Quality as the key – how 3 aims to look different

It’s the only all-3G network, but that means 3 is a (relatively) small fish in a (definitely) big sea full of predators with deep pockets and massive resources.We spoke to 3UK sales director Marc Allera about differentiation, innovation in products, user experience and what it all means for the retail channel …

WePay looks an interesting move.
Tell us what the thinking is.
We’re innovators in the prepay marketplace. We always want to be leading the agenda. And WePay is a revolutionary new prepay service, something that’s never been tried in the UK. The service rewards customer with cash credit for calls and text they received – 5p for every minute of every call received and 2p for every text received – from any network at any time. The message is ‘It pays to be popular, and it pays to be a high user on Three’.
The great thing about this service is that the cash credits don’t have to be spent on voice and texts; you could spend them on music downloads, video, games, TV channels.

Have you trialled this at all?
A similar service is working in Italy very successfully.

And the aim is obviously to increase traffic?

We’re trying to reward loyalty here, trying to stimulate mobile number portability. And around 6m prepay customers actually have more than one handset, which suggests they’re relatively promiscuous, shopping around, looking for the best deals. This service cuts through all that and gives the best value for these customers. And that’s what we want: we want to stimulate loyalty to ThreePay.

How has the channel reacted? Do they like the differentiation WePay gives?
Yes, certainly. All the retailers are keen, they’re all keen to maximise what will be high levels of consumer excitement. It’s going to drive people into their stores and give us lots of new customers.

How many handset models do you have now?
Seven – the biggest 3G pay-as-you-range in the marketplace, from budget handsets to the latest top-tier models like the V3x. We’ve got something for every type of customer.

How is the new store programme going?
We’ve said we’ll be opening 20 standalone stores by the end of Q1 and we’re most of the way through that programme at the moment. We’ll review the performance of those stores before we make any decisions about rolling out further stores. Those we have opened are doing very well for us, though, performing to target and extremely busy.

You’ve introduced web-only tariffs where the same deals on your website are available to any dealers with a web presence of their own. That’s a bit hard on dealers who don’t sell online …
Well, in the nicest possible way I’d suggest those people get themselves a website and start selling online. All the big distributors have white-label hosting packages that can get a retailer online without costing too much.

Our web-only tariffs are available through third party retailers as well. We’re the only network that has offered this to the channel. We’d probably have had more complaints if we hadn’t opened it up.

Given your recent moves on the channel, is it reasonable to assume that you’re pushing for quality rather than quantity when it comes to new business?
The assumption that we’re not after quantity is not necessarily correct, but our strategy is certainly to focus on quality connections. We have been taking steps to ensure that the channel understands what we mean by that, and what it means if the retailers are not offering us quality business. As you know, we’ve been quite strong on this recently.

What’s your current view on cashbacks?

We’ve seen less cashback offered on Three, but the other networks still seem to have lots of cashback surrounding their offers. Personally I don’t think it’s the best customer experience; but cashback is a market phenomenon. – in a market where everything’s free there are very few differentiators on for example the same handset, and retailers are using cashback as a way of differentiating themselves, to appear more attractive. I understand that.

We put together a package for the dealer, and in the end they have a degree of freedom about how they want to put it into the market. You can’t dictate what a retailer does with their commission.

But it can lead to dissatisfied customers, and some customers simply don’t understand it. Which is why we recently distributed some guidelines explaining our minimum standards, what we’d expect from anyone offering cashback. It needs to be communicated clearly to the customer, and the customer needs to understand the redemption process.

In an ideal world we wouldn’t want to see too much discounting. Yes, we can tweak commission structures and so on to encourage certain ways of behaviour in the channel. But you’ll never eliminate cashbacks. Retailers will always search for an edge on the competition – they will always look for something to offer over and above what the network gives them.

Backstory

  • 3 has taken to describing itself as “the mobile media company” to emphasise the range of content options available via a 3G service – it’s not simply a voice-and-text network. Example: a Jackass-type service called See Me TV which allows subscribers to post their own short videos on to a server for anyone to see (50p to upload, but 1p per viewing returned to the subscriber).

  • 3 doesn’t have the same level of own-label retail presence as other networks, but it is expanding its ThreeStore portfolio. Autumn 2005 saw the arrival of a new store design that aims for “an experience-based retail approach that is fun for the customer and makes the store a great place to work”. Key elements: no dummy phones on show, theme changes on a regular basis, a How-To wall, ‘quick pay’ area. The new stores tend to be in big malls (Bluewater, Lakeside, Cribbs Causeway) and join the three original shops and 150 concessions within Superdrugs.
  • New prepay products include an exclusive on the ZTE F866, an entry-level full-service 3G phone which represents the Chinese maker’s first foray into Europe with a handset. Long-time supplier LG has a pink RAZR lookalike, also exclusive to 3, and the top end includes the 3G version of the pukka RAZR, the V3x.
  • WePay was launched late last month: customers are rewarded with a cash credit for calls and texts they receive, 5p per minute for calls and 2p per text. Cash credits, claimed each time the customer purchase a new WePay top-up voucher, can then be used to purchase any 3 services. WePay top-ups are available in £10, £15 and £20 denominations, with no expiry date. There’s a slight sting in the tail – prices for outgoing calls. The tariff is basically the same as for ordinary ThreePay, except that calls to other networks are 30p a minute rather than 20p.
  • 3’s owner, Hong Kong conglomerate Hutchison Whampoa, is known to be considering a Stock Market flotation for 3 UK. This is currently happening at 3 Italy, and the success or failure of that exercise will probably determine the timescale for a British IPO  – which could happen as early as this year.