Could second brands become operators’ training ground?
June 1, 2018 - Aleks
There’s no doubt that the heat is rising for operators.
Declining ARPU and the race to zero-rated data, combined with the rise of web-scale companies means operators are facing increased pressure to deliver more services and create new revenue streams.
Telcos have been vilified for their inability and unwillingness to change, but a new sense of urgency has begun to replace their traditional hesitancy.
This is leading to operators opting for new methods of doing business.
Indeed, some are so ready to be different they’re using second brands to start from scratch.
These new brands, set up with a specific target audience in mind and offering previously unrivalled levels of personalisation, are helping operators test-drive new services and become more innovative.
While the prospect of starting a second brand may seem daunting, the benefits are immeasurable for today’s struggling operators.
By launching a second brand with differentiated concepts to the traditional telco operation, operators can benefit from being able to break into new or underperforming customer segments thanks to a targeted customer approach.
This will enable them to change the way they interact with customers, increasing real-time engagement, self-management and self-care.
What’s more, this agile second brand will embrace new digital services and serve as a “test bed” for the parent company for new innovations and technologies.
This will prevent disruption across the parent organisation all the while ensuring that innovation and digital transformation is at the heart of the company’s evolution.
There’s no doubt that this approach can prove successful but taking the decision to launch a second brand is only half the work.
If operators are to ensure the success of their side venture, they must think carefully about how to finesse this new offer. So what does this take?
Reaping the rewards of starting over
One factor that is key in an operators’ second brand strategy is the platform on which the brand runs.
Today’s leading operators have been around for decades, some since the very beginning of mobile telephony.
This has seen operators evolve their technology and network stacks and build on top of existing legacy systems.
The result? Huge legacy stacks that are difficult to transform, slow to upgrade and expensive to replace. For operators, this is proving to be a significant challenge; trying to be agile just doesn’t rhyme with legacy systems and so another alternative is being taken up.
A second brand should be defined by its ability to be flexible and agile – neither of these qualities can ring true if its operational model is based on that of the parent company.
To succeed, second brands must embrace digital BSS/OSS and be run on a standalone platform, ring-fenced to obtain independence from the parent operator.
This should see operations split into three distinct sections: support – the day-to-day running of the second brand; functionality – customer and brand engagement; and parent – the engagement between customers and the network.
By obtaining this market independence, and allowing the brand to run as its own entity, second brands will benefit from increased agility and reduced time to market, with digital services launched in days, rather than months.
In addition, the independence prevents first brand cannibalisation by avoiding direct competition with the parent brand.
Finally, by having dedicated teams focused on delivery and managed service, the second brand business can focus on core activities such as sales and distribution, brand marketing and customer retention and loyalty.
Aiming correctly
Segmentation and proposition are two more key factors in creating a successful second brand.
It’s important that the second brand has a clear purpose and a well-defined, targeted audience in mind.
It’s no use developing a second brand that acts as an extension of the parent brand; instead, it should be carefully crafted to offer high level of personalisation and increase traction in the segment it is targeting.
Not only does this help with the second brand’s marketing tactics, but it also helps to define the services and offers that will best serve the selected audience – for example, a millennial audience will be far more interested in zero-rated data offers and content bundles, than an enterprise audience.
We have already started to see a number of second brands emerge from leading operators: in Slovakia, Orange launched FunFon dedicated to a younger audience, while Norway’s Telenor launched Dipper to target the M2M and enterprise segments.
In the UK, giffgaff has proved to be a popular alternative to parent company O2, focusing on “honest” mobile data usage and targeting the younger generations.
Time for action is now
Second brands are one of the fastest growth areas in telecoms.
They enable operators to start afresh with a blank canvas and quickly build and launch a digital first brand without being hindered by legacy systems, processes and culture.
The successful operators will be those that take action now.
The development of a new, digitally focused and app-based second brand with a fully automated experience is how they grow market share and give customers what they really want.
So operators, what are you waiting for?
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