OPINION: MILLS ON MARKETING

I suspect most readers will agree that the mobile phone sector stands out for its consistently high quality of advertising (apart from on radio) - especially now that Vodafone and BMP DDB have dropped their dreadful X-Files parody for the new ’words’ campaign.

I suspect most readers will agree that the mobile phone sector

stands out for its consistently high quality of advertising (apart from

on radio) - especially now that Vodafone and BMP DDB have dropped their

dreadful X-Files parody for the new ’words’ campaign.



Call me naive, but the rapid growth in subscribers in the last quarter

is a measure not only of the weight of media spend (a collective pounds

50 million, according to early estimates), but of the success of the

four main players’ advertising. Come November, Vodafone, Orange and

One-2-One (Cellnet I find less convincing) should be jostling for IPA

Effectiveness Awards.



Apart from one thing, that is. The churn rates. By any standard, these

are dreadful, the Achilles’ heel of an otherwise booming sector, even

one so offer-driven. Churn is a fact of life in subscription-based

businesses, but this makes Sky and cable’s rates look positively

moderate. Even Orange’s, the least worst, is 20 per cent, while that for

Vodafone in the fourth quarter was 47.5 per cent and Cellnet’s a

whopping 60 per cent (a net 149,000 new subscribers from a gross total

of 375,000).



The phone companies have lots of explanations: excessive dealer

incentives which encourage retailers to sign up anybody who walks past

the door; ’cheap’ offers that aren’t as cheap as they look when the

bills arrive; bad credit risks; and subscriber promiscuity when another

’cheap’ offer comes along.



OK, I buy those. But the phone companies should also ask themselves some

hard questions. Is their advertising promising too much, or at least

more than the product delivers? What is it about their own culture that

emphasises signing customers up rather than retaining them? Perhaps the

basis on which they reward their own management is wrong and they should

look to pay themselves - and their agencies too - on the basis of

customer loyalty.



Too simple? Well, maybe. But I’ll leave you with two thoughts. If the

likes of Vodafone and Cellnet can sustain cost structures with these

kinds of churn rates and still make profits, then they’re getting away

with murder on the pricing. Second, if you spend pounds 30 million a

year on marketing and have a churn rate of 40 per cent, that’s pounds 12

million wasted. It’s a figure that ought to concentrate the mind

wonderfully.



It’s just as well that Rupert Howell and John Ayling, signed up last

week by the England cricket authorities (who make the House of Lords

look progressive) to rejuvenate the game’s image and promote the 1999

World Cup, are die-hard fans. While the big games will sell themselves,

marketing Scotland vs Bangladesh on a wet Tuesday will test their

commitment.



But the history of English cricket over the past 20 years is one of

missed opportunities, not least on the marketing side. The real interest

is whether this marks a new dawn of enlightenment for the game - a

chance to do a football. This, one hopes, is where cricket might see the

real value of the former Tesco boss, Lord MacLaurin. Despite his

position as titular head of English cricket, his talents appear to have

been cruelly wasted so far.



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