that gives the customer a reason to buy from the MVNO brand. This ‘uniqueness’ is generally aligned to the local market conditions.

Scale Another consideration is the potential for the venture to scale. If it can’t then it won’t succeed in the long-term. In many cases, unless the operator has a number of MVNEs or MVNAs setting up, an MVNO will use valuable resources that all have an opportunity cost associated to them.

MVNOs therefore have to be able to demonstrate sensible growth plans and that they will achieve scale for the operator. I stress the word sensible here. It’s easy to pluck a number from the air and show you are ambitious. But you must be realistic too. Any MVNO with ridiculously ambitious plans will burn their credibility with potential operator partners. Word will get around. Instead it’s best to apply best practice accounting and strategic marketing plans to put forward a concept that can be achieved.

Strong foundations Related to the question of scale is whether an MVNO has ready access to a base of customers. This could either be through an existing sales channel – think retail MVNOs like Tesco Mobile that leverages existing footfall into a store or online channel – or ones with access to an existing base of customers that would consider buying mobile services too. This could be retail loyalty card holders as Superdrug has done, or TV subscribers, utilities customers or existing fixed/ broadband customers buying another product as part of a ‘multi-play’ offer.

Operators will favour these types of partners beyond a new start up, which come with significant risk in terms of financial backing, unproven brand credentials, and no simple access to customers. Start-ups are only ever appealing if they have a really exciting and differentiated product. ‘Me too’ ideas are unlikely to get an operator excited.

The Prisoners Dilemma This is often overlooked, but it’s really important to recognise its importance in decision-making. If the potential MVNO is big, credible and likely to get a deal elsewhere then an operator may consider cannibalising its own base simply to secure the wholesale revenue than lose it altogether to a competitor network.

So, what should MVNOs do?

 Segmentation It should be plain to any MVNO that you need to answer all of these strategic questions above. Above all you must be very clear as to who your target market is, and have real data illustrating not just the appeal of the proposition with the target customers, but also how it adds incremental revenue to the operator.

You’ll create a much stronger pitch here if you use segmentation and show you understand the behaviours of your target segment and how your brand fits in to their lives.

Data is imperative. It’s the only way you can give your brand credence and show you can comfortably predict what will happen. ‘We think’ is not good enough, your business case won’t stand up to the scrutiny of the operator review process. You must give them the proof points that will push the business case through.

Be selective If there is an operator with an obvious complementary fit then target them first. Think about it from their point of view too. For instance, if they are the smallest operator make it clear how you can help grow their revenues. In some markets, regulators insist upon MVNOs and even where this is the case it’s still very worthwhile to prove you are complementary to an operator’s model as it encourages good will and can even help secure more favourable commercials.

Tell a story I can’t stress enough how important this is. Tell your target operator a story and do it in a way that isn’t death by PowerPoint. By all means have slides, but use them to paint the picture that wows them, supported by a well thought through business case.

Swap shoes First impressions are important and with the right assets and strategy you can win an operator over reasonably quickly. But one tip I always pass on is to remember that your audience live in the corporate world and you’ll need to adjust your delivery accordingly. Sadly, though a simple white board pitch may work in a start-up, it won’t help your chances of getting the idea up to the board of an operator. They want to see exhaustive workings and well thought out and reasoned arguments. Have all the detail readily available to support your story.

Work smart By which I mean, get professional help where you need it. Operators are far more likely to engage with an organisation that understands its internal strengths but is also smart enough to get professionals in to help it bridge the weaknesses. If your strength comes from your brand and retail estate it will shine through. But if you don’t understand telco operations then it will also show. Hire professionals that speak ‘telco’ to ensure you understand the operator’s world and you find succinct ways to explain yours.

Graystone Strategy can help on this front. Its team of mobile strategists, product marketers, commercial negotiators and customer experience specialists will help you navigate the path, anticipate the challenges and put a winning strategy together.

Feel free to contact me for a quick chat and see how we can help you set the right direction and make a success of your idea.

You can find out more about how we have helped operators and MVNO’s here.

The post How do operators and MVNO find their perfect partners? appeared first on Graystone Strategy.

The first thought anyone in the industry will be having is that there could be a catastrophic domino effect. Phones4U went into administration after networks pulled out, and it happened in weeks!

But you have to remember Dixons Carphone is a more diverse business and it has been here before. Firstly, Three hasn’t sold through Dixons Carphone since 2013, and that’s despite using Three to run its MVNO iD, which boasts 1 million customers. Secondly, Vodafone pulled out of Carphone Warehouse in 2006, only to return again a few years later. One can only assume this is because they lost customers as a result of leaving.

Understanding the decision through customer segmentation

I can only assume that O2 is confident it can address customer segments that would normally buy from Dixons Carphone through other channels. Time will tell as to whether O2 can achieve its goals without Dixons Carphone.

I have my doubts. Research Graystone Strategy has conducted as part of our Customer Market Segmentation shows that 27% of consumers buy from a mobile specialist (stores, online or telesales) whereas buying directly from the mobile networks accounts for 35%.

Of those buying from a specialist, around half will buy from Dixons Carphone or one of its online brands, which accounts for a substantial part of the market.

But when you look at the channel preferences of the different customer segments you really uncover some interesting insight. Our segmentation shows that THREE of the SIX segments over index on a preference to buy from a specialist mobile phone store, rather than a network store. Those segments are Digital Devotees, Technology Trail Blazers and Budget Balancers.

It’s important to bear in mind that the segments we’ve developed are based on customers’ attitudes so they are powerful indicators of behaviour. They provide a far more accurate view of what people do, want and aspire to. They are not assuming anyone with the same postcode will shop and do the same things – as I’m sure you’ll know from looking up and down your street, that’s not how society works.

That’s why we’ve developed a more accurate model and successfully used it help MVNOs and retailers better understand the customers they have access to and in turn make more strategic decisions about how to develop their propositions.

The O2 customer base over-indexes on Digital Devotees and Technology Trail Blazers suggesting that Carphone Warehouse is a good channel fit for them. However, O2 can still acquire a “fair share” through its own stores, it’s just that those segments above have a preference for independent specialists.

And delving a little deeper, I think there could be something else at play here – by coming away from the high street and moving its stores into the Curry’s and PC World retail park stores, Dixons Carphone may have scored an unwitting own goal driving more customers into the high street stores of the mobile operators.

It’s possible the customer wants to shop around and as there is no ‘one-stop-independent-shop’ on the high street then the path of least resistance for the consumer may be to visit four operator stores on the high street rather than driving to the retail park. It’s a theory but my experience supports it.

So, what is actually going to happen?

Well, I would expect O2 to invest in online to drive more direct business through that channel. Let’s face it, we are all having to shop online right now, and it is going to have a lasting impact on all high street stores. I’d also expect O2 to put more focus on other independent channels like AO Mobile and even independent local retailers.

On the other hand, I would expect Dixons Carphone to try and recover the situation and shift the available “category” onto its MVNO iD mobile or offer a greater category share to other MVNOs and Operators that they range.

In terms of other operators, I think we can expect EE to benefit from an increased share. The research shows that  Digital Devotees, who traditionally visited a CPW store, also have a high consideration for EE, an adept salesman could easily switch them out of O2 and into EE.

What will be interesting is the reaction of other operators. As long as they don’t use this as an opportunity to change their distribution strategy, and therefore pull out of CPW, then I think Dixons Carphone will weather the storm. Although, I hasten to add, they will lose overall market share of that I am sure.

The big question that remains for me in all this is whether the shoppers in Curry’s and PC World are made up of different segments and if so, does this offer them a strategic advantage – can they offer the networks access to customer segments not readily available in a standalone Carphone Warehouse store.

I’ll have to run more research and segmentation to see if that’s the case but it’s certainly something to think about. Indeed, if you’d be interested in testing the hypothesis with me then give me a call. I’m sure there is much to learn.

For now though, it remains a watching brief for all MNOs and MVNOs, especially as we move through uncertainty and plan for recovery. There’s no doubt that understanding your customer is more relevant now than ever before.

The post O2 quits Dixons Carphone – what will happen next? appeared first on Graystone Strategy.