CLOSE-UP: LIVE ISSUE/VODAFONE - Vodafone is shifting focus from the sell to customer services, Jenny Watts says

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

pre-pay customers.

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

land-line telephone.

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

its chest.

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.


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.