Tuesday, September 09, 2008

Black & White - a customer-centred mobile operator in NZ?

It was good to see some broad coverage of Black and White's Mobile offering - currently under Beta launch in NZ in Computerworld, Stuff and Geekzone. I worked with Johnathan during his time at Telecom and hope he and the team at B&W do well.

Most of the basics have come out so far.

B&W are re-selling Vodafone's existing offerings (including plans according to Computerworld) and providing their own branded handsets. They are solid mid-range handsets including a decent enough Nokia 6225c.

Feature-wise this looks like it will be targetted at the SME professional - a good niche with basic voice, text and email capability. 

There are a few things that particularly interest me.

1. The launch approach - a slow trickle to get this right is a great contrast to Telstra Clear's launch last week which went above the line with no real behind the scenes leg-work.  I think this 'slow' approach will give them a heap of speed - just by being so in touch with customer wants.Assuming that B&W will actually make changes based on Beta feedback, this will mean that B&W have a chance of surviving - more so that TC's proposition. Add to that the fact they are planning to add 1000 customers after the Beta, if things go really well for them they have constrained supply to the point where there will be value in just being one of the first 1000 customers.

2. Customer approach - it appears that B&W are looking at a proposition where business customers are not locked in on contract. This is very new in the NZ market and is a hard one to follow for Telecom and Vodafone as their accountants really won't like the idea of revenue uncertainty. But it's a massive value proposition for customers that will probably engender strong loyalty to B&W until the others follow. It's the approach of 'We are honoured to have you as a customer' as opposed to 'We are so scared of losing your money we will lock it in'.

3. Despite the comments on geekzone, the margins for a mobile reseller are pretty slim. The costs to acquire and service a customer are significant so you can't just look at the retail price for a mobile minute vs. wholesale. The Retailer has to cover service costs, handset subsidies etc etc. If you can get 10% margin out of that you are doing extremely well. B&W will only survive if they are able to reduce the costs to service and acquire customers and still provide better than the current standards of service. That means on-line, customer collaborative channels.

4. Value exchange within the Beta - this is brilliant. Sign-up your first 100 customers via Geekzone. Give them free service. Get them to test your products. Take on board their comments. Boom - there's your first 100 sales people, and free testing. Pretty good for a company of 10 people. 

5. Break-even point - B&W are playing in the SME space, traditionally the highest ARPU mobile customers. That is not necessarily the highest margin but it's an area that cellco's fight for pretty agressively. My guess is that if B&W were able to gain 10% of this market (say 50,000 SME's) that would put them in a good place. That might be enough to make Telecom and Vodafone start to follow suit on no contracts.

I think based on this approach and without bundling this will stand up pretty well against the other Tier 2 providers. It will be interesting to see whether NZ Communications takes a similar approach, and just compete in the market, or whether they will continue to blame the big guys for their lack of progress.

My guess is that the bulk of the B&W customers will probably be Vodafone to start with - they are the customers who probably see less value in a bundled offer. This is not at all bad for Vodafone - they get the wholesale revenues and reduce the costs of servicing these customers.

Where it will get interesting is when B&W start offering their own plans, and maybe providing some more utility with customer call data to improve the service offering. In the meantime, don't expect this to change the market for mobile data plans.

1 comment:

Johnathan Eele said...

Thanks for the blogs and comments it is great to see how interested people are in a truly new mobile player. It is clearly a busy time for us at Black + White, we are all working hard and pulling some late nights. In light of all your interest I just want to take a minute to let you know that we are already listening to what you have to say and will continue to do so.

On recent comments concerning thick and thin MVNOs, I am not sure if there is an agreed definition but I can say that as a new mobile company we have complete flexibility concerning price, packaging, terms, service, distribution, processes, target audience and mobile range. Quite obviously we do have a cost base and we have to cover it one way or another. Exactly how we navigate through dealing with the things NZ loathes about mobile and what is currently well received is why we are running the beta. We will then evolve based on the Black + White members feedback, therefore nothing is set in stone despite any speculation.

For the benefit of those of you who don’t know me I am eternally impatient and dissatisfied. So, do I wish we had a lower cost base right now to help us pass more savings onto Black + White members, yes. However I am not content with just wishing this and I already sound like a broken record with those who count in reducing that cost base (we all know who we are talking about). It is worth noting we have already had some serious cost reduction before we even had the first Black + White SIM card in a mobile.

I don’t see a whole lot of point in publicly whining it doesn’t appear to have worked for others to date. So we’ll try something new and get our sleeves rolled up do some work and start a ground swell of action.

Therefore in my opinion the best way we can move the market is to be totally committed to mobile and have a good sized Black + White membership who keep telling us how we are doing. This will strengthen our voice and allow us to challenge the status quo.

“So are you coming with us?” Go on, “Make the most of Now!” Really, “Now’s Good”……. Perhaps we’ll just say something like, “Join Us” and reduce the cost base by deleting the ad agency costs!