Get Them While They're Young
By Peggy Anne Salz, Mon Oct 25 14:15:00 GMT 2004

Operators met last week in Barcelona to trade experience and sure-fire schemes they employ to lure the growing youth market. The big surprise: it's not the service that sells.

If you buy popular generalizations about the youth market, then you probably believe it's a tech-savvy sector that has a high level of discretionary income, an active interest in advanced mobile data services and value as a lifetime customer.

Not so. In fact, exclusive research by Unisys reveals that the youth market -- although the industry’s highest growth segment -- can be an operator’s worst nightmare.

Granted, youth understand technology better than most, but most reject techno-jargon and consider MMS to be a gimmick they don’t need. They have deep pockets, but are heavily cost-conscious and overwhelmingly choose their provider on the basis of price. They are fickle, lack loyalty, switch providers often and have multiple SIM cards.

And here’s the shocker: operator brands don't even show up on their image radar. Over 75% of respondents in the Unisys study thought Nokia was their service provider. That’s how little they know or care about operator brand.

Predictably, most operators dismissed this key finding, but their knee-jerk reaction speaks volumes. In their minds, they put brand before the customer. And, in an industry like mobile where individual interaction and communication are the foundation of the customer relationship, it’s a business model that’s bound to backfire.

Brand doesn’t rule. Management has given brand too much power over the last decade. As a result, executives would rather fine-tune their brands to appeal to customer segments -- an exercise that is often expensive and rarely successful -- than build their brand around customer segments. Indeed, a thought-provoking article in the Harvard Business Review argues this approach ignores the inevitable rise of the individual brand and could alienate more customers than it attracts.

Yorn, the youth brand that became part of Vodafone Portugal in 2002, understands the importance of keeping brand in its proper place, and gets kudos for its fresh approach. It has cleverly positioned its shops as youth hang-outs, not Yorn retail outlets. In Lisbon, it even owns a shopping mall and rents space to popular brands such as Replay, Diesel, Fila and FNAC.

“Communicating that you’re cool isn’t cool -- you have to show it,” explains Rudolf Gruner, a Yorn marketing manager who spoke at the conference. There’s a lesson in here for all operators wanting to target the youth market: It’s not your offer -- but who you offer it with -- that counts.

And speaking of offers – don’t think that mobile data is a must-have. Communication, not content, is king. Youth want cheap, easy-to-understand service bundles that couple lots of voice minutes with even more SMS. While there is growing excitement around music services and ringtones, this doesn’t transfer (yet) to more advanced mobile data offers.

“When they want data services, we’ll give it to them. But right now it’s all about price,” notes Mark Vandevelde, a project manager at The Mobile Factory. Part of MTV in Belgium, TMF joined in December with BASE, which belongs to incumbent operator KPN, to target the youth market.

Since revamping its ad campaign to emphasize price three months ago (it offers SMS for 8 euro cents and rappers repeat it throughout the spot), TMF reports a 25% increase in new activations.

TMF is gaining traction –- proof that it pays to keep prices competitive and simple. The youth market has little patience with small print. Rather than wrestle with complex tariff tables, they’ll flock to operators that offer cheap SMS.

And there’s another value-add operators should have on their radar: payment methods allowing prepaid users to talk or send SMS when they’re broke. Many operators already allow teens to transfer money from one SIM card to another. TIM, for example, is shaking up the Italian market with an offer that allow users to send collect SMS to friends and family asking them to call back. (A TIM executive said users send a 1,000 “SOS” SMS per day.)

Clearly, in the youth market, costs do count. This conference shows price will get youth in the door. But -- moving ahead -- it’s a generous and flexible credit offer that will probably convince them to stay.