Staff Reporters
Nov 8, 2013

Vodafone finds it difficult to reconnect

BRAND HEALTH CHECK: Australian telco hopes rebranding campaign will stem the tide of fleeing customers.

Vodafone finds it difficult to reconnect

Vodafone Hutchison Australia has lost an estimated 1.5 million customers over the past two years, primarily because the company has not been keeping up with the surging demand for smartphones. Its rivals, Telstra and Optus, have since gained 2.9 million and 433,000 mobile customers respectively, at Vodafone’s expense.

Even now, customers continue to leave Vodafone, with the latest statistics showing that the telco lost 500,000 of its users in the first half of this year alone.

In 2015, competition will heat up even further for the telco when Telstra and Optus launch 4G services.

Vodafone head Bill Morrow says the company has since invested billions in the network and recently launched a rebranding campaign, with the tagline ‘Discover the new’. Will this be enough to win back customer confidence?

Paul Nelson
Managing Director

Vodafone is a brand in a world of pain. It is responding by significantly rebuilding its physical network, offering ‘worry free’ service contracts which customers can break if the network doesn’t meet expectations, and a network confidence-based marketing campaign. However, it needs to
do more.

Operationally, it has to get the basics right and continue to improve network reliability and coverage. It should focus less on competing on speed and more on reducing drop-outs and closing black spots.

From a customer perspective, it needs to focus predominantly, but not myopically, on existing customers and driving loyalty and Net Promoter Scores. It should align its dealer and internal audiences and engage deeply and frequently before even thinking about building the brand externally.

Vodafone also has to prepare for the future by positioning its brand beyond purely recovery. It needs to clarify who it is, what its ideal customer looks like, what it stands for and what makes it different. It then has to communicate this positioning consistently and compellingly across all touch points.

The path to growth is via improving its core network functionality; turning customers into loyal brand advocates; and preparing its brand for a future beyond just recovery.

Nicole McCormick
Senior analyst


Vodafone Australia’s network saga is the worst we’ve seen in Asia-Pacsific. Poor data experience with Vodafone during the period mid-2010 to early 2011, due to under-investment in the network, has cost the brand dearly.

The numbers speak for themselves. Vodafone’s mobile connection market share has fallen from 27 per cent in 4Q10 to 19.5 per cent in 2Q13 as customers migrate to rival telcos, in particular, Telstra. Vodafone’s damaged brand perception has meant it has had to reinvent itself. It has had to cut costs, including head count, and it chose not to partake in the auction of 700MHz-2600MHz spectrum.

What Vodafone is doing right is focusing on network performance and coverage and differentiating on tariffs. It has invested heavily in the network over the past 18 months and launched new Vodafone Red plans. In September, it commenced its ‘Discover the new’ Vodafone marketing campaign.

We expect this to help turn Vodafone’s mobile connections positive next year.

To win back customers, it also needs to continue to focus on providing better and consistent customer service. The latter is a key battleground among telcos in Australia and a clear winner has yet to emerge.




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