Sunday, 30 August 2009

O2 creates loyalty through entanglement

O2 Providing additional ways for a customer to interact with your brand is a great way of creating “entanglement”.

The phrase “entanglement” is well used in loyalty marketing and typically refers to the process of meeting an increasing number of your customers needs with additional products and services in the hope of both becoming a trusted first point of call and making it harder for a customer to unpick themselves from the relationship. 

In the book Customer Winback: How to Recapture Lost Customers and Keep Them Loyalthe authors describe that the goal of entanglement “is to earn the customers dependence on your firm in as many ways as possible”

Interestingly, the phrase entanglement is also used in quantum mechanics.  There is a property known as quantum entanglement and it is described as where the quantum states of [two or more] constituting objects are linked together so that one object can no longer be adequately described without full mention of its counterpart.

I quite like the idea of that definition of entanglement for brands – essentially two or more products or services that can no longer be adequately described without their counterpart.  This would indicate that a brand was not only fulfilling a wider breadth of a customers needs, but that the product/service extensions actually supported and enhanced the originally offering – dare I use that much overused phrase – a synergy.

It’s rare to see a brand extension that works this well – sometimes they can appear disconnected, standalone and clumsy – but one company that stands out to me is O2.

They have recently released the O2 Money prepaid card which allows customers to top-up the card and use it in the same manner as a standard credit card, but with the condition that you can only charge as much as you have balance to support. 

There is nothing new with this product – prepaid cards have been around for a number of years now and are increasing in popularity within certain segments such as teenagers (allowing parents a vehicle to provide pocket money), the unbanked (allowing people to access online deals even if they are not credit worthy) and travellers (providing a safer way of carrying money). 

But it’s no secret that in these uncertain times people are looking for better ways to control money and this evidenced in a shift from credit to debit card payments as customers try to live within their means. 

A prepaid product can be seen as a modern version of household budgeting.  Rather than drawing out a fixed amount of cash and using this during the month for household expenditure, consumers can utilise a prepaid card in the same way, transferring a fixed amount onto the card and then using this to pay for goods and services during the month.

The only downside – and it’s a big one – is that you need to be on top of your expenditure to know what’s left on the card to ensure you don’t overspend or have the embarrassment of not having enough funds for the purchases.  This is where the O2 offering fits so well.

O2 have linked the prepaid product tightly into their mobile offering so that the two are entangled – in essence they can no longer be adequately described without their counterpart.

The mobile is used to check balances on the card, to top-up the card and a really nice feature is that real time balance updates are sent to the card after every transaction -  so it’s easy to keep on top of  the available balance and to manage funds.  Of course, as it’s cash, the card can also be used to top-up the mobile phone.

As you’d expect, the card is only available to O2 mobile customers and if you stop being a customer you can no longer load credit onto the card.  O2 see the card and the mobile as inextricably linked, with O2’s UK Chief Exec Ronan Dunne, saying:-

“We believe we are at the start of a journey of the coming together of phone and wallet and we intend, through O2 Money, to be at the forefront of this trend”

The entanglement of the two products – the mobile and the payment card – will inevitably lead to the entanglement of customers with the O2 brand.  For customers who build the card into their daily routine, this could be a powerful retention mechanic for O2 – and as it’s one of the few “fee free” cards on the market, it makes it an even more attractive proposition. 

It’s clear when you look at recent O2 innovations such as the branding of the Dome to “the O2” - and the entanglement this creates between the mobile and music - or the O2 Juggler – and the link this creates between the home, the family and the mobile – that O2 really get how to augment the basic provision of a mobile phone service.

It might not be quantum physics, but creating brand extensions that fit with, enhance and synergise with the core proposition is no easy task.  However it’s one that O2 seems to understand and is a strategy that is sure to create customer entanglement – ultimately resulting in greater loyalty.

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