Cross-pollinating offers can offset price disadvantage

Leaders do not necessarily innovate and laggards do not necessarily remain indolent. Many brands seem to thrive as underdogs. Etisalat is the sector leader in the middle east for ILD (International Long Distance) wholesale carrier business. For obvious reasons they are able to provide cheaper ILD tariff to their subscribers compared to other operators in Afghanistan. This ILD tariff difference leads to the market perception that Etisalat tariff is cheaper than the other operators - AWCC, MTN and Roshan.

Though the tariff difference was only in ILD segment, the general perception was that Etisalat provides cheaper calls, even on-net or off-net calls. That was hurting us as we were fast losing market share, especially in the ILD segment. An opportunity came to us during the Hajj period when traditionally most Muslims across the world make calls to their friends/relatives who perform the Hajj.

There was no way we could have fought a direct price battle with Etisalat as being the carrier operator, they would always have the price advantage. And we had to price ourselves above the interconnect tariff and tax just to break-even, which created a substabtial gap in the tariff offered by us & Etisalat. We had to come up with an alternate strategy. On analysing the ILD traffic during Hajj period for earlier years, we discovered the following:

1. Every Haji (one who performs the Hajj) receives an average of 3-4 calls daily while roaming in Saudi
2. These ILD calls have an average duration of 2+ minutes
3. That the MSISDNs from which the Haji receives incoming calls from, also make 1.5 times more outgoing calls during the Hajj period

The analysis proved that friends/relatives kept in constant touch with the Haji throughout the visit. And secondly, friends/relatives who stayed back, talked more among themselves during the same period. We came up with a cross-pollinating idea, one where the benefits were not direct discounts, but more than one product were inter-linked to provide the benefits. We did various permutations and combinations, before arriving at the 786 offer. 786 is the holy number in Islam. The offer was simple and attractive:

Call Saudi Arabia for 7 minutes to get 86 units* of FREE on-net calling in AWCC, Afghanistan.

(* In many countries, airtime is sold as units instead of minutes. Units can be defined in multiples of 0.5 units of a currency. In Afghanistan, 1 unit = 50 POL or 0.5 Afghani, the national currency.) 

 

In effect, for every 7 minutes of calls made to any number in Saudi will give the caller 43 minutes of FREE one-net calls (or 86 units). And the callers could accumulate their ILD call duration over many calls to receive the benefit. 

Of course, the prospect was scary. The margin one makes on ILD calls is minimal, whereas on on-net calls the margins are high as there is no cost outgo. Compared to previous years, the volume of ILD call traffic had to increase by 5 times to break even! During the last three years, the year-on-year growth on ILD calls during Hajj was just 25% or 1.25 times! And this growth was mainly due to the subscriber growth the portfolio witnessed year-on-year. Which meant, that if the call voume did not grow significantly, we will not only lose money on the offer, we will also have to subsidise the free on-net calls later. Needless to say, that it took a lot of patience and courage to convince the finance committee to get the approval. But kudos to the finance team - they finally agreed to take the risk.

But we were convinced that we had a killer product on hand. We just had to crack the communication strategy. If we had a good campaign, we believed, we were with a chance to upset the market calculation. So, the next challenge was to push the agency to deliver a good idea. In Afghanistan, coming up with a break-through communication idea is a challenge, mainly because of the socio-cultural and illiteracy problems. In the end, we settled for a graphic lead infommercial. By doing this we made sure that even the most illiterate could understand the communication. It clicked and how!

• In the 45 days the promo was live, the ILD call volume increased by 13 times! Never in the history, Etisalat had lost out on such a large volume of ILD call share. 
• During the peak time - 3 days when most Hajis assemble in Saudi, the ILD call volume went up by a whopping 33 times!
• In that period, we sold 20,000 more SIM cards than we normally do. 
• The average call holding time went up to more than 4 minutes.
• Obviously, we had to budget for the huge volume of FREE on-net calls, but this had a positive spin-off. Because people accumulated such a large volume of free on-net calls, attrition over the next 2 months decreased from a monthly 4% figure to 3%. 
• This not only improved the margins made in the promo, it also helped fight the perception that AWCC calls were costlier! We killed two birds in one shot!    
• In 45 days we made more ILD revenue than we make in six months!

In my opinion, the the plan succeeded for the following reasons:

• Hajj period forced ILD communication need, so we did not have to sell the concept of making additional ILD calls...it was a need of the people at that time
• Secondly, cross-linking ILD with on-net calls ensured that customers perceived the value of the benefits more. The free on-net calls that could be used over the next few months for making regular on-net calls, clinched the deal. Everywhere, relatives/friends/business partners tend to use the same operator SIMs. Making on-net calls is a more basic communication need of a mobile subscriber,compared to off-net or ILD calls
• Lastly, the offer rode on the holy number concept....we converted the product feature into product branding. This helped in explaining the offer easily.

Beating a category leader in its own game gives a different high!