10/7/2009 11:10:00 AM
Will schemes such as Giffgaff actually work?
The concept of asking consumers to become important cogs in operators’ machines appears to be an emerging trend. O2 and 3 have recently launched new operations with this principle at the core of new business models…
What are these ‘customers-as-staff’ operations?
Giffgaff: Dubbed the ‘people powered’ MVNO, Giffgaff is due to launch before the end of 2009. The Sim-only proposition offers its members cheaper calls in exchange for ‘getting involved’ with the company by writing blogs, posting on its forum, and referring friends to the service. Members have a choice of what to do with their ‘rebate’ from the company – they can use it for mobile calls and texts, take the cash, or donate it to their preferred charity.
3 ‘free agents’: 3 announced its new ‘3 free agents’ programme last month, whereby customers are paid to recruit their friends to the 3 network. Consumers use social networks to give their friends Sim cards for 3. Once these are activated and topped up, the ‘distributor’ friend gets paid £5 in cash, while the new customer gets an extra £2 applied to their PAYG credit. Those interested can sign up at Freeagent.three.co.uk, while a Facebook widget that will promote the scheme via the site is coming soon.
Are there any other similar existing concepts?
The most similar concept to Giffgaff was US MVNO Sonopia, which ceased trading in 2008 after just one year. The operator offered users the opportunity to ‘build their own branded mobile service’. The proposition, which piggybacked on the Verizon and Vodafone networks, allowed individuals to create their own calling plans and then sell them to friends. Sonopia would take care of giving out handsets and sending monthly bills, while users were charged with creating call plans and getting the customers on board.
Meanwhile, in the UK, Blyk was launched with much fanfare in 2007, offering users a free service for receiving targeted ads. Blyk users were also responsible for inviting friends to join the network. This summer, Orange disbanded the brand but used its technology to launch the new ‘Monkey’ tariff.
Can these new propositions be a success?
Giffgaff: History doesn’t bode well, but that said, Giffgaff is a new concept and very much an unknown quantity. The concern is that the service depends on achieving two notoriously difficult feats: creating a successful social network; and making a successful MVNO.
3 ‘free agents’: This initiative is a relative shot to nothing. As a challenger brand with less scale than its rivals, inexpensive social media represents a low risk strategy with potentially high yields for 3. Its success could rely on how well it can spread awareness of the initiative virally.