Free… Free… and better than free

Part four of eight explores why the discount habit destroys the means of ever fixing it. If texture is the cheapest proof a brand can own, price is the most expensive. Part three made the case for building belief through surfaces. This part is about the alternative strategy, the one almost every regional operator has chosen instead, and the peculiar arithmetic that makes it so hard to escape.

Many of the regional players have forgotten about winning hearts and minds and seek to win through the wallet alone. Bundle after bundle, offer after offer, discount after discount, from free to better than free.

But where does that game end? Who wins? Certainly not anyone attempting successful telecom branding, because every one of those offers is funded out of the same pot.

The quiet tragedy of the discount habit

In the race to the bottom the operator loses out through ever lower margins, and ultimately the consumer misses out on a great brand experience. Here is the part that ought to worry any board. Even if the operator finally understands the power and value of creating brand texture, by the time they get there they no longer have the budget to deliver it.

That is the quiet tragedy of the discount habit. It does not simply postpone successful telecom branding, it removes the means of ever funding it. Every point of margin surrendered to a tactical offer is a point that will never be spent on the store, the packaging, the service recovery or the people. You do not just lose the year. You lose the ability to buy your way back.

“The essence of strategy is choosing what not to do.” — Michael Porter

Porter’s line is quoted constantly and followed almost never. A discount is not a strategy, it is the absence of one. It is what a business does when it has decided not to decide.

Portability changed the maths

In the era of number portability the consumer is tied by little more than cost and contract. The number, which used to be the strongest lock an operator owned, now walks out of the door with the customer.

Strip that away and ask honestly what is left. If loyalty is just about money then the prize goes to the cheapest operator. And that, as any global brand leader will tell you, is a losing strategy, because there is always somebody willing to be cheaper for longer than you can afford to be.

Successful telecom branding is the only real defence against that arithmetic. Not because brands are romantic, but because a preference that exists in someone’s head is the only thing a competitor cannot undercut by five per cent on a Thursday.

The uncomfortable comparison

Consider how a customer talks about their operator compared to how they talk about their handset. One is described with adjectives. The other is described with a number, usually a price, occasionally a complaint.

Successful telecom branding is simply the work of moving your brand from the second conversation into the first. Ask yourself which of those two you would rather appear in, then look at what proportion of your annual spend is currently working towards it. In most operators the honest answer is somewhere near zero, and it has been near zero for so long that nobody thinks to question it any more.

Next in part five: an awkward question about whose brand experience your customer is actually having when they pick up their phone, and the one moment in the year when loyalty is genuinely up for grabs.