Cynthia Gordon, CMO of MTS

Cynthia Gordon, CMO of MTS

Cynthia Gordon, CMO of MTS

Cynthia Gordon, chief marketing officer of MTS, talks about managing the direction and strategy of one of the largest carriers in Russia and the CIS.

The only British and only female member of the senior management team at Mobile Telesystems (MTS)-the largest mobile phone operator in Russia and the CIS-Cynthia Gordon seems unfazed by the challenges of determining the marketing strategy and direction of a firm with over 91 million customers spread across six countries.

The road to Moscow saw Gordon start out at Unilever as a management trainee after acquiring a BA Business Studies from Brighton University. After stints with UK retail banks Lloyds TSB and Abbey National from 1989 to 1993, Gordon made the move into the world of cellular communications (see career history).

Prior to joining MTS in January 2007 Gordon was vice president of Business Marketing at Orange so the jump over to the Russian carrier was a major departure. “Because this is primarily a consumer business, in terms of the majority of the customers and the majority of the revenue, there has been a strong learning curve,” she says.

MTS has a massive customer base, though penetration varies across its six territories. In Russia and Ukraine teledensity stands at 123 and 109 per cent respectively, according to Informa Telecoms & Media, while in Belarus, Armenia Uzbekistan and Turkmenistan it is 74, 72, 31 and 11 and per cent respectively.

The carrier’s network sits comfortably in an area larger than the entire continent of South America with a total population of over 230 million. In the last quarter alone the firm gained an additional two million subscribers.

One of the key cultural issues that Gordon has faced in Russia is the pace of business. “Decisions are made quickly and we see those returns very quickly as well, because the business is growing so significantly. In my experience the Russian culture is very decisive in terms of bringing together a lot of information, synthesising that information very concisely and making sure we make very clear and accurate decisions.”

A well-established system of business units and operational control helps Gordon and MTS keep growing the diverse business. There are three different divisions at MTS. Russia and Ukraine each have their own CEO and are separate business units. The four smaller territories, which represent about ten per cent of the carrier’s revenue, form another business unit with one CEO. Gordon, as with each business unit CEO, reports directly to the recently appointed MTS CEO Mikhail Shamolin.

Shamolin-who took the helm in June-had been VP of MTS’ largest business unit; Russia. His predecessor, Leonid Melamed, has moved on to become the president and CEO of MTS’ parent company Sistema -one of Russia’s largest consumer firms.

“We’ve found that what works really well within the marketing area is a mix of a few global international experts and a lot of very good local, CIS, marketers. So it is a balance of those things. Certainly, my role is more to do with setting strategy and direction,” says Gordon.

“In very practical terms there was an element of defining who and what we are. There was a danger that we could have gone down the route of becoming a low cost operator. That would never have been true to what MTS is or the customers that we have. We tend to have higher value customers,” she adds.

According to Gordon, the firm needed to carry out extensive internal research to define its mission, vision and strategy. “We described the strategy in very simple terms as ‘be more’ when we’re trying to give customers high level services and build affinity and emotional engagement with them. Then that moves to ‘do more’, which describes the types of services that enable customers to do things that they couldn’t do before. Finally there is a very practical level called ‘get more’, which is really about value for money and tariffing.”

Tariffs are, of course, notoriously difficult for some customers to get to grips with. Cynical commentators have been known to claim that carriers create complex tariffs to bamboozle, rather than serve, consumers. Managing the marketing for tariffs across Russia and the CIS must provide a wide range of challenges, particularly when attempting to present a common front.

“We have a common marketing strategy. But obviously in terms of the campaigns that particular markets have and the sequence they have them can vary radically. However, what we have seen in the past 18 months is the process of taking one tariff from one market, namely Russia as that is our biggest and most advanced market, and using it in other places,” says Gordon.

MTS reuses a lot of its advertising materials since the campaigns and services that it offers are common. “We have a common look and feel in which all of our advertising is driven, even down to quite small details. So the websites are all structured in a similar way, both at a local, regional Russia level and also in Armenia and Turkmenistan. We’re trying to, where practical, be consistent, share best practice and improve speed of execution,” she says.

When it comes to SIM ownership, the markets that MTS operates in differ greatly from those that Gordon has experienced in the past. Multi-SIM usage is common (hence the 120 per cent penetration rate for Russia), thanks to the geographies involved travelling domestically within Russia. Consumers will buy local SIMs when away from home to avoid costly long distance calling.

One of Gordon’s objectives is to ensure that people stay with MTS when they’re travelling. “That is definitely one of the challenges to make sure that we secure as much of that share. Pricing varies across regions, Moscow being the most expensive and obviously the less developed areas are cheaper,” she says.

Beside voice and SMS, other content is also proving popular, says Gordon, particularly ringtones and ringback tones-with about 80 per cent of the carrier’s music content being local Russian. Another local service proving popular with Russian subscribers is Odnoklassniki, a social network site comparable to Friends Reunited.

In much the same way that Western operators might look towards Japan and South Korea in an attempt to see where the next successful value added service will come from, MTS can look to Western operators for inspiration or warning, particularly when it comes to 3G. “That is one of the advantages of launching later with our 3G services,” says Gordon. “We see some of the teething pains of what services have worked, but also potential problems with devices have been worked through.”

Earlier this year, MTS launched 3G services in five cities: Sochi, St Petersburg, Kazan, Nizhny Novgorod and Yekaterinburg. The carrier plans to launch in another nine by the end of 2008 and has 3G licences in Armenia and Uzbekistan and expects to launch there before the end of 2008.

“We know that it is very useful for people because we widely enabled EDGE across our network in 2007 and we have seen very significant growth in usage of value added services in the data area. So we know absolutely that 3G will bring in the extra dimensions,” says Gordon.

MTS is leapfrogging WCDMA straight to HSPA and with broadband penetration at only ten per cent in Russia, the first experience of the internet for many consumers is likely to be through a mobile phone. “You might ask why, in countries like Armenia and Uzbekistan, where penetration is much lower than 100 per, cent do we feel that there is value in bringing data,” Gordon says. “But we definitely think there will be strong usage of data services. Visiting places like Belarus, you can already see that the iPhone is there.”

It’s might be a little early to be talking about next generation networks but Gordon throws a bone in the direction of Mobile WiMAX: “We’ve definitely looked at it in terms of technology strategy, particularly as we’re looking to step into fixed broadband, and it is a fast route to rolling our a network,” she says. “We definitely see other WiMAX operators coming into our territory and launch networks,” she says, adding: “But we have not announced any plans to launch a network yet. We definitely see that there are some advantages and we definitely believe that other operators-both existing and new-will be offering WiMAX services as well.”

With prepaid multiple SIM owning subscribers dominating the landscape and a lack of subsidised handsets available, it will be interesting to see whether those same subscribers are moved to take multiple contracts in the 3G environment as they did with GSM.

Career history

1985 – Graduates with a BA in Business Studies from Brighton University1985 – Starts career at Unilever on a management trainee scheme1988-1989 Abbey National1989-1991 Lloyds TSB1991-1993 One to One (T-Mobile) senior marketing positions1993-1998 British Telecom head of ChargeCard1998-1999 ACC International (AT&T) marketing director2000-2001 Demon/Scottish Telecom marketing director2001-2006 Orange Business marketing director2007 Joins MTS as chief marketing officer

Cynthia Gordon is a Freeman of the City of London and a Member of the Worshipful Company of Marketers

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