Saturday, April 16, 2005

The Opposite of Stickiness? 

In my last post I mentioned that recently even companies are opting in to Skype, especially after looking up the roaming charges on their mobile phone bills. I had exactly the same problem recently.

The background: After the desastrous licencing of 3G UMTS frequencies in Europe at the turn of the century, nearly all mobile operators ended up with lots of debt and the problem to recover these. In addition, the licence came with the obligation to set up a certain coverage for 3G until a defined timeframe. This time has now come, so the networks are there, but they are not used. The reason is that the stupid customers still have no idea why they should go for MMS and streaming Video on mobile phones. The mobile phone companies stick to the only marketing strategy they know, because it worked so well in the past: they subsidize 3G mobile phones, practically given them out for free.

So I also got one. Not to send pictures or videos with MMS (although my phone has a cam), and also not to watch TV on my mobile phone, but simply to make phone calls as ususal and to access the Internet faster then before with GPRS.

I tried to find out the tariffs for data access, especially for roaming, but I failed, not wanting and having the spare time to spend hours searching the webpage of the operator for the well hidden pages. Since this was a company account anyway, I thought I will get the tariffs anyway with the first bill. So I travelled to Geneva and then to Japan, using the mobile access ONLY in the evening, because I had WiFi access at the meetings anyway. So I spent 1000 Euros (in words: one thousand Euros) in two weeks. My boss nearly fell over, only to feature a similar bill one month later by himself on roaming charges.

Of course there are cheap data tariffs in Austria (do not forget, the UMTS network is basically empty), but not automatically and only within Austria, e.g. tariffs in the range of 30 Euros per month for 500 MB data volume fair use. This is 0,06 Euro/MB. Now if you see this tariff, do you expect to pay MORE THAN 10 Euros/MB if roaming?

Rip-off an understatement

Because of my own experiences I got sensitive on this issue, so I talked to some people already having 3G phones and asked them, if they use all this fancy new features? The answer was ALWAYS the same: yes, I tried it, but I stopped it IMMEDIATELY after receiving the first bill. Some also said that they basically do not know how to use them and that they are confused. These seem to be the lucky ones.

Now I consider this as the opposite to the stickiness I talked about in a recent post. In this post I also talked about how simple to use Skype is.

Offering services to customers they do not understand or use only once is driving the customers out to look for alternatives.

Talking to markting people and product managers of mobile operators reveals the basic problem here. They just tell you: they know better, because we have been so successfull in the past.

Ok, this is true, but why? Because customers like mobility and there where no alternatives. The first services where also quite simple: anybody knows how to make a phone call. Yes, there was SMS, but this is a very special case. SMS was mostly used by kids. They know how to enter a text message fast and they do not have to pay their bill (if they have to, they reduce their SMS traffic immediately - trust me - I have four kids).

So product managers and marketing people only THINK they are good - or as we say: "mit voller Hose ist leicht stinken" (Engl.: It is easy to stink with full trousers).

Mobile operators are making three basic mistakes:

1. Rip-off tariffs

2. Offering complicated services the customers to not want or do not understand.

3. Offering the customers to many choices in services and tariffs (More is Less)

This last argument would require another lenghty elaboration, but I just recommend the book
from Barry Schwarz: The Paradox of choice - Why More is Less.

All three mistakes are driving customers (residential and enterprises) to look for alternatives. As long as no alternatives exist, this may not matter, but nowadays these alternatives are here, for access and services and applications.

Driving out customers is NOT a good marketing strategy and the revenge of the customers will be awful.

A last word to the fixed line operators: do you really want to follow the mobile operators on their way to downfall with IMS? This is like buying stocks if everybody is buying it because the stock was so successful in the last years.

Or do you want to take a different road siding with the customers and avoiding these mistakes?

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