mardi 10 janvier 2012

Free Mobile: Simplicity laws applied to business

Today in France, everyone was waiting for the launch of the new low cost french mobile operator Free Mobile. Free was up to its promise of proposing unlimited mobile plans at half of the practiced prices. Two plans are proposed: 
  • Unlimited plan for 20 euros / month: Unlimited calls in France, and to 40 international destinations, unlimited sms/mms, unlimited wifi, and 3G data
  • Social plan for 2 euros / month: 60 min of voice communications and 60 SMS
I watched the morning launch presentation by the CEO Xavier Niel, and I would like to talk about two points on the positioning of Free Mobile.

The first point is about simplicity. In a previous post I wrote about the laws of simplicity (Reduce, Organize, Time..). For me, these laws applied by Free to their new mobile offer makes it a really beautiful piece of art.
  1. The Reduce rule: reduce number of offers to only two, reduce offer complexity, reduce price, reduce control: no engagements, no usage restrictions, reduce services, reduce options, reduce contract clauses..
    - The image of the offer can't be clearer and simpler in the mind of the consumer, no need for catalogs, no need to think to choose the right offer.
    - The resulting chain value/cost structure of this simple offer should be also simple: simple sale process, no need for sales advisers, simple after sales services, simple information system, simple advertisements.. all of which are factors for lowering the costs of the offer! take for example their after sales services, they don't need to learn about sophisticated offers, so this service can be externalized easily, and if not, more client issues can be treated more rapidly thus needing less personnel.
  2. The Organize rule: The offer is organized in a new innovative way: the mobile subscription and the financing of the mobile phone are separated. This way for example you pay 20 euros per month for your communications plan and 15 euros per month to pay your iPhone "loan". This way of organizing the offer gives the consumer the freedom of financing the mobile phone he wants in the way he wants. As a whole, the organisation of the offer is very simple. Speaking of iPhone, Apple has adopted the same simplicity in their offer: Only one phone, the iPhone!
  3. The Time rule: The consumer needs less time to understand the offer, to choose his plan and to get the offer (online). We consumers, we love our time, and prefer not spending it on comparing offers, reading catalogs, talking with sales advisers..
    The time savings are also valid in all of the value chain processes of Free Mobile.
As a conclusion of this point, Free Mobile has made very quickly a simple and strong representation in the mobile brands evoked set.

The second point is about the aggressiveness of the offer presentation in the launch. This was for me the very negative point of the positioning of Free Mobile. In his presentation, the CEO was very aggressive and disrespectful toward other brands of mobile providers. For example he kept telling the audience that the current mobile operators were stealing money from consumers, he criticized the complexity of their offers, their prices and practices. He may be right, but I don't think that he should be doing that, but rather focus on the innovation and the advantages of his offer. As a consumer, I don't like the seller whose only arguments are the defaults of his rivals.

The launch of Free Mobile on the french mobile market will certainly disrupt it, which is a good thing. I am looking forward to see how free will deploy and develop their offer, market, and their mobile network, and also how rivals will respond.

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