Telecom’s burden is marketing: Spark

What does Telecom do?

For me it’s simple – as a telco (leaving aside Gen-i) it provides reliable internet and voice connectivity. That connectivity is accessed over the air and via copper and fibre, and there is a strong switch towards demand for pure data access, rather than voice, txt or other services.

When Telecom wins it delivers simplicity, and three recent changes were great to see. The first was the removal of cripplingly expensive data roaming costs so that we don’t have to do the SIM dance when travelling across the pond and to other frequent destinations. The second was the rollout of the iOS (and Android I suspect) application for mobile customers, an application that allows easy addition of data packs for relatively reasonable costs. It’s not perfect – I’ve heard about delays and the incessant texts are annoying – but it’s worlds away from the past. The third is a new system for in-store staff, which makes their work, and ability to deliver great customer service, lot simpler than before, though I suspect there is plenty more to do.

So the proposed name change to Spark is disturbing, and for three reasons.

The first is that the old name is strong, while the new one is appalling. We are incredibly dependant upon our telecommunication providers and demand similar levels of dependability and reliability from them as we do banks. “Telecom” is a name rich in history, not all of it bad, and can be relied upon as a NZ institution to deliver a good service. “Spark” is a small thing that is liable to disappear very quickly.

The second is that this rebranding is a distraction. Telecom’s transformation, like Air New Zealand’s before it, is a long, slow gradual process. It means a return to simplicity of offerings, delivering outstanding customer interactions, and relentless focus on delivering  fast unrestricted data pipes over a variety of mediums. This is happening, but changing the name has nothing to do with these activities, and will cause staff and customers to wonder what the heck is going on. I’d much prefer that the focus remains on the changes, and allow our increasingly positive interactions with Telecom improve their brand equity.

Thirdly this feels like an expensive capture by marketing folks, internally and externally. Telecom has long had an issue with the strange belief that they are a marketing company rather than a product or services company. This has meant wildly expensive spending on television and other advertisements, constant rebranding of the company and products (XT as an example) and a vast and complex series of products that makes doing business incredibly difficult. At issue is not just the cost, but the energy of staff and senior management that goes into “marketing” rather than into delivering great products and services.

Overall

The change happens on April 1, so there is a chance it’s all a joke. Please.

For me the rebranding is a critically poor decision, a distraction and a reason to question what is happening at the board and senior executive level.

Perhaps it’s happening because the marketing department has little ability to create impact at the product level, and they need something to do. A lot of the delivery of Telecom’s products is outsourced (e.g. to Alcatel Lucent), but external marketing websites, TV and billboard advertisements and rebrandings are relatively easy for the marketing team to do. This means vast budgets and numbers of people internally and externally are focused on marketing overhead rather than the core issues like products, pricing and customer interactions.

If I were a board member this would be simple – I’d be strongly advocating that this is evidence of marketing over-reach, and that the budget be stripped and the existing team reduced almost to zero. What a sad waste.

About Lance Wiggs

@lancewiggs
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15 Responses to Telecom’s burden is marketing: Spark

  1. Yes, this smacks of strategic dissonance – where marketing drives business rather than business driving marketing. I think someone in Telecom needs to have a chat with marketing and sort out who’s calling the shots. At the moment, seems the tail’s wagging the dog.

  2. Gordon Milne says:

    Of course, the name “spark” may be a red herring and on April 1st we get a totally different name,

    It has been clear to me since I arrived in NZ in 2000 that Telecom desperately wants to get away from being a technological entity and wants to become a pure billing company. Ideally one that bills for a service they buy from some one else. Now that Chorus exists, and is responsible for the physical network, they are a lot closer to their goal of becoming that pure billing company. And the only thing that differentiates one billing company from another is their brand perception.

    Becoming a billing company may sound great to someone in marketing, branding or accounting but it isn’t very inspirational to those parts of the organisation that still see themselves as delivering a great technical product.

  3. Steevo says:

    The change seems pretty silly to me – but it will go ahead, April 1st or not.
    Their competitors will no doubt be very happy with Telecom’s internal disruption

    It did occur to me that the company split and resulting company of Chorus happened rather quietly. There is still a fair amount of complaining about Chorus – from taxpayer money issues right down to problems with local technicians, but it seems that Chorus successfully shook any bad associations with the old Telecom. Or people, largely, don’t realise there was a split.

    I wonder if Telecom is aware of that and hoping Spark will achieve the same things.
    I agree with your sentiment Lance – concentrate of clean and attractive products. They market themselves.

  4. Jason Paris says:

    Hey Lance – you know me – and I can tell you that we have plenty of substance behind this. As you have said we are transforming ourselves admirably and the pace at which customers have reacted has been excellent.

    To be clear – this isn’t an advertising exercise – but an acceleration of our current business strategy which has already seen us launch a number of bold plays – fibre, 4G, WiFi, flat rate roaming, investment in local business hubs and the OTT announcement today. All of these actions build our brand in the minds of our customers and this name change is just another part of of the plan that we are bringing forward due to unprecedented customer momentum.

    Why a name change? Most importantly because Telecom doesn’t reflect the company we will be come – or arguably the company we are even today. Secondly some key, fast growing customer segments tell us they will always just out right reject the Telecom brand – regardless of all of the great things that we have done and will continue to do for them in the market. The fact is that we if we don’t keep building and changing we won’t get where we need to be.

    Everyone here is focused 100% on getting this right for our customers – continuing to make more substantial improvements to our business and providing a clear return on these improvements are key components of the plan.

    • Mr Jeff says:

      If you’re focused on getting this 100% right for the customers, then simply ask the customers what they want. Hands up who asked for a re-brand?

    • Andrew says:

      A number of bold plays? Are you aware it’s 2014? 4G is not exactly a new concept in fact it’s almost embarrassing that New Zealand hasn’t got it yet and even more depressing that you somehow thing it’s a step forward. Australia is in the process of moving on from 4G and they’ve come out of the dark ages and don’t charge people 20c a mega byte and still sleep at night. When I think of Telecom I think of a company that when I was growing up robbed a nation loyal to it by having no competition and charging the earth for what was a basic human right. You are not leading the way, you have been the road block and the toll road for countless years and have little interest in helping and supporting your country but instead milking it for as long as humanly possible, paying for over priced modern services and trying to enact brand loyalty by making a push at customer service and pawning us “new technology” that is in actual fact old technology and expect us to praise you for it. We paid off the toll road years ago and you should have stopped charging and you didn’t, no, after years of over paying and a changing market you announce the toll road has been paid off and you are not removing the toll, but reducing it and you expect us to be thankful.

  5. A few weeks back – Telecom announced a major disruption of the ad business by changing the way they buy their media. The net effect will be a drop in their media placement costs and more transparency for their spend. This is a big deal as it siphons off millions ($25m?) of spend from another agency. Jason Paris is on a mission here and its not just a name change.

    “Telecom has formed a new agency along with the DDB Group, where it will be the sole client, using the arrangement to build strategies to target customers in digital campaigns.

    Advertising industry sources said that the new agency, called Dynamo, would give Telecom a lot of leverage dealing with media companies and as sole client would give it more direct buying power.

    The change is effective from March 31.”

    http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=10859848

    • Alf says:

      A few weeks back? Try a year. That company has been up and running for nearly 12 months now. The bigger change in the media industry that will give Dynamo (and every other NZ agency involved) is the merger of the Publicis and Omnicom groups worldwide which was announced last year. Dynamo having a $25M client as it’s sole client (and it’s not even that anymore after they picked up BMW / Mini) is not creating a big fish in a buying pool.

  6. Andrew says:

    marketing for marketing’s sake… if I were a shareholder I’d be selling my shares

    • Ex-staffer says:

      I think that’s the idea. Rumour was always that a rebrand would signal a distancing from local shareholdings (both individual and institutional), and a move towards far greater overseas ownership. I was there in 2011 and “NZ’s telco” was still being bandied around – I’d expect to see a lot less of that.

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  9. Andrew says:

    Agree entirely Lance. I’ve been a Telecom “hater” for years after innumerable bad experiences both personal and business accounts. In my opinion this is yet another example of the triumph of marketing over common sense. I feel so sorry for their long suffering staff and customers, Why not spend the zillion dollars Spark will cost on sorting their appalling email “service” that spams everyone in NZ every few months?

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