Optus will now rely much more on direct sales and says it will open 33 new Optus stores. As part of its new strategy it is terminating its arrangement with its largest reseller, TeleChoice.
Last week Telstra acquired Adam Internet and took over the Boost brand from Optus. This week Vodafone announced a major restructure that will include “an optimisation of customer touch points.” Now Optus has announced a “refocusing of its retail and distribution strategy to reflect the maturing mobile market and the changing needs of Australian consumers.”
Optus says the new strategy will see a more integrated retail and online presence and the rationalisation of some distribution channels, enabling Optus to take greater control of the end-to-end customer experience under the Optus brand.” But it means much more than that – it indicates the whole market is changing.
Rohan Ganeson, managing director of sales for Optus, said the new retail strategy recognises this reality. “As we move from a period of growth to one of customer retention, we need a distribution model that reflects this. There is too much capacity in the mobile distribution market and we have made a decision to rationalise our third party distribution channels, while strengthening our branded Optus channels.”
Last week Optus took the first step toward implementing this strategy by terminating the licence of the Boost brand from 20 January next year. Within a few days Telstra announced it will retail the brand – moving in a different direction to Optus, increasing its number of channels.
In a more dramatic move, Optus has notified major distributor TeleChoice that its retail agreements with Optus will come to an end on 31 March next year. This includes the agreements between TeleChoice and Optus’s related companies Virgin Mobile and Pre-Paid Services.
Telechoice bills itself as the “number one Optus premier dealer in Australia”. That will have to change. Telechoice was asked for a comment but did not respond to iTWire by deadline.
“As the products and services we sell become more diversified and sophisticated, so too do the needs of our customers. As a result, retail is no longer just a sales channel – it’s a channel where customers come to better understand technology and how to get the most from it,” Ganeson said.
Over the next 12 months Optus plans to evolve its existing branded sales channels to become a single “full service customer channel”. Ganeson said this will include a number of programs to improve and integrate the in-store and online experience plus the rollout of an additional 33 Optus stores, creating over 200 jobs, to better serve our customers. Optus says its new strategy includes:
- “dedicated product experts” who will be on hand to offer practical information and advice to customers on the latest products and services
- tighter integration between all Optus channels so customers who buy online can collect in-store
- improved IT systems and infrastructure to better support Optus retail staff in delivering a better customer experience
- increased focus on employee training and accreditation to ensure more consistent service and product knowledge among Optus retail employees.
The Optus announcements come as no real surprise, and are indicative of a maturing market. Ganeson’s comments that the market is moving from a concentration on growth to a concentration on customer retention is spot on.
But it’s interesting that at the same time that Optus is rationalising its distribution channel, Telstra is broadening its. Each strategy has some logic in light of each company’s market position – Telstra needs to expand to maintain its position, while Optus needs to consolidate a fragmented distribution network. As for Vodafone, we have yet to see what this week’s shakeup will bring, but it is likely it will also see a major rationalisation of its distribution channels, and a possible reduction in its number of brands.
Expect to see newer and more sophisticated marketing strategies from all the players. In a saturated market, gaining and retaining customers will be more expensive than ever. They are large companies with large marketing budgets. There will be lots of above and below the line marketing. Let us hope this means Optus will now move beyond its tired ten year old Zoo theme.
The mobile distribution changes from the major carriers indicate a realignment of the retail market to reflect changing technological realities. 4G, a proliferation of tablets, increased smart phone penetration – all are causing qualitative and quantitative changes to consumer usage of mobile devices.
At the same time carriers are under increasing margin pressure and being forced to adopt new or vastly changed business models. There was always going to be something of a shakeup – the events of the past week show that it is starting to happen.