John Caudwell undeniably built a powerhouse of a business in Phones 4U. He also famously sold out for £1.5 Billion. I personally know many people that worked there from the Board Room to the Shop Floor and it certainly changed upon him leaving. So why did it fail and has anything changed following it?
Why did it fail?
In my view when John sold out Phones 4U lost its Chair, and with it some serious direction. John was an extremely strong driving force, not to be reckoned with – so when the ‘money men’ came in I believe that Phones 4U lost its way and along with it its historic relationships with the networks; John was extremely close to them, just like Charles Dunston is still today at Carphone Warehouse.
Why was this relationship important?
Well historically the mobile networks can be incredibly fickle, one minute you are the centre of their universe, the next they have gone ‘direct only’ (Three for example) – so having a strong relationship with them and sharing common goals is critical. I believe that it was the latter that ultimately led to the breakdown in the relationship.
What do the Networks really need?
Mobile networks are looking for loyalty nowadays. They invest heavily in schemes to keep you locked in and loyal. Some schemes are better than others – O2’s Priority Moments currently leads the way – however TV from EE and Spotify Music from Vodafone are popular services too. With mobile devices getting more and more advanced, and along with it customers network performance expectations getting more and more demanding the Networks need a return from its customers and nowadays that is only coming in at month 22 of a 24 month contract. Alongside this the Networks are investing millions every single day in network improvements – the Anything Anywhere ‘wholly grail’.
What went wrong at Phones 4U?
My observation is that Phones 4U became famous for ‘churning’ customers from one network to the next, taking advantage of new connection bonuses from rival networks. They were also big exponents of the ‘cheapest deal’. In my opinion it was these combined ideals that led to the networks pulling the plug. I believe ‘a meeting happened’ - the networks sat down and saw an opportunity to stop paying high fees to acquire low spending customers off each other that will end up being disloyal again next time.
So has anything changed?
In my opinion I believe it has. I believe customers have become more realistic about their mobile deals and what to expect from the networks – i.e. they are starting to increase spend to get the service they need in return for a service delivery that meets a promise. I believe that customers now have combined expectations: Great Network Service + Customer Service at a Fair Price – not always just a cheap price. Being available/online can be more important than saving a few quid – however network service is critical and non-negotiable. We have all seen that customers will take to social media immediately if there is an outage, an RPI price increase or a poor customer service experience – and now OFCOM is releasing real data on each aspect so the public really know ‘what is what’.
Things seemed to be getting fairer. I think that the mobile networks and mobile resellers/dealers/partners are working far closer together to ensure a greater customer experience – and not any ‘any price’. The focus is on value – Great Coverage, Speeds, Service, Experience, Loyalty Schemes etc.
I believe that things will continue to improve. Maybe the industry just needed some discipline? One thing I do wish, I wish the Networks and/or Phones 4U could have handled the whole debacle better – it wrecked some lives for a while.