the disloyalty that globe handyphone's loyalty and rewards program creates

marketing 101 says loyalty and rewards programs are very effective tools in keeping subscribers happy with your service and more importantly to stay loyal. that means loyalty and rewards programs are meant to prevent existing subscribers from cutting off their subscription with the company and switch to a competitor.


it is also much more cost effective to keep customers loyal than to look for new subscribers. marketing and acquisition costs for new customers is much higher and much more difficult for companies.

what makes all of these critical is that the mobile phone service industry is probably the most competitive mass consumer market in the country. we know this with the unending and heavy advertising and promotions launched by the top three competing companies – sun, globe and smart.

the three competing companies offer unique plans and a full range of options for the consumers to choose from. many of these are value packed, offering very low cash outlay and monthly fees. when the market already competes on price, you know that the market is reaching maturity and is already near saturation point.

the market is also reaching near-saturation point where a large part of the demographics, in practically all segments already own a cell phone and already subscribe to a mobile service provider.

what this tells you is that a mobile phone service provider’s way to market share and revenue growth is to (1st) keep your current customers loyal; (2nd) increase usage of loyal customers through more value added services and (3rd) gain new users.

what is the point then that globe has kept it’s loyalty and rewards program secret from it’s subscribers?

we have been getting some feedback from a yahoogroup we are a member of. members are saying the loyalty/rewards program of globe has been there for a long time, it’s just that they don’t tell their subscribers about it. you only get to know about it by accident – from friends or when you call their hotline number and accidentally ask about it.

apparently, smart is less secretive about their loyalty/rewards program. smart puts it in fine print on your cell phone bill to let you know about it. it is in fine print but at least you are told about it. globe does not put it anywhere in your bill and they don’t tell you about it when you call them. you get to know about it only when you ask them about it.

for me, keeping the loyalty/rewards program a secret from subscribers indicates insincerity. why would you develop a rewards/loyalty program when you don’t intend to let your customers know about it? keeping it a secret from subscribers is very much equivalent to not having one.

we are familiar with rewards/loyalty programs - the SM group has one, mercury drugstore and national bookstore as well. these stores publicize it with posters and their cashiers ask you if you have one. if you don’t , they will ask you if you want to get one. to these stores, it’s not a secret they actively recruit members to it.

the most obvious negative effect of keeping it a secret from subscribers is that the program is not being used as a tool the way it is intended to be used. not having a lot of subscribers using it also says the program is not achieving it’s objectives.

there is a feedback given in the yahoogroup we are a member of - this subscriber has been with globe for a long time, since year 1 of globe operations in 1996. she accidentally found out about globe’s loyalty/reward program from a friend. she calls the hotline number to inquire about it and globe did not even apologize for not letting her know about its existence. disappointed, she closed her globe account and switched to smart. since she moved over to smart, she has gotten 2 new cell phones as her reward and is very happy with smart.

in that incident, the loyalty/reward program that was kept a secret actually caused disloyalty from a subscriber. it achieved the exact opposite of what it is supposed to achieve.

we know that smart telecoms monitors their churn numbers on a daily basis. churn is the result of subtracting the number of subscribers dropping the service versus the number of new subscribers joining the service. having a positive churn means the total number of subscribers is increasing while a negative churn means the number of subscribers is shrinking. a positive churn means increasing market share of number of users while a negative churn is a decrease in market share.

to smart telecoms, it’s important that they continue to grow in market share. a negative churn turns them into a panic and will immediately launch new programs to entice new users or keep existing ones.

that is the kind of marketing that smart does and it shows as smart continue to be the dominant mobile service provider in the country.

smart has an interesting history. smart actually built their market through very aggressive marketing.

smart was not the market leader when they started in the market. piltel which was still owned by pldt and separate from smart was the market leader. globe entered the market and took leadership away from piltel. through aggressive marketing, smart over took both piltel and globe and since that time, smart has not only sustained it’s leadership, it has achieved dominance.

in case globe is wondering why they are unable to get switchers from smart subscribers, perhaps the answer can be deduced from this incident – smart does not keep their loyalty/rewards program secret from their subscribers, they tell them about it. smart users are loyal subscribers because they are hooked by their loyalty/rewards program.

on the other side, in case globe is wondering why they keep losing their post-paid clients to smart – it is probably because they have kept their loyalty/rewards program a secret from their subscribers.

posted here: http://wawam.wordpress.com/2010/04/19/globe-telecoms-secret-loyalty-and-rewards-program-that-creates-disloyalty/

Smart/PLDT's "Ako Mismo" TV Spot

it's a simple ad and very easy to understand. but what gets you in this ad is what seems to be the unending number of celebrities from all fields appearing in the ad. the talent fee cost of this ad is mind-bogglingly crazy. it has probably has the most number of zeroes anyone has ever seen in a production cost estimate.

it's not a surprise that the company that paid for the ad is smart/pldt, two of the country's largest and most successful businesses.

cellphone service providers steal our money - the philippine experience

this is the life of a cell phone service subscriber in the philippines:

• texting (SMS) is cheap P1.00/text.
• we get a lot promotional text that we do not subscribe to
• for some of these promotional texts, we get charged for every text our cellphone receives even though we did not subscribe to it
• if we do not reply, the texts don't stop, the charges continue
• instructions on the messages say to disable them, you need to send a text reply that says "STOP", some of them charge us for asking them to stop sending us text
• some don't stop sending you texts even if you already send a "STOP" disable message to them
• some of the steps in disabling them don't even work. checking what you are "subscribed" to will tell you are still subscribed to it even though you have a disable text a few times already
• to get relief, we call customer service
• when you call customer service, you are asked to wait a few minutes as they are still serving other subscribers
• when you finally get to talk a customer service representative, she tells you you should have not subscribed to it
• we correct them and say we never subscribed to any of it in the first place
• they give you instructions on how to disable it
• you tell them you have done that a few times already but it has not worked
• she repeats again this thing about not subscribing to these services
• once again you correct them that you had not subscribed to it in the first place
• throughout the conversation she will repeat this accusation and each time you correct her until you get really pissed and order her to stop saying that as it is very irritating
• you ask what will happen to money they took from you on a service you did not ask for
• she says she will make a report and she will get back to you in 3 to 4 days
• you complain why it will take them 3 to 4 days to resolve it when everyone knows it is a problem with their service and that you are not the only one who has complained about it
• she says it will still take 3 to 4 days
• having had enough of it, you ask to speak for a supervisor
• she tells you the script - her supervisor is busy entertaining another customer
• you don't budge and tell her you will wait. she puts you on hold.
• she comes back after 3 to 7 minutes and tell you he supervisor is still busy with another customer
• you raise your voice and you say you will wait. she puts you on hold
• after a few seconds, a supervisor talks to you
• you have to repeat to the supervisor everything you said
• the supervisor repeats everything the agent told you
• you are now mad and insist she returns the money they stole from you
• the supervisor says it takes 3 to 4 days to return the money that they took from you on a service you did not ask for and did not want
• you get even more mad and you insist you want the money back now
• you tell her this has happened to you before and other supervisors were able to return your money instantly
• after some heated words, she relents and returns the money to you
• this whole session will last anywhere from 20 to 30 minutes
• this whole thing will happen again and you will once again repeat the whole thing with another agent and another supervisor

the philippine cellphone service market is mostly made up of pre-paid subscribers, around 80% to 90% of all subscribers. and most of these subscribers are ordinary people who will not have the time or the courage to talk to customer service agents to complain. and many of them most likely are not aware their money is being stolen by the cellphone service providers. sadder still is that most load up their cellphone with only P20 to P30 per day. getting an unwanted text of say 3 to 5 a day means 15% to 30% of their money is being stolen.

and that is why we love senator enrile for telling a lie for us. senator enrile is standing up for cellphone service subscribers like us. he told a lie but it's ok, we forgive him. we don't mind that as long as he helps us and stop the cellphone service providers from stealing our money. read here: http://bit.ly/jLtOH

PLDT & Smart Telecoms "Ako Mismo" - ako may duda, dapat kayo din

(english backtranslation of title: "PLDT & Smart Telecoms "I Myself" - i am suspiciousm you should, too)

we saw this ad very often during the pacquiao-hatton fight. impressive list of celebrities. this is next in WAWAM.

read more about it here: http://tinyurl.com/qguvpx

red mobile takes the long road to something

a new mobile service was launched last year, red mobile. we're not sure if the philippine market can take one more. the top 3, smart, globe and sun cellular is just about to reach saturation levels. smart is the dominant leader followed by globe and a far third is sun cellular.

red mobile is going after sun cellular. what? why go after sun, the smallest of the three? we will answer that question later.

sun's core strategy is excellent value. they launched on the basis of unlimited calls and unlimited texting. that has caught on as there is a growing segment of the market, most specially among teen-agers and young adults who have switched to sun and an even larger segment who have added a second cell phone to their globe or smart cellphone service.

the mobile phone market is quite mature in the country and many have actually more than one handset. users tend to replace their handsets often and buying a second hand or used handset is quite easy and cheap. so, adding a second mobile service is quite easy. the habit is to use the sun cellular handset when you want to indulge yourself with numerous text sending or make long calls.

sun cellular, however, has not grown its market share to anywhere close to being a real threat to smart or globe for a simple and really idiotic reason - not enough cell sites. everyone knows texting and calling a sun cellphone is a very painful process. the network is always busy or over loaded that you can't get a line or the person you are calling is often out of coverage. texting is equally painful - success at sending texts takes a long time and receiving one takes longer.

and now to the question - red mobile is going after sun as most likely red mobile was launcheed as a flunker brand, a brand owned by smart or globe meant to blunt further growth of sun. our guess is it is owned by smart.

will red mobile succeed? we don't know yet. it might, but we need to wait for sometime.

red mobile's lowest costs are only applicable for texts and calls to other red mobile cell phones. and since this is a new mobile service provider, there are very few people who have it. everyone will simply be on a wait and see mode.

the other turn off factor here is that, they are not offering superior or even the same rates as sun cellular. sun is offering unlimited text and unlimited calls, red is not offering unlimited texts/calls, just lower rates versus globe and smart. they are actually selling quality and reliable service - calls will be clear, you can text/call anywhere in the country and you will not experience network problems. those are all sun cellular issues or problems.

now there is a lot of problems with that strategy. here's why - red is going against sun cellular not with superior rates but better quality and reliable service. quality and reliable service is something sun users are used to and obviously something they don't mind suffering from. the fundamental reason why sun users have stayed on is the unlimited text and calls or best price/value point.

we think there is no way red mobile will be able to get sun users to switch on the basis of better quality and reliability. price/value point is THE motivator and poor quality and reliability is just an inconvenince to live with.

that kind of attitude is true for many other services and products the filipino consumer buy - they will not mind a less than superior or less than perfect service or product as long as it gives the best or lowest price point.

red mobile's marketing strategy is a WAWAM!

smart telco's wrong send tv spot

this ad can be classified as a public service ad. it's supposed to educate cellphone users on how best to use the cellphone. in this ad, it's how not to get yourself in trouble with your boss.

while the ad is entertaining in some ways and communicates the point of the ad, it really does not do anything to the Smart brand. it's a story that is truly generic that it applies to any subscriber of any cellphone service provider. if it's too generic, why bother to produce and air the ad at all?

advertising money is very precious. you want every advertising money you have to work for your brand. it should either build an image or sell more. the best kind is the one that does both.

does this ad make smart more endearing to consumers? or do this ad make non-Smart subscribers want to switch to Smart? on both questions, we think the answer is no. so why bother?
we think it's a WAWAM!



english backtranslation of the SMS text sent by the employee:

Pilipino : "Kalbong ito!!! Gabi na! Wla na FX!"

English : "This bald man!!! It's already late in the evening! There won't be any FX (mode of public transportation like a taxi with a fixed route shared by other passengers) anymore!

smart buddy's "me na me" is who na who?

the philippines is the mobile phone texting capital in the world, sending an average of 600 million texts a day. that is impressive not only because of the sheer number of the texts, but consider that the philippine population is only at 80 million. at 600 million a day, it means on average, including babies who were just born, filipinos sent 7.5 texts to each other.

the country reached that phenomenon through the brilliant marketing effort of the telcos in the country, the top two, smart and globe. smart is the dominant leader and could largely be credited for making what the mobile industry is in the country now. they pioneered best value texting, costing only P1.00 per text (US$0.02).

at that price, sending text easily became very pervasive so much so that a new form of written, err, texting language evolved, to the horror of the country's english and filipino professors. from the written, that has jumped into the spoken language as well.

one of that is this smart telco ad campaign where they use the tagline "me na me" ("it's very much me"). the english word "me" is being substituted to the pilipino word "ako" (same meaning as the english "me"). you say "tulog na me" ("i will already sleep") rather than "tulog na ako". it's youth-speak, the slang that teen-agers and young people use. it's not yet as pervasive in the spoken language, but it is used often in text speak or when you send text.

smart is the dominant leader among the mobile phone service brands. their consumer base is truly across the board and among the competing telcos, probably is the closest to the general profile of the philippine population where a large portion belongs to the lower socio-eco class.




being the dominant leader and having a consumer base with a large mass base, smart can rightfully use and own a tagline like "me na me" ("it's very much me"). smart is the cellphone of the masses, and that is a compliment to their marketing savvy.

the only problem is the commercial that they aired uses that tagline.

the ad uses 4 of the country's hottest celebrities - piolo pascual, the present matinee idol and heartthrob; angel locsin, one of the most beautiful and most popular actress and also a heartthrob; and gerald alcantara and kim chiu the new and up and coming superstars on the footsteps of piolo and angel. aside from being extremely famous and top on the list, they are also extremely rich.

and that is where the disconnect begins. the target market is the broad based consumers, the masa. the tagline, "me na me", is being expressed in the actual language they use in their texting lives. that means that will pull in empathy and will ring very true among their target market.

while these very popular and very rich celebrities in the ads are their idols, these celebrities are not who the target audience are. they idolize them, they can even aspire and dream to be like them, but they cannot truthfully say these celebrities are "me na me". they know the lifestyles these celebrities have is not their lifestyle. they know they live in two very different worlds. aspiration and reality are two very different things and one of the two often times do not become a reality.

it might look cute, but come on, piolo pascual will not use a pre-paid card for his cellphone service as it is depicted in the tv ad. he has a post paid subscription where he probably pays on a monthly basis the amount equivalent to two to three month's salary of an average wage earner in the country.

the use of not 1 but actually 4 celebrities is one heck of a thrill when the ads were conceptualized and developed. the crafting of the line "me na me" could have been really exciting. but merging the two into one ad without even trying to bridge the inherent problems each one had puts into play believability issues and makes this ad campaign a WAWAM!

-------

Text messages soar in June–NTC
By Darwin G. Amojelar, Reporter

DESPITE soaring consumer prices, the average number of text messages sent per day rose by a fifth as of June, the National Telecommunications Commission said Friday.
Edgardo Cabarios, NTC director for common carrier and authorization, said the agency estimated about 600 million texts per day as of June this year, higher by 20 percent than the average of 500 million texts per day in 2006.

“The system is processing 600 million texts a day,” Cabarios told reporters and calculated that a subscriber sent 10 texts per day from only seven texts two to three years ago.

article parsed, read in full here : http://www.manilatimes.net/national/2008/aug/30/yehey/business/20080830bus6.html

globe handyphone and the 3G i phone : part 2

wonder what globe handyphone will do when they launch the iphone? and more importantly, how does globe see the iphone?

in some ways, it's good that globe did not join the global launch of the iphone last july 11. the launch suffered a glitch on the internet side of the launch. so it saved globe some headache. launching the ipod on a latter date makes sure globe's own launch will go on without a hitch. but what they have lost in not joining the global launch is the goodwill and the excitement. they could have ridden the momentum.

will globe look at the iphone as the fulcrum to take them to leadership as many other foreign carriers have or will globe look at the iphone as just one more cell phone in their list of many cellphones?

globe has been unable to get leadership from smart. not that we have seen globe try hard enough, but i'm sure it's every brand's dream to be market leader. the prize for being the market leader in the philippine mobile market can be a very rewarding one. globe has shown aggressiveness in recent months, but i don't think they have done anything powerful enough to tip the scale to their favor.

and as far as WAWAM! is concerned, we think the 3G iphone has what it takes to make globe take leadership away from smart.

but does globe have what it takes to make it happen? i see the iphone as an excellent gift to the marketing plans of globe. there are many superiority points that they could actually use. and the good thing about it is that smart cannot match it. as of now, there is no other cellphone in the market that can match the iphone's reputation and technology.

does globe have the attitude and culture to use the iphone as it's lead weapon to leadership? we have seen the kind of aggressiveness smart can deliver, but not on globe. globe seem to belong to a corporate culture that is too slow and too cautious. they are not used to skirmishes.

WAWAM! says the iphone is one of those once in a lifetime marketing gift to take globe to leadership. let's see if globe is up to it.


more on this in WAWAM!.....

impact of price and "value for money"

here is an interesting article on how price movements and the resulting "value for money" enhancement affects volume and market share. this is telling us that for products that start out very well and become icons, they can demand a steep price for consumers to pay and even grow market share. and when it starts to reduce it's price point, it's sales will double and even triple as it continue to leverage it's icon status and widens it's consumer base. in the end, the price cut pays handsomely in terms of a significantly wider consumer base.

that's a lesson that not only smart and lobe but also for coca cola. actually, globe and specially smart already know that, it's the cell phone makers that don't and even the other tech products being sold in the philippine market.

philippine tech companies that sell things like computers and mp3 players, in my view are too greedy to the point of already being immoral. will talk more about that in the next postings.




-----------------

AT&T price cut could juice iPhone salesBy Scott Moritz

AT&T’s (T) planned $200 subsidy on Apple’s (AAPL) iPhone could increase the sales of the new 3G model by 50%, according to one analyst.

Using a comparison to price cuts of Motorola’s (MOT) Razr — the 110-million-units-sold wonderphone from yesteryear — Bernstein analyst Toni Sacconaghi says its reasonable to expect that AT&T could more than double its iPhone sales, which currently account for half of all Apple’s iPhone numbers. He made the analysis after Fortune first reported the plan by the Apple’s exclusive iPhone partner to cut the price of the upcoming 3G version of the phone.

Sacconaghi sees a strong parallel in the scorching history of Motorola’s Razr phone. In 2005, Razr’s expensive ultrathin metal-clad design went from being the coveted phone of the moment to a pop culture sensation as the price fell.

“The Razr’s unit sales run-rate doubled when its price dropped from an initial $500 to $150, then doubled again when the price fell further to $100,” Sacconaghi wrote in an Apple research note Thursday.

“While offering the subsidy would cost AT&T $200 per iPhone user, we estimate the cost would be more than offset if the subsidy results in an increase in the iPhone subscriber base of around 100% - which appears to be a realistic assumption in light of the Razr’s experience,” he wrote.

Sacconaghi is an Apple analyst but he says he has not confirmed the price cut plan with Apple or AT&T.

Cell phone and smart phone subsidies are common throughout the U.S. and Europe. The iPhone was unusual in that it was sold at full price. Despite the hefty $400 price tag, Apple has sold 5.7 million iPhones, over half the way to its goal of 10 million for the year.

For AT&T, the phone is fantastic bait to reel in customers from rivals like Verizon Wireless (VZ), Sprint (S) and T-Mobile (DT), at a time when wireless growth is slowing. To date, AT&T says about 40% of iPhone customers are coming from other services. Not only does the iPhone lure customers, it brings in the type of customers that the industry cherishes: big spenders.

AT&T says it rakes in an average of $95 a month from each iPhone customer, nearly twice the average monthly bill of its conventional cell phone user. With faster 3G phones, it’s likely that iPhone fans will spend even more money time on the mobile Internet. AT&T has a revenue sharing agreement with Apple where it forks over as much as 25% of its iPhone customers’ monthly payments to the company.

The remaining take for AT&T is between $70 and $75 a month per iPhone user totaling more than $1,700 over the life of the two-year contract, wrote Sacconaghi.

AT&T plans to lock the subsidized iPhones so they can’t be used on other companies’ networks. That leaves it open to debate whether Apple will sell unlocked, unsubsidized phones at its stores. Sacconaghi says people might pay a premium for an unlocked iPhone, untethered as it would be from the AT&T service. “We believe the availability of factory-unlocked iPhones would further stimulate overall iPhone sales, though price may remain a barrier to truly mass market adoption.”

The mass market however, is a double-edged blade as Razr observers will note. Razr’s ride to popular glory was followed by a plunge into ignominy as the price of the phone went to zero, a precursor to the downfall of the Motorola’s mobile phone business. But that is one Razr parallel Apple fans aren’t likely to make.

http://techland.blogs.fortune.cnn.com/2008/05/01/atts-price-cut-could-juice-iphone-sales/

smart's "best for value" brand positioning

this is one of the first tv ads that smart ran when they launched the brand. it is clearly on a "best value for money" positioning. it's a good example how a brand's positioning is carried through from brand name to tv ads.

http://the-wawam-file.blogspot.com/2008/03/part-5-how-not-to-name-brand-strategic.html

part 5. how not to name a brand : strategic issue - what is an ice cream product?

“smart” was used as a name for a cell phone service provider positioned as giving “best value for money”. at the time of launch of smart, there were three players - globe (GSM), piltel (analogue) and extelcom (GSM). smart intended to use analogue as its less expensive operational cost allowed them to under cut competition’s prices and quickly gain market share.

the choice of “smart” as the brand name was strategic, to uphold its “best value for money” brand positioning and to communicate that users who chose the brand were being smart about it. smart has in fact upheld their positioning even when they moved to GSM but not necessarily through undercutting competition through lower pricing but through industry leading value added services that resulted to the same best value brand image.

that is to show how a brand’s positioning is carried through to naming a brand. strategic thinking was applied through all components of the marketing mix, including the naming of the product.

a look at names of international ice cream brands tell you that they tend to be flavor oriented. that makes a lot of sense as in truth an ice cream is an ice cream is an ice cream. all of them are cold, most are sweet and creamy but the main differentiator is the flavor. there can be variances in texture through additional things like nuts and raisins but even in products like these, they still anchor the differentiator in the flavor.

nestle’s new ice cream product’s core reason for being is the three fruit flavors of melon, watermelon and orange. this is shown in what appears to be a tv comercial when you go to the website, but it is not mentioned in the product description, we can assume the flavors will not be mixed together (sure a bad tasting product id done!) but separated in the tub. we can also assume the product will have three colors (not mentioned in the porduct description but shown in the tv commercial) to signal the three fruit flavors. the three flavors then is the core strategic consideration for the product (not a “promo”!). this differentiates the product from others. the name should deliver.

it is this reason that the name submission “triple delight” (and others that use the idea of “three”) works very well. it highlights the core essence of the product and talks about appetite appeal (”delight”) without being too laborious and boring about it. its a complex product design, with the three flavors, and putting these in the name is just too cumbersome and impractical, if we were to follow what the international ice cream brands did. the tv commercial shown in the website mentions "tres marias" as a copy line, a suggestion for the name. "scramble" and "karambola ni lolo" were the other "suggested names, talking about the three unique flavors. the suggested names mentioned in the commercial clearly implies "three" or "triple" flavors is the core reason for being for the product.

when “triple delight” got a lot of votes, other copycat names were submitted using the concept of “three” or “triple”. but the authors submitted those only because they were riding on the popularity of the idea behind “three”, not necessarily because of an appreciation of strategic thinking.

now, we have basically two sets of names in the list of finalists - one along the concept of “summer” and the other on “triple”. that is the nature of a popularity contest like this thats posted in the internet where there are no cut-off dates for submission.
will this product have a name that will uphold the brand’s positioning the same way as “smart” did?

to be continued….

nestle : http://www.givemeaname.ph/