For more information, please visit: http://www.mobileyouth.org

1. Why everything we believe about Youth
Mobile services is wrong
by GRAHAM BROWN on FEBRUARY 9, 2012
Why (Most) Youth Mobile Services are Doomed to Failure
Amp’d, Disney, Helio, Virgin Mobile India and Blyk – just a few MVNOs that have tried
to capture the youth market and been dashed at the rocks of failure. They failed because
the youth market is less about “Big Ideas” amped by your creative agency and more
about doing the small things well – like customer service.
So what does it take to win the hearts and minds of today’s 2 billion mobile owning
youth?
Let’s start by looking at where youth mobile services go wrong because, as we’ll discover,
simply doing the opposite of the received wisdom is the key to success.
Too many mobile services are easy come, easy go
Img (c) Flickr
http://www.mobileyouth.org

2. Here are the 3 biggest mistakes made in servicing youth:
 Provide the cheapest mobile service
 Sell a lifestyle (extreme, aspirational, cool)
 License the brand to a mobile provider
Mistake #1: Provide the cheapest mobile service:
There is a common misconception of youth – they want everything free. In our
research we identify the 3 key pain points of youth mobile usage and cost isn’t one of
them. Youth don’t want free, they simply want control. They don’t want cheap services
they want a service that guarantees them this is how much they’ll be spending in the
month – no hidden surprises.
On this matter, Blyk is wrong, Boost Mobile is right: I don’t care what Blyk said
otherwise, you can’t build a youth mobile service giving everything away for free. What
youth want is control. If they wanted everything for free they wouldn’t be lining up
outside Apple Store for the latest iPad or iPhone 4S. They wouldn’t be buying Air
Jordans or getting drunk at Spring Break. These all cost dollars.
Here’s how one customer puts it on the Boost Mobile website:
“I LOVE the fact that my plan eliminates the worry of overages or hidden charges. I
know exactly what is expected each month and it helps me keep my monthly budget
balanced. Boost’s pricing has kept me loyal because it allows me to have all the services
of a contract plan at an affordable price that fits into my tight budget!”
- Kelita S. (Capron, VA)
Even in Africa, the logic holds true. In Kenya – where the average GDP is less than
$5,000 youth aren’t gravitating towards the cheapest option. In fact, our
2012 mobileYouth report shows that in Kenya, the cheapest mobile services have the
highest churn rates. Conversely, Safaricom is the most expensive and has the most loyal
customers even though its proposition is based on a large, young prepaid base. How?
Because Safaricom built its proposition on long term customer relationships, value
added services (like MPesa) and marketing that aimed to create Permission Assets in
youth communities (rather than typical agency fare of cool celebrities + campaign).
http://www.mobileyouth.org

3. Mistake #2: Sell a lifestyle
Lifestyle doesn’t sell mobile. Your brand means nothing. Hiring a PR or marketing
agency to make you “more youth” will not change a thing. Who cares if your brand is
well known in snowboarding or hip hop? Who cares if you have a sponsorship with
Lewis Hamilton or Lady Gaga? Sure, it wins you ad agency awards but this isn’t about
awards to satisfy them but winning customers.
Unfortunately it’s not what brand managers and agencies want to hear. Where’s the
room for the “Big Idea“? What about our “Life is for Sharing” advertisements? The cold
truth is that youth don’t buy mobile services on the base of lifestyle – they buy because
of simple, convenient customer experience. Common things done uncommonly
well – the unsexy stuff – getting the billing right, a good range of handsets, good
customer support, retail presence.
Smart youth mobile services know that getting these right means changing how we view
young customers. Mobile providers see the youth acquisition game as one of
cool advertising and cheap offers but as the logic goes, it’s easy come easy go. In the
modern era, retention is the new Acquisition. Operators should think less about “cool”,
“entertainment” and “lifestyle” and more about how they can reduce the numerous ways
they annoy their customers. Stop trying to delight youth and start trying to do common
things uncommonly well. In the Customer Experience module of the 2012
mobileYouth report we detail the 3 areas of customer experience and how operators can
add value in each. By changing the metrics from ARPU to loyalty we yield different
results.
Traditionally, mobile asks the question “how can we maximize ARPU from this
customer?” When it comes to youth that doesn’t make sense. The effort required to shift
a mobile user from $50 to $55 a month (10% uplift) is significant. If you changed your
metric to loyalty based measurements (such as churn or EMI like NPS and SMART
index) the math makes sense: the cost of acquiring a new customer + lost revenues for
existing customer ($800 a year) vs the uplift from ARPU gain ($60 a year).
http://www.mobileyouth.org

4. Boost Mobile, for example, thinks differently. Rather than sell a lifestyle product and
maximize ARPU gains, Boost asks the question “how can we reduce this customer’s
phone bill?” The longer you’re a customer, the cheaper your bill. Great idea because 65%
of youth buy mobile phones based on what their friends, not what ad agencies say. Long
term customers recommend the most.
Mistake #3: License the Brand to a Mobile Provider
It’s tempting to think a lifestyle brand exported to mobile can help monetize an existing
franchise but think carefully. Mistake #2 highlighted how youth don’t care for lifestyle
branding in mobile. What wins the youth mobile game isn’t branding but customer
experience and operations. The staff and expertise needed to win the retention game
aren’t the same staff and expertise needed to create exciting lifestyle brands like MTV,
Disney or Red Bull.
Virgin Mobile discovered this to their peril in India. Virgin licensed the brand to their
local partner Tata who had little expertise in delivering the customer experience
expected of the Virgin brand. As in many of these licensed cases customers sign up on
the premise of lifestyle branding expecting the pizazz familiar with the mother brand
and are left with a shoddy experience that doubly disappoints.
Apple outsources its production to Foxconn in Asia but controls its retail operations
because it’s in the retail touchpoint (its Permission Asset), Apple can generate a NPS of
+75% (and +90% in its most successful stores) creating one of the most profitable retail
franchises in the world. The key for mobile providers and brands considering this space
is understanding what creates value and what doesn’t. Control the front end, outsource
the back.
Be the Exception
Kenya’s Safaricom has the highest loyalty rates, prices and NPS scores in its category
even though it built a market on young, prepaid mobile owners. Boost Mobile has the
highest loyalty rates in the prepaid segment in the US even though it charges above the
market average price.
http://www.mobileyouth.org

5. Despite these obvious anomalies, mobile operators will continue to see youth as cheap
and provide discount tariffs to win the market. Brands will continue to try and squeeze
extra revenues from their licensing by partnering with mobile providers in local
markets. All along operators will look at the results of these endeavors and agree that
youth are unprofitable, fickle and too expensive to reach.
When we look at our own mobile choices we’ll probably find we gravitated to the
provider who simply got things right rather than the one who delighted us with offers
and technology. Sure, we’re paying a little more than the next guy, sure we don’t have
the latest phone but we’re comfortable and that’s what we want. The problem is that
while every single mobile industry employee knows this the machine they work in keeps
pulling them back to the received wisdom of failure.
Safaricom ex-CEO Joseph grew the business from a starting point of just 5 employees in
Kenya. He took the Kenyan position in the Vodafone group because some insiders say he
didn’t have the traditional background of a telecom CEO. These examples demonstrate
that the received wisdom behind this schooling – Price, Brand Management, Efficiency
– is wrong.
And that’s why these success stories remain the exception rather than the rule – because
the rule is broken. There is only one Facebook, one Google search engine and one Apple
iPad despite countless imitations. Anomalies win because they challenge the
conventional wisdom.
Contact us for report, workshops, webinars and more:
Josh Dhaliwal
Director, mobileYouth
http://www.mobileYouth.org
http://www.mobileYouthReport.com
Tel: +44 203 286 3635
Mob: +44 7904 200 513
http://www.mobileyouth.org