Hello I’m Glyn, CSO at KBS Albion. Albion is a creative business partner. We work fast, lean and collaboratively to help businesses make bold leaps. We’re known for our work building startups like Skype, Zoopla, King and Ada Health, and today Thomas Cook, Vodafone and Compare the Market are big clients.
But today I’m going to talk about a business called giffgaff that we incubated back in 2009. I think it’s a good example of using design thinking to create a new kind of brand with representation at its core.
O2 asked us to help them design a new virtual mobile network business. There wasn’t a grand strategy, just the convenient coincidence of a few factors: 1) A customer segment that couldn’t be served profitably by the O2 brand. 2) A new tech platform than needed testing. 3) One senior person’s interest in “the Wikipedia way of doing things”.
But those are all self-serving reasons. So our first task was to find an unmet need in that audience that a Wikipedia-style virtual mobile network could serve. By spending lots of time with those people we came to realise something simple. They loved mobile but hated Big Mobile networks.
These people loved mobile. They loved getting the latest handsets. Talking in forums about the latest handsets. Unlocking handsets, jailbreaking iPhones. Heavy use of apps, heavy use of mobile data.
But they hated the mobile networks because they didn’t recognise their acumen, and because they resented being clumsily sold to at every single touchpoint. As a result they constantly churned between networks, unprofitable and never happy. So we set out to design a mobile network that they could call home.
To cut a long story short we designed a business model based around a virtuous circle:
- These customers demanded radically lower prices
- So we had to have a radically lower cost to serve
- Which we achieved by having the customers do lots of the work normally done by the company, especially customer service and marketing
- Which created a sense of belonging, that reduced churn
- That enabled radically lower prices…
So the ‘what’ is pretty interesting. But what’s more relevant for today I think is the ‘how’. We could only pull this off by behaving in a way that’s opposite to how companies usually behave.
Companies, brands, are usually big, shiny, persuasive, secretive, consistent, fixed. With giffgaff we had to be humble, open, iterative, honest, human, and embrace emergence.
I wanted to quickly tell you 3 stories that illustrate that approach…
1. An iterative and human approach to setting rewards
The community would have worked for giffgaff for free if it had been a startup. But because it was owned by O2, that would have felt exploitative. So we knew we had to reward participation. But how to structure that system and set the right level of incentive? There were a lot of strong, but uninformed, views from the team. In a normal company the most senior or persuasive person would have won, and their answer launched. Or they’d spend loads on flawed market research.
Instead we systematically made all the options and tested each of them live with a controlled subset of the customer base to see what actually worked best ‘in the wild’. Through that multivariate test we actually ended up somewhere pretty simple. Basically, if I get someone else to sign-up to giffgaff, I get £5 and they get £5.
What’s perhaps more interesting is that the data showed that making the incentive higher — £10 each, £20 each — didn’t have any uplift on conversion or customer satisfaction. No-one would have intuited that.
2. A humble and open approach to making price rises
Although it’s owned by O2, giffgaff had to buy wholesale network capacity from them as if they were a third party. A few months after the launch, O2 put their wholesale prices up, and so giffgaff had to put its prices up. Despite our advice, The CEO and CFO just did what they would have done at O2 — they decided themselves how to implement the price rise based on conventional wisdom, and then announced it (‘and the customers will just have to put up with it’).
The community went mad. So then we had to scramble over the weekend to do what we should have done in the first place. We wrote a blog post explaining, in some detail, why the prices needed to go up, and some of the economics of the business, including the approximate margin they needed to make to be a sustainable business, and then set out three different options for the price rise, and invited debate in the forum. Over the weekend the super-users in the community DID debate, and between them arrived at a fourth pricing option that better met their needs and still met the business’s objectives. We put it to a vote in the wider community, which gave overwhelming approval, and so it became policy. This is the model for how they’ve made pricing changes every time since.
3. An iterative and emergent approach to developing a proposition
When we were developing giffgaff, we knew there was a lot to like about the offer for this audience. Actually is was almost too rich, so there wasn’t one obvious USP. If we had 20 minutes to explain it, then people really got it and signed on. But we couldn’t find a pithy few words that would hook people. This was OK when we were only having to appeal to early adopters, but when the business needed to scale with digital advertising, this became a problem. The best we came up was the descriptive positioning statement ‘the mobile network run by you’, so that was it for the first few years, but no-one was ever really satisfied with it.
But, once again, the community had the answer — if you listened hard enough. Over several years, tens of thousands of people sold giffgaff to hundreds of thousands of people, and the ‘crowd’ started to figure out what worked best. Eventually a winner became clear: ‘Free to go, free to stay’. It perfectly summarises the difference between giffgaff and Big Mobile, without trying to explain the model. (And, counter to conventional wisdom, because giffgaff doesn’t trap its customers, it has the best customer retention in the industry.)
What can we learn from this that’s relevant to government?
Lots of the digital work going on in government seems to focus on making the day-to-day of being a citizen easier (e.g. paying your taxes, renewing your driving licence) or better engaging within the current system (e.g. better dialogues with local government officials). And that’s necessary and important.
But what seems more urgent at the moment is that our democracy feels broken. In an age of unparalleled connection, expression and magical levels of customer service, our representative democracy doesn’t feel anywhere near representative enough. I don’t think a few new politicians or even a new political party will do much to change that. Addressing the symptoms isn’t enough, we need systemic change. Our system of government needs a reboot.
Like Big Mobile, our current politics is all about big personalities saying whatever it takes to persuade people to vote for them, then taking huge often un-evidenced bets on those policies — which very often don’t work, or have terrible unforeseen consequences.
I believe that the new system of government we need can only be developed by behaving the opposite of how government usually behaves. By being humble, open, iterative, honest, human, and by embracing emergence — something like we did with giffgaff.