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Orange aims to make it too painful for customers to churn

Maze Lost Trapped

As far as convergence goes, Orange is leading the way in the European telco market, perhaps worldwide, and it’s a sensible strategy; make it so difficult for customers to churn, they don’t bother.

Convergence is an attractive opportunity for telcos for several reasons. Having one customer consume more services is more cost-efficient operationally than several who consume one. Customers become brand ambassadors. Product and revenue differentiation is paramount to surviving the cut throat world. And of course customer loyalty is increased.

The last one is crucial, and seemingly at the heart of the Orange convergence strategy. Looking at the positive side of convergence, any customer who takes up more than one service with a telco will experience the benefit of lower monthly bills. It is a sensible route for those who are counting the pennies, or who want to become fully engulfed by the digital revolution. But when the time comes to leave it all gets a bit complicated.

This is the darker side of convergence, which telcos will say is an unfortunate accident, but deep down some more nefarious executives will know it’s actually the grand plan. Sure it is convenient to have one supplier at the end of each month, but when you want to leave Orange, you’ll have to search for providers for each of the services. Comparing different offers for one area is complicated enough, so some might just give up when it comes to several. There is more than one reason churn is decreased when you have convergent customers; leaving is a nightmare.

This might sound a bit negative, but it is a sound business strategy from the telco. It is actually offering a benefit to the customer at the end of the day. The best relationships are the ones where both sides gain something and this is one of them.

“The way we talk about convergence is important,” said Gervais Pellissier, Deputy CEO at Orange. “Our customers want convergent offers which are easy to understand.”

Consistency is one of the first steps. The convergent product will now be known as Love throughout all the markets, after being established as the main brand name in Spain last year, with Moldova last to join the convergent party after acquiring and integrating fixed assets in October.

The basic offering with be mobile and fixed internet, and after that there will be additional services dependent on the market. TV will of course be a popular one throughout the group, though there are plans to launch smart security services in Spain, finance has already kicked off in France and Poland, with plans to launch in Romania before too long, energy services are also taking off in Poland and there are various other IoT initiatives in the pipeline as well.

One of the next moves will be to recognise customers as households as opposed to individuals. Data plans and services can be shared amongst numerous individuals in the same household, which once again offers prices and efficiency benefits to the customer, but makes it more difficult to leave; you are no longer making a decision on behalf of yourself, but potentially several people.

And at the centre of the household you’ll have Djingo, Orange’s take on the virtual assistant launched mid-way through 2017. This is an important aspect of the connected vision which Orange has, as it creates a focal point for the customer.

“We want to be more visible in the day to day life of customers,” said Pellissier.

The speaker would act as an extension of the individuals mobile devices, and a focal point where all Orange services can be consumed or controlled through. It also creates a very useful opportunity for Orange to create new services and disseminate to its customers.

The big challenge Orange will face is against the OTTs who are launching their own virtual assistants, and doing a very good job of flooding the market with their presence. Google and Amazon in particular are dominant, and Pellissier admits Orange will not be able to compete with the pair in terms of R&D resource, but it does have a USP which might attract the attention of some; data privacy.

Google and Amazon are two brands who will make money in this space by monetizing your personal information. They will engage third-party advertisers with insight so you can get spammed about 2-4-1 offers at Odeon. Pellissier highlighted that Orange will only use data to enhance its own platform, improving experience, or possibly to create new offers. This might appeal to some of the more privacy conscious/paranoid.

For the moment, it is unclear whether this is a concrete commitment, as it should be worth noting Orange is not able to monetize data in the same way as OTTs due to regulatory restraints. When the playing field is levelled, we’ll see how committed the telco is to data privacy, but for the moment it is an interesting twist for advertising campaigns.

The final point worth highlighted about convergence is the rationale behind Oranges ambitions. It doesn’t necessarily want to absorb more market share, but increase the ARPU of its current customer base. In what could be known in the industry as ‘sweating assets’, the idea is to increase brand loyalty and stickiness through absorbing more of the household outgoings. It is cheaper to upsell additional services to a customer which already trusts your brand, and also makes leaving your web of services more difficult once again.

In France, Orange is the market leader; acquiring additional customers is difficult. In Romania, 50% of customers are an Orange customer in some way or form, and in Moldova, Orange has a mobile market share of 60%. These are markets where it is difficult to acquire additional share without ludicrously expensive campaigns; it is a logical business decision.

This is a very sensible strategy from Orange, as it continues to live up to its reputation as one of the most innovative telcos worldwide. But for those who are thinking of saving a few euros each month bear in mind it might be a bit more difficult to escape the grasp of the brightly branded telco once you are in the connected clutches.

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