Monday, April 21, 2008
Multi-Brand Strategies Deliver New Revenues; But Why Don’t More Operators Follow KPN’s Lead?
Kudos to this month’s Total Telecom magazine for an in-depth look at Dutch carrier KPN and the link between its ambitious multi-brand strategy and its impressive success. KPN counted 9.4 million subscribers at end-2007, more than double Vodafone’s share of the Dutch market. Granted, part of the growth can be attributed to the operator’s acquisition of Telfort, but the article also points out that a “blooming multi-brand strategy” has also contributed significantly to the stellar rise. In fact, it’s the multi-brand strategy that is allowing the operator to make gains in Germany and Belgium, markets where research firm Current Analysis estimates KPN had 14.8 million and 2.9 million subscribers respectively.
From Hi!, an offer aimed at Holland’s youth and “young, trendy, cool people,” to ethnic focused MVNO Ay Yildiz (a brand that appeals to Germany’s Turkish community), KPN commands a roster of customer-focused MVNOs that represent some of the most progressive thinking in mobile marketing today.
KPN “gets” it – which is why the operator is reaping the advantage. Muriel Arts, KPN’s CMO responsible for its consumer markets in the Netherlands, is quoted as saying: “We have found that you can get more market share by differentiating than building one brand.” She continues: “Consumers don’t all have the same needs. Really knowing their needs and tailoring the customer segments to meet their needs has given us significant advantage.”
More remarkable than KPN’s strong position on the benefits of multiple brands (and segmentation) is the lack of operators willing/able to follow KPN’s lead. Current Analysis’ Emma Mohr-McClune hits the nail on the head when she observes: “I’m quite astonished that no one else has picked up on this in a big way.”
Indeed, KPN has a head start on its competitors in understanding (and acting on) the fact that it’s Marketing 101 all over again: delight the customer with customization, meaningful segmentation and marvellous service.
Retailers have spoilt consumers with choice, and now it’s the operators’ turn. A long overdue shift if we consider that the operator plays a pivotal role in our personal lives. They are the key company that delivers consumers their most personalized services (communications, content, commerce) to their most personal devices (their mobile phones).
Against this backdrop, the Total Telecom feature speaks volumes about the current mobile operator dilemma (a problem for players except for KPN, that is) and the obvious solution.
Mobile operators must accept that they are no longer selling minutes to mass markets; they are expected to create new brands and differentiated offerings rapidly, securely and with real-time management. Their success depends upon their ability to offer the communications services portfolio that fits their target demographic.
In a game where winning is about delivering a wide variety of differentiated (translated: personal) communications offerings to a virtual Long Tail of niche customer segments, a multi-brand strategy is table stakes.
Current Analysis’ Mohr-McClune connects the dots to predict that “this year will be the year of multiple brands.” Operators that haven’t already will need to get their multi-branding strategies on track – or risk that their customers will be the ones walking.