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MTN SA will launch a new system next month that will allow it, for the first time, to sell tailor-made contracts, which it expects will save costs, boost sales and profits, and save customers money.
Larry Annetts, MTN SA chief consumer officer, this week said that the customised contracts would give consumers choice and control over their handset, voice, text, data and other cellphone spending, which would probably result in client savings.
“None of our competitors will be able to match this within one year,” said Annetts.
Vodacom and Telkom don’t allow their contracts to be tailor-made at all.
At Cell C, a customer can request some adjustments to fixed contracts and the consultant will then provide the client with a contract quotation.
Vinnie Santu, a Cell C spokesperson, said that the company had been offering contracts of varing lengths since 2012.
Arthur Goldstuck, the managing director of World Wide Worx, said that the plan by MTN for tailor-made contracts was “not necessarily innovative”, but it was a first in the local market.
“To date, local cellphone contracts had been designed by accountants and actuaries without taking into consideration the needs of the customers, so it is good to see MTN move to what is best for customers,”
he said.
Calls for customisation of mobile contracts started a decade ago and it was surprising how long it had taken the industry to get to this point, Goldstuck said.
The move to tailor-made contracts reflected greater competition and more demanding customers in the sector, which was pushing the market to be more efficient, he said.
The personalised contracts would allow MTN to hold its contract customers, who were the highest-value clients, but was unlikely to be a means to poach clients from rival networks, Goldstuck said.
A key issue that MTN’s new system failed to address was whether the customisation contracts would allow unused data or airtime to be carried over, or would be lost, he said.
However, Annetts said that under the new system MTN would ‘allow carry over depending on bearer and bundle type’.
The tailor-made plan will be known as Shifta. The company was also developing customised prepaid contracts, which will be known as It’s On, and which would require customers to install an app on their phones, he said.
The key driver behind tailor-made contracts was to save marketing costs – money would be saved because MTN would need to market few contract brands, Annetts said.
Selling, distribution and marketing costs are one of MTN’s biggest expenses and the group spent R18.4 billion on these costs worldwide last year.
“We got a lot of feedback from the market to say that our plans are quite antiquated when it comes to the amount of data that people are consuming ... With this, a customer can customise his plan,” he said.
The new system uses a series of “sliders”, which will allow a customer to select from various options to make up an overall contract package.
There would not be a price advantage when choosing a tailor-made product over a fixed contract, Annetts said.
Determining what subsidy or discount a client will receive if they buy a new handset will depend on what choices they make.
Annetts said that the algorithm for calculating the subsidy was probably the most complex part of the customisation system.
In addition, once the contract has been taken out, the customer can change its parameters, and those changes will be fully effective in the following billing month.
The idea is that customers can design their contracts over the internet, place the order and then have their order delivered to them.
The new system will allow applicants to be vetted via credit tests and affordability checks.
The project was scoped for six months and had been under construction for the past year, Annetts said.
MTN studied customisation plans offered elsewhere in the world, including looking at Singapore’s Singtel and the UK’s Vodafone, as well as operators in Italy and the US. Singtel’s customisation plan was the most advanced that MTN found.
Annetts said that at least 20 MTN staff had been involved in the development of the new system, but he wasn’t able to say how much had been spent on it.
“The new system will save time for the sales consultant and provide better service for the customer,” Annetts said.
MTN would maintain its existing preset contracts while looking to grow the tailor-made contract segment.
Annetts said MTN didn’t expect to completely drop fixed contracts because the older generation preferred these kinds of packages. He expected that within three years, MTN’s local sales would consist of 80% customised plans and 20% fixed contracts.
An extra feature that MTN is planning for the customisation system is to include bundles for international roaming.
