Virgin Media’s strategy to drive mobile into its cable customer base is reaping rewards with the number of its cable customers taking one or more prepay or contract phones up from 15% to 21% over the past year.
However, Jamie Heywood, Virgin Media’s director of mobile, is not resting on his laurels. He has the rest of Virgin Media’s cable homes firmly in his sights. He said: ‘Having over 21% of Virgin’s cable homes taking one or more mobiles from us is good but it is still only a minority of our cable homes, which means we have another 79% of homes to target.’
Cross-selling mobile services into Virgin Media’s four million cable homes is a central part of the company’s quad-play strategy to get customers to take all four of its services of cable television, broadband internet, home phone and mobile. ‘The Virgin Media cable base is important to us because that is the area where we can differentiate ourselves and add value in ways other operators can’t. By selling mobile to those customers it means we can keep them longer and we can lower churn rates,’ he said.
Virgin Media can also offer its cable customers highly competitive prices on mobile services. Heywood explained: ‘They know who we are. This is not a cold call and so it is very much easier to say, “why not add a mobile?” And because we have a trusted relationship with our customers we can give them mobiles for less than on the open market so our acquisition costs are cheaper.’The strategy appears to be working. Although Virgin’s prepay sales have declined over the past two years in line with the rest of the mobile market, Virgin’s contract sales have offset that fall, experiencing a significant rise.
In its Q2 results to 30 June this year, Virgin Media reported over 791,000 of its cable homes have at least one Virgin Mobile contract, representing a rise of 28% on the same period last year. In the second quarter alone its contract base rose by 53,900, while the total contract customers increased 22% to 1.64 million on the same period last year.
Virgin’s cut price tariff deals for its cable customers are also helping to drive mobile sales, said Heywood, pointing to Virgin’s Premiere tariff as an example. Launched this June as part of Virgin Media’s ‘Unlimitacular’ campaign, it offers unlimited data, calls and texts. Heywood said: ‘And when we say unlimited we mean it is truly unlimited.’
The MVNO has also made a big push into the Sim-only market this year, launching aggressively priced deals starting from just £15 for Sim-only contracts offering unlimited calls, texts and data to Virgin customers, on plans ranging from one month to a year.
Heywood said its free insurance across all handsets and tariffs was also proving a popular draw with customers. But isn’t offering free insurance a risky move in a market where operators and retailers are increasingly struggling with the rising cost of smartphone insurance? Heywood said it can be risky for other operators but insisted Virgin’s relationship with its customer base means the risks are far lower. He said: ‘Because 90% of our contract sales are with existing customers in our cable homes that we already have a relationship with, the risks are limited. Unlike our competitors we are not playing in the open market and so there is less chance of fraud.’
Converged an opportunity
The merger of Everything Everywhere’s (EE’s) Orange and T-Mobile’s networks last year has also brought benefits, said Heywood. As an EE MVNO Virgin Mobile gained access to both networks late last year. ‘Since that was rolled out to our customers in Q4 last year, we have received great feedback on the quality of the network and the improved coverage.’
Heywood is also looking forward to Virgin Media customers gaining access to EE’s 4G services and revealed the MVNO is talking to the operator about when its plans to roll out the 4G service to partners. But is Virgin still talking to other operators, as Mobile reported earlier this year, with a view to gaining greater control of its MVNO services? Heywood is guarded in his response. ‘We are always looking at ways we can improve the quality of our service and the degree to which other operators merit that discussion.’
However, he confirmed Virgin Media is also in talks with IT providers about ways in which it can expand converged services such as TiVo to its mobile customers. The rising number of tablets in Virgin’s cable homes has added impetus to the strategy. Heywood said that while Virgin has no plans to add tablets to its portfolio of devices, it does want to provide cutting edge services to customers’ mobile devices. He added: ‘Our mobile strategy now is looking at [providing customers with] TV anywhere and looking at the way we can take TiVo services onto these devices.’