O2 – Look after your customers and they’ll look after you!Annalisa Smith – Senior Client Service Co-ordinator

Success of O2 in the UK Mobile phone categoryThe UK mobile phone market boomed inth l t f th 21st t d

They also tapped into the businessmarket by developing different contractswhich appealed to different sized

i Thi ll d tthe early part of the 21st century andpenetration of mobile phone userstopped 74% in the UK by the end of20041. Anyone who wanted a phone hadone so it was no longer easy to attractnew customers to the category. The bigcategory players needed to out-smartthe competition to increase their marketshare and focussed on developing new

companies. This allowed consumers tofeel that their needs were being wellcatered for and they were being valued.

In 2002, there seemed to be a generaldissatisfaction with the mobile operatorcategory compared to other categories.For example, BRANDZ data shows that in2002 only 26% of consumers werep g

schemes to lure in new customers fromtheir competitors. This behaviour fuelledhigh churn between providers with threequarters of consumers in 2004 beingprice driven. O2 took a different tackand in 2005 turned the market on it’shead with a strategy aimed at customerretention. In fact, O2’s ‘A World ThatRevolves Around You’ campaign as well

ytotally satisfied with the Mobile telecomsmarket as a whole, placing it behindsectors such as Banking, Credit cardsand even Insurance. It looked evidentthat the mobile phone operator marketneeded to be shaken up entirely in orderto satisfy its consumers.

Revolves Around You campaign, as wellas helping to retain customers alsosucceeded in attracting new onesmeaning that by the end of 2005, O2had the largest UK user base2.According to Eddie Murphy (Director,Priority Consulting Services Ltd) “In asaturating mobile market, out-performing the competition on churn is

2002 Totally SatisfiedUK Data

Cars 38%

Banking 37%

Credit cards 34%

Insurance 28%a crucial weapon in the battle tocontinue subscriber and revenuegrowth. Choosing the right customer-retention strategies will be the key tocontinuing success.”

Listening to what customers want?O2 was re-born out of the former BTcellnet brand and went from strength to

Insurance 28%

Mobile phone operators 26%

Re-invention and momentum

In 2002, the category was dominated by the likes of big players such as Orange and Vodafone. Not only was O2 unknown cellnet brand and went from strength to

strength from the time of it’s launch in2002. Its success came from makingsure that all segments of the marketwere catered for, from those whopreferred the flexibility of pre-pay andthose who preferred the benefitsprovided by taking out a contract.

a d oda o e ot o y as O u oin the market but it’s future wasn’t looking promising as predicted by a negative Brandz voltage score.

BRAND SIGNATURES 2002

ding

Year

Con

sum

ers

at B

ond

By 2004, it had overcome its lack ofmarket presence but was still failing topersuade consumers about its advantageover the other brands, as can be seen byits brand signature.

Living up to brand promise – Why areO2 customers more satisfied?

O2’s diagnosis of bonding shows apositive turnaround for O2 with levelsin 2007 above expectation on categorydrivers such as offering better pricesand fairer billing rates.

Diagnosis of bonding

Fairer and more transparentbilling rates

Overall give you a

7%

6%

However, tracking the brand over a 5year period to 2007, we saw O2 grow tobecome one of the strongest brands inthe UK mobile operator market.

O2 are also in a really strong positionin the market with a much higherpercentage of consumers who say thatO2 is the only brand they wouldconsider. This is double the categoryaverage of 7% and 5% more than itsnearest competitor, Orange. Amongst

better deal

The brand’s awareness had grownconsiderably and was now +10%against the category average. Perhapsmost importantly the brand’s bondingscore was now the highest among itscompetitors. The outlook for the brandwas also much stronger with a positivebrand voltage score of +3.6 showingthe brand is set to gain market share in

O2 users this has rocketed from 22%to 39% in 2007 and again is higherthan Orange (25%) and Vodafone(21%)

Amongst the consumers who arebonded to O2, we see that ‘meetingneeds’ is the most important factor fordriving bonding in the category. So, itthe brand is set to gain market share in

the future. The higher the brand voltagescore, the more likely your brand willconvert consumers from presence tobonding at the expense of other brandsin the market.

driving bonding in the category. So, itdoesn’t take a genius to work out thatthe only way to meet needs ofcustomers is to listen to ones we have– getting the business basics right cansee payback.

RecommenderZ – Would you Look after your most valuable asset recommend your mobile phone operator?

O2 had done something right but canthis be all attributed to putting thecustomer first? To gage this, we canidentify if O2 customers are likely torecommend the brand to their friendsand colleagues as the pay off from O2’s

yand they’ll look after you

The outlook for O2 is strong based onits brand voltage score and thecompany should continue to benefitfrom putting their customers first.Acquiring a new customer can cost 5times more than satisfying thecustomers that you have4 somethingand colleagues as the pay off from O2 s

customer satisfaction can be seen intheir likelihood to recommend thebrand to others. O2’s RecommenderZscore is 66 which sits 10% above thecategory average.

It is clear from the data that lookingafter your customers reaps benefits in

f b h i i d

customers that you have4, somethingO2 must have known and now used totheir advantage. According to thesame source a 2% increase incustomer retention has the sameaffect on profits as cutting costs by10% or put another way a 5%reduction in defection rate canincrease profits by 25%-125%

terms of both retaining customers andattracting new ones; “as good profitsare earnings from creating customervalue, which in turn, creates customerswho are then promoters” 3.

So the old adage of treating others asyou would wish to be treated yourself isa simple truth that turned out to be the

depending on the industry.Pretty powerful statistics to spell outthe importance of keeping yourcustomers happy.

[1] IPA Paper – O2 The best way to win new customers? Talk to the ones you already have –pg 103a simple truth that turned out to be the

key to O2’s success.

Satisfaction in the market

So since the launch of O2, areconsumers more satisfied with thetelecoms market on the whole? The

t thi i ! I 2002 l

pg 103[2] O2 internal and external market research estimates – IPA Paper – O2 The best way to win new customers? Talk to the ones you already have –pg 103[3] Fred Reichheld[4] "Leading on the Edge of Chaos", Emmett C. Murphy and Mark A. Murphy

answer to this is yes! In 2002, only26% of consumers were totally satisfiedwith the market. Since 2002 and thelaunch of O2, this has risen to 38% asa category average with 41% of O2customers being completely satisfied.

Annalisa Smith is a Senior Client Service on Brandz at Millward Brown, the leading international brand and communications research consultancy

Brandz is the WPP global brand equity studyAvailable to clients and potential clients viaWPP owned companies. It is validated against sales and quantifies and diagnoses the strengths weaknesses of brands.