Hands up those who don't already own a mobile phone. At about 35
per cent of the population, you'd be in the minority - and don't the
mobile companies know it. The other two-thirds of the population, having
succumbed once to the lure of competitive phone offers, are now nigh on
deaf to their continual persuasions to splash out again.
The one-off nature of mobile phone purchases means that the rush of
customers buying handsets is now pretty much stemmed, and phone
companies are suffering from an over-supply that is putting their retail
operations in a vulnerable position.
Own brands are subsequently being forced to move into the territory
previously occupied by service centres such as the Carphone Warehouse
and the Link.
And it is no secret that the heavy subsidy of handsets has led to huge
increases in the costs of pre-pay telephones. While penetration numbers
have risen, revenue coming in from the millions of customers has become
negligible in comparison.
Vodafone, in particular, needs to re-engage customers. In July, it
admitted that 16 per cent of its 12.5 million subscribers were inactive
The decision to then cut them from its customer base saw its subscriber
figure fall to 10.54 million, meaning its five-year reign as the biggest
mobile operator in Britain came to an abrupt end.
Vodafone's smaller, sexier rival Orange is now the market leader with
11.9 million subscribers, followed by BT Cellnet on 10.9 million.
Name-only retailers have got problems keeping up sales rates, with
underlying growth likely to slow as they stop chasing lower-spending
So to cash-in on a shrinking market, Vodafone has to make the mobile
phone replace all activity that has traditionally been the preserve of a
Its initiative has been to introduce in-store demonstration bars, which
represent in-house advice centres for its customers. The outlets still
sell phones, but will be positioned as advice centres, with the emphasis
on its customer service element.
The demonstration bars are designed to be part of a larger education
process for Vodafone customers about the potential of their phones, and
are expected to roll out nationwide.
To support the demo bars, Vodafone staff are being retrained away from
selling toward helping people get more out of their phones.
It seems likely that Vodafone's initiative to transform its stores from
retail to customer care outlets will nevertheless keep them Vodafone
However, the bars are also likely to help people on other networks.
How WCRS will go about changing people's behavioural patterns remains to
be seen, as the agency's plan to bring out more value in the retail
environment is under wraps, and Vodafone is holding its cards close to
Enticing subscribers to make more calls is one way, coupled with
interesting packages, individually tailored contracts and special
Still, Vodafone and WCRS must act quickly to stay ahead of competitors
such as Orange which, as WCRS knows all too well, has a history of great
advertising behind the brand.
THE BIG THREE'S MARKET SHARE - BY SUBSCRIBER TYPE
Operator UK market Contract Pre-pay
share subscribers subscribers
% % %
Orange 28.0 25.0 29.0
Vodafone 26.5 33.5 23.1
BT Cellnet 25.5 25.0 25.2
Source: Taylor Nelson Sofres, September 2001.