Can Vodafone's 'heart-break' tactics win back trust?

The architect of Vodafone Hutchinson Australia's (Vodafone) turnaround strategy, Bill Morrow, was never under any illusions about the enormity of his task. But the veteran telco troubleshooter is no stranger to clean up jobs, nor a stranger to using unusual tactics to get his way. 

Before Morrow got the ball rolling on his plan, he put in motion an internal campaign that likened Vodafone's customer attrition to that of a devastating Hollywood-style break-up.

Oddly enough, it all began by ransacking the office.

Last year, Morrow, Vodafone’s internal communications team and a couple of key executives broke into Vodafone's Sydney offices over the weekend to transform it into a scene out of a run of the mill rom-com.

Vodafone staff arrived next Monday to find break-up messages written in red lipstick across the glass walls of the office, furniture turned on its head, light bulbs unscrewed from their sockets and flower petals strewn across the floor.

The scene drew a mixed response from employees. As one recounted, a few team members called security to report a break-in before realising that they were being set-up by their boss.

Mending broken relationships 

Now, sending employees such an elaborately choreographed message might not be out of the corporate play book, but as Morrow explains mending broken relationships lies at the heart of his turnaround plans.   

Morrow wants Vodafone to be perceived as a company that “you want at the dinner table”. He also wants his staff to be devastated over any future loss of its near 6 million customers.

“If a customer leaves us, it’s like an old lover just left us,” Morrow said at an event in New Zealand last week  

He isn't off the mark there, because the extent of Vodafone's brand meltdown means that a bevy of detractors is never too far away to cut Morrow's moves down to size. It may not be fair but at least it doesn't leave Morrow and his team any room for complacency.

Robust rhetoric or a con job?

Morrow’s not alone in his bid to rekindle his company’s relationship with the Australian public. After years of exploiting hapless consumers, the entire telco industry is trying to turn a new leaf, trying to prove to the public that it's worth giving them a second chance.

Peel away the rhetoric about relationships and it's clear that Vodafone and the industry's bid to win back consumers essentially hinges on two key words: trust and transparency.

That's were things get complicated, just ask the Australian Communications Consumer Action Network (ACCAN).

According to the consumer watchdog, Australia’s telcos by their very nature are not transparent.

Many consumers are still in the dark as to whether they are over-using or under-using their current plans. And on top of this, the amount consumers pay for the same kind of services varies quite widely across the entire sector.

If you include the virtual operator space, the cost of a plan which contains just 1GB of mobile data, ranges from around $30 through to just over $60 per month. This point is also painfully apparent with global mobile roaming, where consumers are slugged anywhere from $1 up to $7 per minute for international calls.

The major telcos would argue that they are moving to address these concerns. For example, Vodafone and Optus have already moved on limiting excess mobile data charges and roaming costs. 

And as for the discrepancy in pricing of plans, they say that the level of service and additional features a consumer receives is reflected in the cost of the service.

All of this feeds back into this idea of trust.  After years of being milked by the industry with confusing, excess charge-ridden plans, are consumers really going to believe that this is the sole reason that one telco charges more than the other?

Despite the best intentions from the industry, probably not.

Lessons from McDonald's 

It’s an odd link, but McDonalds Canadian arm actually had a similar problem with trust and transparency.

The company’s market research found that it was perceived to be the least transparent with what ingredients were contained within its products and this status damaged McDonald’s brand as Canadians moved to embrace healthier food options. Introducing a salad to the menu just wasn’t going to fix the problem.

So, McDonalds Canada was forced to do something radical. It launched a marketing campaign based around transparency.

As McDonalds Canada’s Joel Yashinsky explained at this year’s Association for Data-Driven Marketing and advertising conference in Sydney, the company made it a point to answer as many questions it could from consumers about its products.

The whole campaign was about answering questions like: “Is this real beef in my burger?” or “Why does my burger look different to the one in your marketing campaigns?” or “how do you make your fries?”.

This level of transparency resonated with consumers, and now serves as a global case study in how a tell-all approach  can actually play to a company’s advantage.

Doing the full monty on costs 

So, is this possible in the telco industry? The industry has been tearing off layers of complexity, but can it do the full monty and bare all to its customers?

Apparently not, according to Vodafone’s chief marketing officer Kim Clarke.

It’s not that Vodafone is shy, Clarke maintains that the industry is a complex beast and explaining all of the intricacies around costs would likely bore consumers rather than get them on side.

Unlike McDonald’s with its food, there is no compelling story behind the costs of the telco sector. Clarke says its calculated through considering a mix of market research, company costs and competition in the sector.

Clarke also said that Vodafone has learnt through experience that over-communicating with consumers can be just as damaging as not saying anything at all. That was a strategy that she altered when she took the helm of Vodafone's marketing last year.

Scrapping "bollars"

Vodafone, along with all the other telcos, is also caught between a rock and a hard place when it comes to doing what they know is the right thing by consumers, and doing what their research is telling them consumers want.

Clarke explained that Vodafone would love to scrap what it calls “bollars” or “bullshit dollars” with telco plans. She’s talking about those plans that give consumers “$600 worth of services” for say, “$60”.

But according to Clarke, despite her desire to scrap this system and be more transparent with pricing, her research tells her that Australian consumers actually like these plans.

This makes sense, given this tactic has been adopted by all the other major telcos. It seems we actually prefer to be tricked with fake money rather than be given an accurate representation of costs.

It’s also worth noting that the telco sector isn’t the only industry with a transparency problem. As seen by the IT price inquiry, the major tech companies are far from transparent when it comes to their costings and prices. In fact, most companies are.

The only difference is that the telco industry is in a situation where ingrained distrust could damage future sales and revenue. Future digital disruption may force many other industries down this path in the near future.

Over the course of the New Zealand event, both Clarke and Morrow affirmed that Vodafone is on track for turnaround.

But the real question, that we’ll need to pose at the end of this transformation, is whether Vodafone actually won back consumers trust or it just tempted customers back onto its network by arming itself with a competitive offering.

Consumers are so embittered with the industry that this may be the only way to coax them onto a Vodafone plan. Going back to Morrow’s relationship motif, Vodafone’s turnaround just might show once and for all whether flowers and chocolates can truly fix a break-up.

Harrison Polites travelled to New Zealand as a guest of Vodafone Australia and Virgin Airlines Australia.