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Telecom’s burden is marketing: Spark

What does Telecom do?

For me it’s simple – as a telco (leaving aside Gen-i) it provides reliable internet and voice connectivity. That connectivity is accessed over the air and via copper and fibre, and there is a strong switch towards demand for pure data access, rather than voice, txt or other services.

When Telecom wins it delivers simplicity, and three recent changes were great to see. The first was the removal of cripplingly expensive data roaming costs so that we don’t have to do the SIM dance when travelling across the pond and to other frequent destinations. The second was the rollout of the iOS (and Android I suspect) application for mobile customers, an application that allows easy addition of data packs for relatively reasonable costs. It’s not perfect – I’ve heard about delays and the incessant texts are annoying – but it’s worlds away from the past. The third is a new system for in-store staff, which makes their work, and ability to deliver great customer service, lot simpler than before, though I suspect there is plenty more to do.

So the proposed name change to Spark is disturbing, and for three reasons.

The first is that the old name is strong, while the new one is appalling. We are incredibly dependant upon our telecommunication providers and demand similar levels of dependability and reliability from them as we do banks. “Telecom” is a name rich in history, not all of it bad, and can be relied upon as a NZ institution to deliver a good service. “Spark” is a small thing that is liable to disappear very quickly.

The second is that this rebranding is a distraction. Telecom’s transformation, like Air New Zealand’s before it, is a long, slow gradual process. It means a return to simplicity of offerings, delivering outstanding customer interactions, and relentless focus on delivering  fast unrestricted data pipes over a variety of mediums. This is happening, but changing the name has nothing to do with these activities, and will cause staff and customers to wonder what the heck is going on. I’d much prefer that the focus remains on the changes, and allow our increasingly positive interactions with Telecom improve their brand equity.

Thirdly this feels like an expensive capture by marketing folks, internally and externally. Telecom has long had an issue with the strange belief that they are a marketing company rather than a product or services company. This has meant wildly expensive spending on television and other advertisements, constant rebranding of the company and products (XT as an example) and a vast and complex series of products that makes doing business incredibly difficult. At issue is not just the cost, but the energy of staff and senior management that goes into “marketing” rather than into delivering great products and services.

Overall
The change happens on April 1, so there is a chance it’s all a joke. Please [Sorry Lance, it's actually an un-specified time around mid-year - Editor]

For me the rebranding is a critically poor decision, a distraction and a reason to question what is happening at the board and senior executive level.

Perhaps it’s happening because the marketing department has little ability to create impact at the product level, and they need something to do. A lot of the delivery of Telecom’s products is outsourced (e.g. to Alcatel Lucent), but external marketing websites, TV and billboard advertisements and rebrandings are relatively easy for the marketing team to do. This means vast budgets and numbers of people internally and externally are focused on marketing overhead rather than the core issues like products, pricing and customer interactions.

If I were a board member this would be simple – I’d be strongly advocating that this is evidence of marketing over-reach, and that the budget be stripped and the existing team reduced almost to zero. What a sad waste.

Lance Wiggs is an independent consultant providing management, strategy, growth and valuation consulting to industrial, media and internet based businesses. He blogs at Lancewiggs.com

Comments and questions
25

Lance, not sure where you dreamed up April 1 but that is definitely not the case. we have simply said the rebrand will take place later this year, exact date TBC.

Remember the wee dog, Spot? The name came from the initials of Services and Products Of Telecom. That is still a sensible commercial focus for the company and consumers alike. What brand values are we to attach to Spark?

Hey Lance – you know me – and I can tell you that we have plenty of substance behind this. As you have said we are transforming ourselves admirably and the pace at which customers have reacted has been excellent.

To be clear – this isn’t an advertising exercise – but an acceleration of our current business strategy which has already seen us launch a number of bold plays – fibre, 4G, WiFi, flat rate roaming, investment in local business hubs and the OTT announcement today. All of these actions build our brand in the minds of our customers and this name change is just another part of of the plan that we are bringing forward due to unprecedented customer momentum.

Why a name change? Most importantly because Telecom doesn’t reflect the company we will be come – or arguably the company we are even today. Secondly some key, fast growing customer segments tell us they will always just out right reject the Telecom brand – regardless of all of the great things that we have done and will continue to do for them in the market. The fact is that we if we don’t keep building and changing we won’t get where we need to be.

Everyone here is focused 100% on getting this right for our customers – continuing to make more substantial improvements to our business and providing a clear return on these improvements are key components of the plan.

All companies have to innovate and diversify over time Jason, it doesn't mean you need to change your name.

Your products and services define your brand, not a name change.

Will this name change fix your email issue's with Yahoo? These are the things that define your business.

Absolutely agree Steve - it's not the name, but the substance that counts. Unfortunately even though we have done a lot that our customers have absolutely loved over the last couple of years - and have much more planned - a whole range of New Zealanders told us that they were just not interested in joining us if we kept the Telecom brand. We needed to change.

On yahoo - we know that this hasn't been good enough and we continue to work hard to sort this out for you.

I like it, personally. It captures the true transformation that's happening and that put simply, they ain't just Telecom anymore.

Rebrands always have their detractors - most people react negatively to change. But I bet in a year from now we'll all look back at the "old" Telecom name and wondering what all the fuss was about.

Having said all that, there is a risk of alienation of older loyal customers who have "always been with Telecom". Time will tell.

But overall, well done for being bold I say.

Telecom, Spark, whatever it is - unless you fix issue's like Yahoo email problems, what you call yourself becomes irrelevant. They define your brand, not a name or a logo.

Agreed - the Yahoo mess has seriously hurt their brand, and that at will carry over to Spark if they don't sort it out once and for all.

Move everyone to Gmail :).

That would be one option. Change @xtra.co.nz to be forwarding addresses only, forever, to wherever, and include comprehensive instructions on how to set them up at Gmail, Yahoo (hur) and others. Make it voluntary to switch to forwarding only first, with a switch-off date for XtraYahoo 12-18 months into the future.

Gets Telecom out of the email game (that they clearly don't want to be in, and is almost legacy given the multitude of options available today that weren't "back in the day") and means people can keep their Xtra email address which is important to those that have used it for years.

Nice idea :).

Every company is a marketing company Lance, whether you like it or not. You too market yourself, every time you are published. The marketing team bring to market their company's products and services, as well as represent their brand the best way possible. If a brand name change represents a significant shift in their ethos etc, then it is worth investing in, IMO.

Isn't Kevin Roberts on the board Lance? I doubt a $20m incremental spend is purely the work of the marketing department...

Noting the spirited defense of the new name going on by various members of the Telecom marketing department on the main story comments section, I suspect you are correct Lance... Coloring in dept gone mad yet again... Who cares if they have always referred to the logo as the spark? Don't they know they have actual customers out there?

Anyone who refers to the marketing department as the "colouring in department" obviously has no idea about business or marketing.

Spark is quite a departure. When I first heard it I thought it ludicrous. Such a dynamic and aspirational leap from "Telecom". Yet, an interpretation of that reaction suggests that Telecom was a poor brand. I'm not a mobile Telecom customer, but Telecom's service and products have moved on, I think it time for a re-brand. The comments to this article suggest that it has become a glass ceiling for their growth.

Telstra possibly buying Telecom NZ http://delimiter.com.au/2014/01/14/telstra-buy-telecom-nz/ - would be much more attractive under a different name yes? Urgency much>?

Telecom has to change - but why start here.

Telecom was a network company - but no longer has the network.

telecom needs to reinvest its service offering - to be more than just a billing engine.

When it has new service offerings - surely that would be the time to consider a change because then you would understand why it was changing and what it needs to change to

the response might be that the tv stuff is new...but really what is the offering and why is it relevant...

Lance I think you've completely missed the point here, and as Jason has pointed out, the Telecom brand does not resonate with key growing segments in the NZ market. You obviously haven't seen this data - I have, I've sat through the focus groups and its clear, the brand needs to change. It's a logical move and should be part of the transformation process.

totally correct

You guys have a lot more detail than any of us and awareness of the product pipeline in the years to come.... but I would have thought that - let's say Telecom bought the rights to the cricket or NRL to be streamed online just like the football..... the aspirational want for that product would outweigh the brands name??

Maybe the football experiment has proved otherwise?? It just doesn't compute with me that a passionate english football supporter would give up watching their club because they didn't like the name Telecom.

I know you guys must of been sweating over this decision for months.... I'm intrigued to watch it all play out over the coming years and to see if I am part of this "key growing segment" of NZ that you talk about.

what bright spark thought this one up?

Telecom is aiming at the 30 somethings because that is the age of most of their marketeers. I know, I worked recently as an analyst for over 3 years for Telecom in the marketing area. I often told them that none of their marketing was targeted at my age group at all (50's) and they would look amazed and could not understand that most of their marketing did not resonate with anyone over 40.
"Spark" is some 30 something idea that will waste money and will divert precious management time away from service and product and pricing. When Reynolds introduced the scribble when I was there, it diverted the marketing departments and Telecom for months while costing millions. I wonder if it is a cunning plan to divert attention away from a cost cutting CEO from the old Telecom of Gatting.

An awful name. Crass. A brand needs at least two, at the most three syllables.

Well done guys. Bold move. Decisive. Innovative. Well done!