CMA backs super complaint against loyalty penalties

The Competition and Markets Authority (CMA) has backed a ‘super complaint’ raised by Citizens Advice which suggests UK consumers are being ripped off by loyalty penalties on services such as broadband.

The super complaint was raised by in September by Citizens Advice, asking the CMA to investigate whether customers were effectively being punished by service providers, so called stealth price rises for example. The areas being called into question were cash savings, mortgages, household insurance, mobile phone contracts and broadband.

The CMA agrees with the points raised by Citizens Advice, suggesting the segments in question gain £4 billion a year through ripping off loyal customers.

“Our work has uncovered a range of problems which leave people feeling ripped off, let down and frustrated,” said Andrea Coscelli, CEO of the CMA. “They shouldn’t have to be constantly ‘on guard’, spending hours searching for or negotiating a good deal, to avoid being trapped into bad value contracts or falling victim to stealth price rises.”

Looking specifically at the telcos, this is a frustrating point for many consumers. UK telcos show very little desire to reward customers, setting in processes and systems which make it impossible to leave. Many will give up on trying to navigate the red-tape maze as the poor experience proves to be favourable to the frustrations of trying to leave. By making this process as difficult as possible, the telcos don’t have to worry that much about retention and can instead focus on luring new customers.

The CMA has pointed this out during its own investigation, ensuring that one of the recommendations made to government and regulators will be to simplify the exiting process. This will intend to tackle the process, systems and the fees which customers face when attempting to secure a better deal.

It appears the telcos are much better at scaring customers away from exiting than enticing them to stay with positive customer service. Your correspondent can confirm this is the case after trying to end a Vodafone contract last year. It took a ridiculous amount of time, engagement with several staff who had no idea what they were doing (or was this trained in to make the process as painful as possible?) but the mission was stubbornly completed.

“We know that the better deals are often found by switching provider,” said Richard Neudegg, Head of Regulation at “But many companies make this more difficult by not being transparent enough about the options available or how to take your custom elsewhere. We are pleased to see the CMA identify this as an area for improvement, to ensure the power to get better deals is placed firmly in the hands of consumers.”

One specific complaints which has been firmly aimed at the telcos concerns subsidized handsets. The CMA highlights telcos should not be allowed to charge the same amount per month once the handset has been fully paid for. This will be a frustration from the consumer, but like the ridiculous nature of roaming fees, because the industry has stuck together little progress has been made.

Above all else, the CMA opinion adds to the already well-known position that telcos are not at all customer-centric organizations and have a lot to do if they want to be considered relevant for the digital economy.

Three looks to complimentary brands to focus on retention

Three has announced the launch of a new two-year partnership with EasyJet to build out its loyalty programme for customers.

As part of the agreement, Three customers will be able to check in hand luggage for free, while also taking advantage of priority boarding amongst other benefits including a free tote bag for carry-on essentials. This partnership is the latest to buffer the Three customer experience strategy which also includes tie-ups with Snapchat.

The partnership could said to be based on O2’s Priority engagement strategy, which has been incredibly successful over the years. It also demonstrates a different mentality to what we are used to when it comes to telcos; reward current customers with incentives, as opposed to simply focusing on bolstering subscriber numbers.

The loyalty app itself, Wuntu, now has 1.1 million active users, up from 350,000 over the last twelve months, and features 400 partners. Over the course of the first six months of 2018, there was a total of 1.5 million offer redemptions from customers, up from 400,000 in the same period of 2017. Partners include the likes of Hotel Chocolat, Dominos and Belle Italia, though EasyJet could arguably be described as one of the more significant wins.

“The EasyJet partnership gives us a big chance to influence our customer’s experience in the airport,” said Three CEO Dave Dyson. “It’s a company which has a very like-minded audience, and is a chance to bring extra value to customers.”

For the moment, the scope of the partnership is limited, but there are two years to play around with new ideas; Dyson said to expect a variety of new offers. Snapchat is another example of a partnership which could work out very well for the business. In both examples, Three has identified brands with similar audiences and identified a pain-point to address; queues in the airport and data consumption with Snapchat users. These are two examples of a company pragmatically identifying how it can add value to the experience, without making risky plays through diversification.

Like O2’s Priority initiative, Three is playing a low risk game. The value is being presented to the customer, though it is an option. Some telcos have gone down the content route to enhance the experience, but this could prove to be expensive (just ask Gavin Patterson). By offering other brands access to its subscriber base, and in return gaining exclusive offers for customers, it is a win-win situation.

The idea of brands audience sharing is not new, but it is extremely effective. By asking customers to download an app, its less intrusive than the traditional means of spamming, and opens up a huge number of opportunities. More importantly, Three is looking inwards, caring for the customers it has, not simply reserving attractive offers for new customers; this is an excellent way to isolate a current customer and destroy a relationship.

There are of course numerous studies online which argue the point of customer retention versus acquisition, with some claiming acquiring new customers can be five times more expensive than retention. Caring for a customer, creating a relationship which makes them feel valued, is also an excellent way to increase revenues in other areas of the business. Just look at the brand and loyal customer which Apple has created over the years; many of these iLifers would choose to purchase Apple products over others irrelevant whether there are better or cheaper options.

Loyalty programmes are not uncommon, but many seem to be slap-dash and only present because it seems to be the right thing to do. That said, we get the impression Three has seen the light and might start treating current customers with the attention they deserve.

How MVNOs can stand out in a crowded market periodically invites expert third parties to share their views on the industry’s most pressing issues. In this piece Freelance Technology Journalist Kate O’Flaherty explores how, amid increasing competition, MVNOs must offer innovative additional services.

The MVNO space is becoming crowded, particularly in the UK. Established brands such as Tesco and Virgin continue to gain customers, while major players such as Sky are also competing for opportunities to grab share.

But at the same time, mobile operators across the globe are increasingly launching ‘sub-brands’ that directly compete with MVNOs and target specific segments – such as Vodafone’s VOXI and Three’s SMARTY. So, how can MVNOs stand out?

According to experts, innovation is about much more than just price: firms need a strong value proposition including unique additional services. Take the example of Sky Mobile, which has taken steps to differentiate itself by becoming the first UK network to let customers cash in their unused data in exchange for savings on a range of phones, tablets and mobile accessories.

Another stand out offering is the Superdrug MVNO launched in June running on the Three network, says James Gray, Director at Graystone Strategy. He explains: “You have to be a member of the Superdrug loyalty scheme to join and it enhances your membership with initiatives such as double points.”

Solutions such as these are a recognition that MVNOs need to offer more than just minutes and texts, according to Kester Mann, Analyst at CCS Insight. But at the same time, the number of areas an MVNO can target is diminishing, especially in the UK, he points out. “The UK market is reaching maturity and saturation: We might see new players, but there will also be some casualties.”

Amid this competitive market, MVNOs need to think what they can offer beyond connectivity, says Gray. “If you are going to become an MVNO, you need at least one clear point of differentiation – and price probably isn’t it.”

Gray cites the example of ethnic MVNO Lebara, which addressed a customer need by adding money transfer services to its core offering. “It is about building in an iterative way: Start out, then update and add to the offering. You don’t need to launch everything all at once. You can bring things out and if they work, then great and if not, you haven’t lost anything.”

Reverent offerings

There are multiple solutions that can help to differentiate an MVNO. “It is about being the most relevant to the customer and the most strategic for the business,” says Shanks Kulam, Co-Founder, x-Mobility.

For example, AppVNOs such as Vyke offer additional numbers to customers. “Innovation is about using the features of an MVNO to offer the services your target audience wants,” says Iqbal Maricar, VP Far East, Vyke. “This is even more true now that an MVNO doesn’t need to be a replacement Sim but can instead supplement an existing Sim-based contract.”

Another MVNO innovating through its service is FreedomPop, which offers a free option on its basic plan. “Modern MVNOs need to be disruptive and flexible, and to provide mobile services that customers want,” says Nicholas Constantinopoulos, President of International, Freedompop. “The flexibility of the MVNO model means we can provide a completely free solution to subscribers, but we also give them the flexibility to customise it if they choose to pay for additional services.”

Meanwhile, cloud gaming firm PlayGiga offers a “Netflix of video games” as a white label service to telecoms providers. “Telcos are looking for content to expand their service, monetise the network, or reduce churn,” says the firm’s CEO Javier Polo.

PlayGiga’s service allows MVNOs to incorporate cloud gaming into their offerings without the need to invest in content or infrastructure, he explains.

The company can provide the service via a set top box, PC or smart TV. According to Polo, the opportunity for gaming services as an additional revenue source for mobile operators and MVNOs will increase as 5G enters the fray. “Telcos can include a Sim card in a set top box and fibre-like connectivity could be provided by 5G.”

Another way in which MVNOs can differentiate themselves is by bundling telemedicine and pharmacy savings with a rewards programme, says Rob Webber, CEO and Founder of MoneySavingPro. He cites the example of ROK Mobile, adding that he thinks more similar services “are likely to follow”.

An additional model could see MVNOs using data about their customers to offer services such as loans. Steve Polsky, Founder and CEO of Juvo says MVNOs can use data about prepaid subscribers to cross-sell and upsell alternative services, such as airtime loans and handset financing. “Operators can offer minor credit extensions and then – based on the subscriber’s payback behaviour – can begin to generate a financial identity, similar to a traditional credit score.”

Customer experience

In an age of competition around customer experience, MVNOs can also stand out by offering self-service capabilities. Michael MacAuley, General Manager at Liferay UK and Ireland, says GiffGaff has done well in this area, by providing customers with the ability to service themselves and each other.

It’s a competitive market, but there is huge potential for the MVNOs able to innovate through their solution and strategy. But it requires entirely new thinking, and a change in technology architecture, says Tony Regan, Head of Openet Consulting.

He points out that many operators are embracing change through ongoing digital transformation strategies. “The net result is more personalised services, better engagement and retention, and healthier revenues. MVNOs have to rise to the opportunities afforded by digital transformation journeys too. With a vastly reduced cost base and the freedom to move quickly, MVNOs have the most to gain.”

For now, Gray thinks it is important for existing MVNOs to examine their customer base and identify “what the next need is”. He explains: “If they have established their brand in telecoms, they can add new features. Consumers are becoming more comfortable and buying multiple products from one brand as long as they trust it.”

He points to Graystone Strategy’s research, showing 50% of customers would buy mobile services from their broadband provider, while 19% would buy from their gas and electricity supplier.

There are also many more vertical areas where MVNOs can specialise, especially on the enterprise side. Gray predicts growth based on internet of things (IoT). “There is an opportunity for MVNOs in that area. They tend to be a bit more fleet of foot and can react quickly to changing markets.”

Learn how you can differentiate, build partnerships and secure your place in a time of greater consolidation at the MVNOs Series events – including MVNOs North America and MVNOs Europe.

Telia tries shocking new strategy: improving customer experience

Telcos in the UK might not understand what it means to be customer centric, but the Swedes seem to be having a solid crack at it. Well, Telia at least.

The point of attack here is an app called ‘Min Mobile’, developed by a company called eBuilder, which Telia has a non-controlling stake in. Essentially it is a platform which collects information about you and how you use you device, but then offers advice on how you can improve performance.

It’s an interesting strategy to re-engage customers, who are starting to forget about the operator. Telia’s Gustav Berghog highlighted to us the user is now more concerned with the handset manufacturer and the flashy content providers/OTTs; there is a risk the operator will be thought as nothing more than a commodity, and therefore traded out without much thought or emotional loss.

Ideas like ‘Min Mobile’ are designed to take Telia back into the customer life. The team want to show the operator is more than just a connectivity provider, but provide an experience which adds value. This idea of ‘positive discounting’, as Berghog describes it, removes the idea of an operator relationship being transactional, and aims to create an element of loyalty. That’s ultimately what ‘Min Mobile’ is; a customer retention strategy.

So how does the app work? Once downloaded, the app monitors how you use your device, and aims to predicts any flaws or errors on the device. The app currently monitors four areas; storage, battery, general performance and device condition/age. There are plans to extend in others, but these address the main pain points for consumers for the moment.

After monitoring your device for a while, the app might figure out that your battery performance is 15% less than other users on the same one. Using this information, Telia can make communication with you much more personalised. The might send out a message with tips focused on improving battery life to you, but your partner might get one on storage tricks, as this was an issue highlighted on their device. It is much more appealing, a step away from the general ‘engagement’ messaging which most operators make use of, and it is pretty useful as well.

Data usage is another area which the team might investigate. By monitoring your geographical location and where you turn your wifi on, a pattern will soon emerge. For those who are data conscious, a small reminder to turn on your wifi would be a good little value add. These are not ground breaking ideas, but tie enough of them together and they start to make a difference.

And it seems the Swedes like it as well. Since launching in January, the app has been downloaded 100,000 times, 76% of those downloads retained, and has a rating of 4.5/5 on Google Play. For those who have the app, the Net Promoter Score is 29, compared to a score of 1 when they don’t.  Berghog wasn’t able to say whether this has had a direct positive impact on churn rates, but the early signs are certainly good ones.

But it should be worth noting Telia also plan to make money off this data as well. By collecting information around storage, battery, general performance and device age/condition, and combining that with other data sets such as customer demographic, handset type and historical upgrading behaviour, Telia can start to develop a purchase pattern for each customer. This can be used to approach the customer at the right time to renew an agreement or upsell to more premium products.

Customer retention is clearly an objective for Telia, and creating these purchase patterns mean the team can engage the customer earlier in the process. Potentially the team can start that conversation before the customer get curious by other deals.

Berghog thinks there is also another way the team can provide value by becoming a bit of a broker for the mobile industry. All the data which has been collected so far not only allows Telia to increase engagement, avoid churn and upsell new products, it also tells the team about how you use your device specifically. An ambition for Berghog is to become an independent advisor to the customer.

Imagine you currently have a Samsung handset. With all of this information, Telia might be able to say because the way you use the device, the new Huawei model might be more suitable. It might also be able to suggest not to update to the newest version of an operating system, for example, because that would not suit the way you use your device. Helping the customer make more informed decisions is one way in which Berghog feels Telia can add value and create an emotional connection to the customer.

The best ideas are the ones where both sides of the equation feel they have gained something. This is one of the instances where it could be true. The customer gets a better experience, and potentially a better deal, whereas Telia increases customers loyalty. It is still early days for the moment; Berghog highlighted the team need to validate the benefits to Telia, while also scaling to the rest of the user base, but the early signs are certainly positive.