MCI INTERVIEW
MCI INTERVIEW mike.hibberd@informa.com
Riding out to meet the regulators
CEO of 3UK since May 2007, Kevin Russell had previously run the firm’s Australian operation.
He was shocked, he tells Mike Hibberd, by the regulatory shortcomings of the UK market.
�UK has not had a stellar time
since it launched in March
2003. The firm had attracted 3.9
million subscribers at the end of May
this year, according to figures from
Informa’s World Cellular Information
Service. And, while, it has the largest
3G subscriber base in the UK—it
doesn’t operate a GSM network—it
has been out-performed in subscriber
additions during the four years since
its launch by Vodafone, O2 and T-Mobile.
Orange, it’s nearest competitor
among the network operators, has
over 15 million subscribers across
its GSM and 3G networks.
Subscriber land grabs, of course,
are passé. As any operator will tell
you, it’s all about the quality of
the customer base that you have,
the loyalty of the users and their
willingness to spend higher and
more reliably than your competitors’.
Nonetheless, four years after
the new entrant promised to revolutionise
the mobile offering with a
groundbreaking series of services,
you get the impression that 3UK has
yet to settle in.
Kevin Russell took the reins at
3UK in May this year, following a
handover period that began when
he joined as deputy to outgoing CEO
Bob Fuller in January 2007. Russell
was transplanted from 3’s Australian
operation, where he had been
CEO—and the UK outfit, he says,
has suffered from a combination
of operational shortcomings and a
regulatory landscape that he claims
is fundamentally anti-competitive.
Russell suggests that, of the various
operations in 3’s portfolio, the
Australian and UK markets share the
greatest number of similarities. The
key difference, he says, is the distribution
model. “In Australia there wasn’t
the presence of the independent,
multi-operator channels that have a
significant influence on distribution,
and communication with customers
at the point of retail,” he says.
Kevin Russell
He argues that 3UK has suffered
from a lack of own-brand retail
presence. This is key, he says, in
educating consumers at the point of
purchase. Post-retail, it becomes key
in providing the kind of after-sales
service that is needed for an offering
that, when 3 launched, was markedly
different from what its competitors
were taking to market.
“If you’ve got your own dedicated
chain of stores, it’s a very significant
benefit in terms of getting more
customers to use your services,” he
says. “It’s not just about selling, it’s
how the stores develop into service
centres and areas where customers
can upgrade and develop a stronger,
tighter relationship with your brand
and your company. It’s a very important
platform from which to build
the business.”
In Australia, where the firm has
a chain of 75 retail outlets and 900
retail staff, the customer experience
has been much better, Russell says.
In Australia, the firm has won 6.9 per
cent of the market, while in the UK it
has managed 5.4 per cent.
“We are addressing this more aggressively
in the UK now,” Russell says.
“We will have 250 of our own stores in
the UK come the end of the year and
you’ll see quite a significant change
in terms of our high street presence.”
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While a greater visibility in the
UK’s shopping centres may help boost
brand and offering awareness, Russell
says he is not “in a customer-grab
mindset right now.” The firm’s sales
targets, he says, are lower than they
were twelve months ago. “We’re making
sure that customers come to 3 for
the right reasons. We’re getting the
right customers and, bit by bit, we’re
building the base and the business.
As we get a more satisfied base, that
run rate will increase.”
A satisfied customer base is not
something that 3 has always had.
“We’ve had churn issues historically,”
says Russell. “We haven’t been tight
enough on acquiring customers and
keeping them. I think we need to
improve some of the basics of the
operation, particularly customer
management.”
The firm uses an off-shore call
centre for its customer service operations,
which is based in India. While
the benefits of locating this kind of
function in a place where costs are
significantly lower than the home
market are clear, more than one company
that has followed this path has
encountered operational obstacles.
Principal among these are cultural
and language barriers, which can be
extremely tricky when they affect the
customer/provider interface.
The same call centre serves 3’s
Australian customers and, in this
instance, says Russell, the off-shore
model has worked very well. Not so
in the UK, though. “In the UK I think
it’s taken longer to bed those service
levels down and to develop an operation
that is answering and resolving
customer issues,” he says.
Despite this, Russell’s commitment
to the off-shore strategy is emphatic.
“We will stick with it—it’s pivotal,”
he says. “To deliver the service that
I want to deliver going forward
—which has to be better than market
—I do think you need an off-shore
call centre.”
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