International pre-pay MVNO Now is in talks with several retailers about new deals as it bids to target younger consumers in the UK.
The company has doubled its customer base to more than 60,000 during the past 18 months, driven by a major strategic shift which has seen the MVNO expand its distribution channels beyond the traditional corner store to major high street retailers and target a younger demographic of second generation immigrants in the UK. It most recently signed a deal with supermarket Morrisons.
Tony Ion, head of sales at Now, said cut price competition in the international MVNO market forced the company to rethink its strategy in early 2012. He said: ‘When the MVNO was launched in 2010 it competed against the likes of Lebara and Lycamobile, but after throwing everything at it the company found it was chasing its tail in what was a price driven, crowded market.’
The MVNO decided on a two pronged attack to expand its distribution channels and broaden its customer base. Ion (pictured) said: ‘We decided we needed to stop chasing the competition at that end of the market and appeal to the middle ground - to customers who make both international and UK calls, using the same Sim. We decided to focus not only on first generation ethnic groups but their kids too, who are predominantly born in the UK but still with an ethnic background.’
To back this strategy the company launched a new tariff plan called 1 for 1, aimed at its target demographic and offering callers one free international minute for every one national minute of calls. Ion said the impact was rapid, with churn levels falling from around 25% to 4% in less than six months of launching the tariff. Ion added: ‘That may be a considerably smaller base than say Lebara’s base, but we believe in organic growth rather than growth by price acquisition, and that strategy is working well for us.’
The company also began targeting new distribution channels beyond its traditional convenience stores, rapidly winning deals with Tesco and Sainsbury’s. Its latest supermarket deal launched last month is a trial of Sim card sales across fifty Morrisons stores, all located in ethnic areas. The deal will extend to include top-up sales later this year.
The MVNO also launched a two month marketing campaign in May this year at over 200 99p Stores, offering a Sim with £1 of credit for 99p, which Ion said has seen ‘good returns in terms of activation numbers’ with continuing strong sales.
Ion said other deals with major high street retailers are in the pipeline. He added: ‘From early 2012 we decided to put all the emphasis on growing major retail channels. So far we have been largely successful in the big supermarkets. It has taken time but we are gaining momentum now and we are in talks with a number of other retailers.’
Author: Carol Millett