8/26/2009 1:03:00 PM
Vodafone’s brand challenge
‘We’re not number one,’ Andrew Strauss declared after the exhilarating Ashes win last weekend. The same statement could be made of the company on his Champagne-soaked shirt.
Vodafone ends its sponsorship with the England team this summer, and it couldn’t have anticipated the position it now faces when it first signed up 12 years ago for a £4m per year deal. It is well documented that Vodafone has slipped behind O2 over the last two years and has taken a tough position on expensive sponsorship deals, and a raft of cost-cutting across the business. UK CEO Guy Laurence now has the task of finding growth to catch O2 and moving beyond the legacy of fat profit margins.
The crux of the recent decline can be illustrated by anecdotes of Vodafone’s customer retention team desperately trying to keep hold of customers by offering to cut bills, and is highlighted by Vodafone citing the reduction of out-of-bundle spending for its declining revenue. But the most revealing piece of data concerned voice revenues: £726m for the quarter. That’s a painful 12% decline from the same period one year ago. Voice calls are operators’ bread and butter, and that level of decline in a saturated market is proving tough for all the operators, especially Vodafone.
Vodafone’s challenge is wrapped up in the reality of trying to manage a base signed up to expensive tariffs, and a perception that it is an expensive network for corporates. Laurence has tried to change that with innovative price changes, moving back to Carphone Warehouse and showing an appetite for collaboration. But he doesn’t have the T-Mobile option of being a ‘down and dirty’ value operator.
It will neither be quick nor easy to change the perception of the company and will need some genuinely exciting ideas, products and services to make it stand out against O2 and Orange.