After entering the market four years ago with a target of taking 10% of the local mobile market share, Virgin Mobile has revised its expectations to taking less than 1% in the next one or two years.
Chief strategy and business development officer Jonathan Newman says Virgin Mobile has about 250 000 subscribers, most of whom are contract customers.
This, according to Frost & Sullivan ICT analyst Protea Hirschel, gives Virgin less than 0.5% market share, which means the mobile company's revised growth target is still ambitious.
Despite Virgin Mobile's slow growth in SA, Newman's targeted 1% of market share would imply the company is seeking to grow its customer base by 100% ‑ to about half a million subscribers, in the next year or two.
Newman attributes the slow growth of the company's subscriber base to irregular leadership. “We have been through a few CEOs until 2008, when Steve Bailey joined. At the time, we weren't doing very well and he started to turn things around.”
He claims the company now gains about 10 000 contract customers per month.
Poor service
Hirschel also points out that Virgin Mobile's poor customer service is one of its failings. “Virgin Mobile has fared very poorly in customer satisfaction surveys, such as the Orange Index - in fact, considerably worse than the next worst, Telkom.”
Newman agrees, saying the operator is also trying to improve its customer service levels. “We are focusing on getting service levels up. It's not where we want it to be.”
About 200 000 of the 250 000 Virgin Mobile subscribers are contract customers, according to Newman.
“We held off on targeting prepaid customers, because we didn't have the capability to reach them. But now we are doing much better.”
In an effort to start targeting prepaid customers, Virgin Mobile has unveiled a product that allows prepaid customers some of the benefits of contract subscribers.
The operator says it rolled out M'Tshele Nine Nine vouchers that have R99 airtime and 500 free SMSes to use anytime, to any network. The SMSes have a 30-day window.
“Until now, only contract customers spending over R100 per month have been given 500+ SMSes per month. Now, we are bringing this benefit to prepaid subscribers who are also willing to commit to this level of monthly airtime spend - hence, the R99 voucher cost and 30-day free SMS window. We have stopped differentiating between prepaid and postpaid,” says Newman.
Hirschel says that, while this is an attempt by Virgin Mobile to increase its market share and visibility, its customer service levels should be its main point of focus, as the M'Tshele Nine Nine voucher is not as innovative as it may seem.
“Offers of this kind are not new, and several operators in SADC [the Southern African Development Community] have similar recharge vouchers that have timed bonuses, such as 500 free SMSes for a period of 30 days.
“In theory, timed benefits should help to lock in subscribers to the network as they want to renew their 500 free SMSes. While not groundbreaking, offers of this kind are expected to become more common in SA and are a variation on the bonus airtime, depending on the voucher face value.”
Hirschel states Virgin Mobile has not really had much of an impact on the mobile market in SA - an indication of this is that commentators often speak of SA having three operators only.
However, she adds that the company has been focusing on the retail distribution channel since last year in order to increase its visibility.
“Given these developments, one gets the sense that there is renewed energy. However, turning around their poor reputation in customer service needs to be a key component of their strategy going forward.”
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