Telecom has announced that it will emerge as Spark on 8 August. But the powers that be say the new name is just one aspect of the company’s transformation into “a confident, forward-looking technology company”. In an edited version of an article originally published in the May/June edition of NZ Marketing, Ben Fahy looks at the thinking behind one of the country’s biggest-ever—and most controversial—rebrands and the important role chief operating officer Jason Paris played in the process.
Jason Paris is a busy man. He leads a team of around 100, in a business that turned over $4.2 billion in FY2013 and has undergone a huge amount of change in the two-and-a-half years he has been there—some forced upon it, some of its own volition. So it’s entirely understandable that he had to postpone the first meeting we arranged to talk in-depth about Telecom’s decision to change its name to Spark. But he didn’t cancel because he was cutting deals or managing crises. It was because he had to attend a parent-teacher interview for his seven-year-old son, Sam.
Perhaps slightly revealingly, Paris, who started off as Telecom’s chief marketing officer and shifted to chief operating officer last year, says the teacher characterised his son as very enthusiastic, but not too focused on the details. His wife gave him a sideways glance and raised an eyebrow, inferring that he must take after his father. But from the outside looking in, it seems like Paris is being a little too hard on himself, at least in relation to his corporate responsibilities, because when we eventually sit down for a chat, he says he had spent most of the afternoon trying to sort out new phones or upgrade plans for friends and family. In his senior role, he is employed to look at the bigger picture, to guide strategy and ensure the organisation is on the right path. But as a marketer, he still seems to understand that such requests are not annoyances or trivial matters. They’re still customers, after all. And once you hear him talk about the process the organisation has gone through to get to the point where it was happy to throw out almost 30 years of brand equity (or, some would argue, brand baggage) and start again with Spark, a lack of detail certainly isn’t something you’d accuse him of.
Paris, who’s originally from Invercargill, says the responses to the news of the name change were fairly predictable. Name and logo changes are emotional and simple to grasp. And commenting on them is basically a sport in this era of feigned-outrage and social media-inspired showoffery, especially when it comes to companies like Telecom that could be placed in the ‘hated incumbent’ category. And the fact that it plans to invest an estimated $20 million on the rebrand undoubtedly helped fuel some of the incredulity among the non-believers who felt that money would be better spent elsewhere.
But, after the announcement—and once again putting a check in the attention to detail category—Paris and other members of the Telecom executive team were at pains to point out that this was “a business change, not just a name change”, so, in addition to giving interviews to explain their rationale, they commented on stories directly, which appears to be a very different and much more open approach than the Telecom of old.
“All of us were straight in there having a conversation with customers and listening to people who were a bit pissed off about it,” says Paris. “We were just upfront and said ‘we understand how you feel, but this is our view on it. Hopefully we can prove you wrong over time and we are listening to you.’”
Behind the curtain
So what process did Telecom go through to ensure this was the right course of action? Interestingly, he says none of the journalists that interviewed him after the announcement asked that question, but in September last year, Paris says things were looking pretty good for the company. It had consecutive quarters of mobile growth and consecutive quarters holding broadband share. Then it refreshed its brand and added some colour, launched a range of products like free Wi-Fi at Telecom phone boxes, as well as free 4G and new, more simplified post-pay plans. Further back, he says it was the first to introduce $19 pre-pay, and it also introduced fixed cap data roaming overseas and share plans on business.
“We were actually feeling quite proud of ourselves. We were leading into Christmas and we had pretty good momentum so [chief executive] Simon Moutter and [retail chief] Chris Quin said ‘now’s the chance to accelerate our strategy even further..”
To figure out how to do this and discover what Telecom’s annual report called its “ticket to tomorrow”, Paris says he rented a cheap apartment in High St and got settled in for a session with Interbrand’s James Bickford, Saatchi & Saatchi Worldwide Design’s Derek Lockwood, Philip O’Neill and Callum Bakker and Two Views’ Andrew Stone (Gen-I’s chief operating officer Jo Allison has led the strategy for the company’s ICT arm).
“We looked globally at the best retailers around the world, the best telcos, we talked to our customers across all segments, we talked to our competitors’ customers across all segments, we talked to our frontline staff who talk to customers every day, and we talked to our key partners.”
And, after all that analysis, Paris says the team boiled it down to “five key inhibitors” that needed to be addressed if Telecom “wanted to become the company we aspire to be”. 1) know its customers more than any other brand; 2) look after its existing customers better than it does today; 3) be the first to bring new cool technology through (he says it took two years to get the iPhone, it was nine months behind Vodafone on 4G and it took two years to get the Spotify deal over the line so it needs to speed up); 4) Be easier to deal with (he says digitisation plays a major role in this, because customers increasingly want to join, check out their plans and upgrade devices where and when they want to, rather than have to talk to someone; and 5) “be a brand that people are proud to be with and love”.
With those insights, it developed five different programmes. And as part of a three-year plan, Paris says there are 19 initiatives under those five programmes that are either accelerating existing things or creating new things (the first of them was the deal to give certain Telecom mobile customers free Spotify Premium and the name change is another. Telecom didn’t want to discuss its IPTV project, which it launched under the ShowMeTV banner but recently launched as Lightbox).
So were there any other names suggested?
“You can always brainstorm. Our logo is called the Spark internally. It was the only name I thought was right for us. It was always clear-cut and customers and staff alike loved it. They said ‘if you’re going to change it, Spark is the one you want to go with’. It’s much more energetic, dynamic, creative and reflective of what we are. But it needs substance … Quite often a business strategy will be disparate to a brand strategy or a brand strategy will make promises that a business can’t deliver. What you want is both in parallel.”
Photo: Paul Statham
It may seem like a strange decision for a large, fairly dominant telco to change its name. But Paris says it’s not particularly uncommon globally.
“BT to O2, French Telecom to Orange, [Bell Atlantic to] Verizon. They’re names that don’t describe the category, they describe the ambition ... With O2, the strategy behind that is communication is ‘essential to life’.”
And he does have some history when it comes to rebrands, leading the two-channel strategy when he was chief executive of TV at MediaWorks and successfully morphing C4 into Four.
“It’s not a huge brand but there was a very different programming strategy. C4 was niche, youth and music-focused and we really wanted to reposition the core brand into mainstream. And it worked. We had significant audience and revenue increases. And Four, due to the work Roger Beaumont [currently head of marketing at ASB] won media brand of the year at the Media Awards that year.”
It seems almost oxymoronic, but Telecom, long renowned as a slow-moving, monopolistic monolith synonymous with the home phone, does seem to have developed a more entrepreneurial streak of late. It’s experimenting with new products, it’s simplified existing products, it’s listening to customers more intently and, importantly, it seems to be acting on their feedback. Part of that can be put down to good planning and what Paris calls the “clarity of vision” the executive team have delivered, but it can also be put down to good luck and government intervention, because Paris says the structural separation in 2011 meant that Telecom made a psychological shift and “realised it was a retailer for the first time”.
“We’re not technology led anymore, we’re customer-led,” he says. “We’ve got a faster, more iterative retail rhythm that’s based around customer feedback and sentiment.”
Paris says the management team get together for half an hour at 8.30am every day and go over what they’re hearing through the sales and service channels, what its competitors are doing, what issues it needs to address, any market behaviour it needs to act on and how its props and offers are going in the marketplace. And, unshackled from the infrastructural side of the business, Paris says the new executive team knew it was necessary for Telecom to adapt its business for the future, rather than simply protect its dwindling legacy.
“Before Simon and Chris were in their roles I would say our strategy was ‘walking back slowly’. We were prepared to lose customers to maintain short-term margin. They said ‘stuff that, we’re into growth’. But the good thing is we’ve been able to do both. I’m confident we’re going to hit this year’s financial numbers, and also we’re setting ourselves up really well for growth in the future.”
And a big part of that is prioritising its ideas. There’s certainly no shortage of them (he says it currently has 457 different initiatives), and choosing the most important ones to focus on is something Paris admits he’s been grappling with since he started. But it is now hoping customers can help filter those ideas and, inspired by an online feedback tool developed by Z Energy, it created a website that asked customers (and non-customers) what Spark should sort and what Spark should start and then asked them to vote for the top five.
“We see the opportunity to problem-solve and find out the things that are annoying customers … It’s a strategy that’s grounded in being inspired more by our customers and the only way to do that is to talk to them, listen to them and act on it.”
Telecom is still dominant in a number of areas, like broadband and mobile in the regions. But Paris says it needs to improve in the booming, multi-cultural market of Auckland, and particularly in the under 35 bracket. Telecom, resplendent in corporate blue, just wasn’t getting noticed by that group, no matter how good the deal, so that was a major reason for last year’s brand refresh as well as the name change.
“The way I would frame it is they said ‘Telecom, you’re old, rich and white, and you’re not reflective of the new New Zealand’ … We have under ten percent share of the pre-paid market in Auckland. We only have 20 percent of the medium-sized business category in Auckland, third behind Vodafone and 2degrees. And you just wouldn’t expect that, right? We’re fantastic in big business and broadband and I’m glossing over every other metric that’s outstanding. But why are we not winning in those segments? We want to win them all … Auckland is the market where all the growth is. And Vodafone is dominant in Auckland. But the cool thing is now a lot of Vodafone customers can’t give you good reasons as to why they’re still with them. What they’re saying is ‘Telecom, you haven’t done enough yet to convince us to move’.”
He’s confident that’s changing, however. And after Telecom launched its new brand, dropped its All Blacks sponsorship and started to put more emphasis on creating experiences that were more relevant to customers in its target demographic (it is focusing on three areas this demographic over-indexes in, sports, gaming and music), Paris says it has seen significant increase in foot traffic in its stores in Auckland and across the country, significant increases in brand preference and significant increases in conversion rates, something he puts down to staff who are proud and excited about the changes that have been made. But there’s still a long way to go, he says, as evidenced by some of the responses after the Spark announcement.
“It was like ‘come on guys, we’re not that bad’.”
So what does Paris say to the detractors who believe changing the name in an effort to attract young, urban customers instead of keeping its older, more regional customers happy is akin to throwing the baby out with the bath water? Put simply, he needs the young’uns Telecom isn’t connecting with at the moment to love the new brand, but he only needs existing customers to like it.
“There are some who hate Telecom and won’t be with us. And they’re probably going to continue to hate Spark. I hope that no-one who’s with us hates us. I’m sure there are a few, but I’m hoping they’re increasingly a minority. But in the past 18 months to two years, we are a significantly different organisation than we were.”
Corporate egocentrism tends to mean companies overinflate their importance in people’s lives and, as ex-Telecom chief executive Theresa Gattung famously said, confusion was a legitimate marketing strategy back in the day. Combine these two things with the huge number of new products, innovations and acronyms in the telco category and it’s not entirely surprising to find that many New Zealanders were unaware of Telecom’s changes or new products. As ANZ’s ex-head of marketing Mike Cunnington said when discussing the merger of ANZ and National Bank, by the time the company has moved on to the next project, customers haven’t even noticed the last one. As such, another one of Paris’ major goals is to stop looking in the mirror, start looking through the window and further simplify Telecom’s language, product offers and comms.
“We create our own complexity and noise, even with the jargon we use internally. So we’re still sometimes our worst enemy and even now I get stuck in the terminology of telco instead of putting the customer lens on it … One of the things I’ve admired about 2degrees is its relentless simplicity of communication. It just has rollover, rollover, rollover and it’s stuck to its guns around taking on the big guys. What we’ve done is say ‘we’ll see your rollover with 100 different things’. Over the past 12 months I think we’ve got a lot better and we’ve had more simplicity of message. Things like free Wi-Fi in pink, which has gone gangbusters, and free Spotify are clear market differentiators for us. And they’re not commoditised in the market or driving the market down. They’re creating new value.”
One of the benefits of announcing a new brand a few months before actually rolling it out is that there’s time for the dust to settle and the hoi-polloi to get back to not really caring about utilities providers. And it also gives the staff something to aim for.
“The good thing about doing it later this year is it’s much easier to get staff in behind it. They have clarity of strategy and they have clarity on how they’re going to play a part, so it’s an easier, more efficient and hopefully more effective way to execute.”
Maybe it’s a mark of respect for Paris, a mark of the improving culture at the company, or a mark of the pain caused by the leak of Telecom’s ill-fated pink fist campaign for the Rugby World Cup, but, with so many different parties involved, it was quite an achievement to keep such a major announcement under wraps and out of the media.
“I was really proud of the team to have that level of confidentiality; for the agencies, the partners and the people who worked on it to keep it quiet and get it across the line.”
Paris says he has learned to work in six-month horizons because looking further ahead than two years is nigh on impossible in the fast-changing world of technology and communications. He says it’s likely its customers’ needs—and even its competitors—might have changed in that time and it will have to adapt again. But, either way, Paris is absolutely loving the pace of the change—and the willingness the current exec team has to enact it.
“It’s awesome. MediaWorks was fantastic and I wasn’t there for as long as I probably would have liked. But the angle for me was to get on to the executive of a much lager organisation and if I was chief executive of TV3 and Four, I knew that being chief executive of Air New Zealand wouldn’t be my next job. So I’m really stoked to be here and achieve what I wanted to achieve. This is a phenomenal place.”
He may be wary of looking too far ahead, but he’s got “a lot of ambition”. So could he be one of the few marketers in this country to make the leap to the top role at a major company? And is Air New Zealand on his radar?
“Success comes from delivery. The three-year plan for me is to make Spark famous and then go from there. To be honest, that’s as far as I’ve looked ahead. Because if you look to far ahead of yourself you can get ankle tapped.”
Here's Telecom's release about the change to Spark:
Telecom New Zealand announced today that it intends to change its name to Spark New Zealand, as signalled earlier this year, with effect from Friday 8 August 2014.
“Spark is much more than just a new name - it reflects enormous change underway in our business and in the world around us,” said Chief Executive Simon Moutter.
“As a company we’ve moved far beyond the home telephone. Spark better represents what we are today – it is all about mobile data, online entertainment, Cloud services, the internet of things, or whatever new technology is around the corner.
“Spark is a word that has life, energy and links to creativity, the modern tech economy and our desire to enable our customers to thrive – as we help unleash the potential in all New Zealanders.”
Mr Moutter said the transition to Spark is a massive undertaking with a vast number of underlying technology changes required as well as the more visible changes to branding and signage. While the change in legal entity names would be effective from August 8, some changes would be phased over a period of time to manage the transition in the best way for customers.
“The technical transition to Spark is extremely complex, especially with so many of our customer services revolving around digital connections via our networks or the internet,” Mr Moutter commented.
“Phasing in the changes is therefore the best way to reduce the risk of disruptions to customer services and to manage the transition cost-effectively. Throughout this transition period, the priority is to ensure customers continue to receive great service – regardless of whether the brand name visible to the customer is Spark, Telecom or Gen-i.”
Spark New Zealand will have the following core business units and brands:
· Spark Home, Mobile and Business will be the new name for Telecom Retail, providing access to technology in new and innovative ways to help New Zealanders and New Zealand businesses move forward and reach their goals. It will operate under the Spark and Spark Business brands.
· Spark Digital will be the new name for Gen-i, providing solutions for the rapidly evolving needs of business, enterprise and government customers as they meet the demands of an increasingly globalised, connected and mobile customer base.
· Spark Connect will be the new name for Telecom Connect, delivering the technology, products and processes to ensure great customer experiences and world-leading connectivity via the Spark Network.
· Spark Wholesale will be the new name for Telecom Wholesale, utilising the Spark Network to provide a range of wholesale products to telecommunications retailers.
Spark Ventures will be the new name for Telecom Digital Ventures, accelerating the company’s future focus and pace of innovation, and delivering new services and businesses such as WiFi, Internet TV and Smart Data analytics.
The names of some other business units and brands will not change: these include Revera (business Cloud services); Skinny (mobile); Bigpipe (broadband); Qrious (data analytics); Lightbox (Internet TV); and Telecom New Zealand International.
Key market information in relation to the name changes of Telecom’s listed entities, and information on some of the other companies within the Telecom Group that are also making the change to Spark, is outlined below.
For more information on the transition to Spark, visit the Spark is Coming website at www.spark.co.nz