One year in and already Virgin Mobile is rocking
In May this year, Virgin Mobile announced that it had won 100 000 subscribers (11 months in). This seemingly low number startled analysts and media reports used phrases such as “only 100 000” when describing the total.
Many will be shocked to learn that Virgin Mobile will sign up its 200 000th subscriber this month. Think about that. Netting 100 000 users in 11 months, and then that same number in only three? Something must be working.
Addressing heavyweight analysts and the media at an informal breakfast yesterday, Virgin Mobile MD Peter Boyd spoke about the company in the way a proud dad would talk about his young son being selected for a school sports team.
Boyd is absolutely confident that the company has the right target market, pitch to consumer and (now) the right business plan. Virgin Mobile hasn’t been without controversy though. The operator was forced (by market situations, the delay in introduction of mobile number portability, and problems with the original strategy) into revising its business plan at the start of 2007. Clearly this is paying dividends.
Boyd downplays market rumours about Cell C’s financial health. While clearly not being able to speak on behalf of his shareholder, he believes that “fundamentally they have a great network” and that as far as he knows things are definitely not as bad as rumours suggest.
Broadly speaking, Boyd also believes that the switching by consumers hasn’t really started yet. Boyd admits that mobile number portability is a start and there is a gradual increasing realisation among consumers that they can move to an option with better value for money (and that the move itself is not terribly complicated).
Obviously, at the drop of a hat Boyd (like the exec of any company) would try to demonstrate why Virgin Mobile is the best value for money, but broadly speaking consumers are beginning to look for better value for money in the market. Maybe you’ll get a bundle of free SMSs for free at network X or a lower monthly rate at service provider Y.
While numbers like Vodacom’s 21m prepaid “subscribers” dwarf Virgin Mobile’s 200 000, Boyd spoke at length about the idea – also part of the title of one of economist Ernest Schumacher’s books – of “small is beautiful”.
The company like most other Virgin Group entities is seemingly obsessed with the unique user (the company uses words like “consumer champion”). Boyd views the Virgin Mobile subscriber base as a “club” or as a tightly-knit group. In some ways, you can notice his background in marketing coming through.
“We do want numbers”, he says, “…obviously we’re proud of them.” But for him, Virgin Mobile’s space is not about relentlessly chasing subscriber numbers.
He argues that while the bigger networks spend R300m a year on advertising locally, he has a R50m budget. “We keep asking ourselves where our consumers want their money spent,” he says. Boyd is pretty sure they’d choose more value for money than more Virgin Mobile advertising.
“We simply look at the market differently to our competitors.”
It’s an approach that’s also worked well for another purveyor of everything cool, Apple. The two companies are very similar in their approach to the South African market. Both are very successful overseas, and both have started small when approaching the local market.
Boyd is a lateral thinker, evidence of this is the fact that he sat down with local Apple execs recently to discuss the two companies’ approaches. Yes, both have made mistakes but Virgin Mobile and Apple are both nimble enough to adapt, change or even ditch what isn’t working.
“The guys from Apple speak about controlling the [customer’s] experience,” Boyd says. “And that’s what we want to do”.
He admits Virgin Mobile has a fairly aggressive retail expansion strategy – expect more flagship stores (it opened four last weekend, for example). Boyd uses two of these, one at Southgate near Soweto and one at Greenstone near Modderfontein as examples of how they’re targeting their desired market. “You have aspirant consumers at both of these locations,” he says.
Boyd sees customer service as a fundamental differentiator to his competitors. Anecdotal evidence in the industry, suggest that consumers’ experience of Virgin Mobile could be much better. There is a lot of negativity surrounding the porting process, most of which sits outside of the control of any network that is being ported to.
“We’re not as good as I want to be,” he admits frankly. However, he readily answers that in his view, it is better than the rest.
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