Since taking over the role of chief marketing officer at 2degrees eight months ago from the long-serving Malcolm Phillipps, Roy Ong says the brand team has been looking at itself in the mirror and deciding what to keep and what to shed.
As part of this reflective process, Ong recently put the creative account up for pitch, inadvertently setting the hearts at Special Group to ‘dull thud’ mode.
Accounts tend to move when they go up for pitch, with most estimates suggesting that they only stay with the incumbent five to ten percent of the time.
So rare is it for agencies to retain an account when it’s being pitched that US agency Crispin Porter + Bogusky has enshrined a ‘no defend’ policy so absolute that it even declined to pitch for its US$200 million VW account when it went up for pitch in 2009.
However, in this instance, the account stuck with the incumbents, Special Group.
Depending on who you ask in the industry, this pitch was either perceived as a complete waste of the agency’s time or a legitimate effort by the client to determine who was best suited to take the brand forward.
But regardless of which way you look at it, this was certainly a strong vindication of Special’s credentials to come out on top when the odds are stacked against them.
Ong says that from the outset he had no inclination toward either sticking with the incumbent or choosing a new partner.
“We have grown from being a pre-pay consumer company to a full-service telco provider in fixed landline, broadband and also some emerging national enterprise products. And that’s all happened in the last 12 months.”
He says that in order to determine whether or not 2degrees was equipped to be successful as this new multi-faceted business, he had to make sure he had the right partners in place.
“We signed Special on three years ago, and they were really crucial in continuing the good work TBWA had done, but I wanted to know if they were still the right one, given where we need to go as a business,” Ong says.
“To use the cliché, it was definitely a case of ‘it’s not you, it’s us’ that led to the process.”
Ong admits that he asked a lot of all the agencies involved, requiring them to go through three rounds of pitching on a multi-disciplinary brief broken down into five core components.
“Three agencies [Dentsu Aegis Network, Saatchi & Saatchi and Special Group] made it through, and by the third round we finally saw something from Special that ticked all five boxes,” Ong says.
“This was really about doing due diligence to make sure we had the right partner to move us forward.”
No longer the challenger
As the youngest among the telco brands, 2degrees has until now been seen as a challenger in the market, an image cemented through its quirky ads over the years. That has changed in recent times, with a more mature tone to launch its broadband offer and the sophisticated, cleverly integrated Play the Bridge campaign.
Like many challenger brands (Kiwibank is another example), 2degrees has had success attracting low-value customers and the brand now commands over a million customers (graphs below taken from Annual Telecommunications Monitoring Report 2015).
But Ong says it is moving in the right direction when it comes to average revenue per user (ARPU): it recently won the account for the Ministry of Primary Industries (from Vodafone) and is eyeing a few other big business clients. After its purchase of Snap, it also has “a lot of headroom in that space to grow broadband signups”.
All this combined amounts to a brand that’s increasingly competitive with the big guys.
“I want to move the business from a challenger to an innovator mindset,” Ong says.
He says that challenger mentality helps to get a brand off the ground by emphasising that something different to the incumbents has arrived.
“We used to challenge on the basis of looking at what Spark and Vodafone are doing, and then let’s do something differently,” Ong says.
But what happens over time is that this contrarian approach becomes tiresome, leaving a brand without a clear identity of its own.
“It means that you’re always looking at someone else as a point of reference. So if they colour something blue, let’s paint it red.”
Ong references the book Blue Ocean Strategy, which argues that a challenger mindset only leads to one competitor stealing market share from another rather than growing the overall commercial segment.
“The telco market is worth $5.2 billion and what I want is not only to carve that up with the other three or four players, but find ways to grow that.”
To do this, Ong believes his team needs to stop looking over their shoulder at what the competitors are doing and instead focus on what’s missing in the market (although it does still appear to be looking over its shoulder by focusing on lost data in its latest campaign, which has also returned to its comical roots).
“I need to look at the needs of the market and question what no one else is doing. So that’s really a different mindset. We’re no longer benchmarking against the other telcos. We’re benchmarking against what our customers want. Our marketing strategy is about finding what’s missing.”
Leave the tech behind
Prior to his arrival at 2degrees, Ong had no experience in the telco market.
He had spent over a decade working in the innovation department of Lion (and later its parent company Kirin), before shifting across to a sales and marketing role at Comvita.
But he doesn’t see this as a disadvantage. On the contrary, he says that 2degrees boss Stewart Sherriff was specifically on the hunt for someone who didn’t have any telco experience. Sherriff wanted a fresh set of eyes on the business, according to Ong.
And it didn’t take long for that set of eyes to spot a few problems with the way telcos are marketed.
“I noticed that 80 percent of the marketing strategy was based on product and technology, which is a big part of it, but not where the opportunity lies,” he says.
“My take on it is that technology does not drive innovation in this industry. It’s understanding what the user and customer experience journey is. The technology is just the enabler.”
So, in response to this issue, Ong reorganised his team, shifting focus from product to core customer segments.
“We now have a head of consumer segment and a head of business segment, and they’ve been tasked with looking at total end-to-end [customer experience].”
Ong says that a common mistake marketers, particularly those in the telco space, make when analysing customer behaviour is focusing on the ‘what’ rather than the ‘why’
“The information used in the telco industry to push a business forward is usually based on historical performance,” he says,
“And on a day-to-day basis we get info on churn, ARPU and calls made in and out, but those data points don’t tell me why people are moving and shifting.”
Ong says that the real value lies in identifying the pleasure and pain points that lead to consumers making certain decisions along the customer journey.
This is the difference between counting beans as they roll off a table versus investigating what caused them to start rolling in the first place.
To assist in identifying these core pain and pleasure points, 2degrees now works closely with a research agency called FiftyFive5, which has offices in both Sydney and Auckland.
“What I like about them is that they don’t just give you data saying ‘this is where you end up,’” says Ong.
“There’s always an insight focusing on why we’re in that position, and how we can move on. I now know what’s holding people back from engaging or buying us, why they are leaving or even why they’re leaving Spark and Vodafone to join us.”
The shift to focusing on pain points was clearly evident in the recent campaign, which draws attention to the fact that 2degrees doesn’t simply discard its users’ unused data at the end of every month.
Ong says that insights such as these will inform more of the brand’s work in the coming year, leading to an evolution of the overall brand.
Not so emotional
Like 2degrees, the other telcos in the market have similarly shifted from focusing on products to what they enable.
However, while his strategy might have parallels when it comes to what technology means, Ong says 2degrees won’t be following its competitors down the emotional route.
“I can see why they’re doing it,” he says. “What those two companies lacked was a sense of affinity with New Zealanders. They’ve always been perceived as big corporates that are out of touch with New Zealanders, so that’s clearly where they need to go. 2degrees has come from a very engaging emotional platform, so we’ve always owned New Zealand value and the people connection. New Zealanders love us because we are seen as being one of them. We need to take our brand on a different trajectory to Spark and Vodafone.”
And as Ong starts to build on the foundations he has put in place over the last few months, we’ll see where this trajectory takes the brand.
“We have a very different take on things going forward, and I think we’re going to have a very exciting year next year.”