Whuffie and the importance of loyalty

Over the past couple of weeks I’ve been dipping into Tara Hunt’s book The Whuffie Factor. I’d intended to write a post discussing the book in more detail, but a case study has just presented itself which brought my plans forward!

Disclaimer: it’s worth restating that all content on this blog represents my personal opinion and my own experiences.

whuffie factor

Image courtesy of missrogue

The Whuffie Factor talks about the importance of establishing, growing and maintaining social capital in your market and with your community. The concept of “whuffie” is drawn from Cory Doctorow’s novel Down and Out in the Magic Kingdom (which I just started to read), which presents a world in which an individual’s social capital, or reputation for good deeds, is visible to others in an augmented reality, built-in heads-up display which everyone has. People can earn whuffie through good deeds and behaviour, spend whuffie in asking for favours, and lose whuffie in acting in some negative manner. Tara suggests that organisations and individuals that participate in online communities have exactly the same experiences, although whuffie itself may be less immediately tangible than in Doctorow’s imaginary world where everyone is wearing a whuffie badge.

So, on to the case study.

I’ve been an O2 customer for a long time. Before I got the iPhone 3G on UK launch day last year, I’d been an O2 customer on previous handsets and price plans. Actually, I had a relationship with the company stretching back to when they were BT Cellnet – a looong time.

My experience with the iPhone has been wonderful. Ignoring the device itself (this post is not about that) – the tariff was reasonable, I had unlimited data at varied speeds anywhere in the UK, and access to two wireless hotspot networks, the Cloud and BT Openzone. Life was great. I believe it was the best deal in the world on the iPhone.

Last month I decided to switch broadband suppliers, after Tiscali/Pipex were acquired by the Carphone Warehouse. Listening to the advice of many of my friends in the Twitterverse (Whuffie lesson – socially-connected individuals value personal recommendations above any others), it didn’t take long for me to select O2 as my new supplier. I felt comfortable with that, having had an excellent experience with their mobile service. I have to say the switch was painless and the service and performance of my new connection has been excellent.

Whuffie++!

Just after the switch, I thought about getting a broadband dongle for my Mac. Naturally, as an O2 customer with two of their products, I thought I’d ask in an O2 store what kind of deal was on offer to loyal subscribers. “No special deal, sir” – I’d have to go with their regular package, which is far less competitive than T-Mobile, 3 or Vodafone (I only really wanted to use the 3G modem occasionally, so I didn’t want to sign up to a contract on that).

Whuffie fell off.

Yesterday, Apple announced the iPhone 3GS. It’s an exciting device with some mouth-watering new capabilities – a better camera at last, a speed bump, voice recognition, a compass, and greater memory capacity. Oh, and it has the capability of being used as a 3G modem, which would mean I wouldn’t need a separate dongle for the Mac. Seems ideal. In short, I’d take one in an instant. I also discovered yesterday that O2 has a Twitter account, which I started to follow when I realised that it seemed to be a real person engaging in conversations, and not just a stream of PR pronouncements.

There’s a wrinkle here, though. In order to take an iPhone 3GS on launch day, I’d need to buy myself out of the final 6 months of my existing 18 months contract (in my case I’m guessing that will be a straight 6 x £35, not cheap), and then buy the phone on a new contract. So the reward for loyalty and being prepared to sign up for a long contract is having to pay more for an upgrade to the new technology. People are also concerned about the cost of O2’s tethering plans, which don’t entirely surprise me given my 3G modem experience.

Whuffie? Plummeting.

A couple of people have noted on Twitter that those complaining about the situation are either whinging in general, or that they don’t understand the concept of a contract. In my case, I fully understood that I was signing on for 18 months – it just seems bizarre that it is non-transferrable and that I’m actually penalised for staying with O2. It’s not like I’m heading off to another network.

Shane Richmond over at the Telegraph has an excellent summary of the issues, so I’m not going to pick through the situation point-by-point. Some of the commenters are right on the nail, too.

The Twitterverse is fairly upset about all of this, with one person going so far as to set up a petition (I’ve not signed it, as twitition doesn’t use Twitter’s OAuth option for login).

I phoned O2, at the suggestion of the O2 Twitter person, since “upgrade costs will vary”. The lady I spoke to claimed that no pricing information was yet available (odd, since there’s a page on the O2 website with that information), and then said that for upgrades, they were offering existing customers the option of downloading the new software onto their current phones, or buying themselves out of the existing contract.

I’m disappointed. Right now, I’m actually thinking that the Palm Pre looks interesting. It’s a shame, as I’m an Apple user and I think the iPhone is an amazing platform – but O2 just jettisoned the good reputation that it had built up, and made themselves far less likely to be recommended by me in the future.

End of case study. The conclusion here is that Tara Hunt has it completely right. In today’s social web-connected world, whuffie is important – potentially vital – for companies, as well as for individuals.

How did I hear about Tara’s book? I’d been following her (@missrogue) on Twitter for a long time, recognised her as someone I respect and like through her great blog, HorsePigCow, and I was excited to hear about her book directly from the source. Here’s my personal recommendation: get hold of a copy of The Whuffie Factor, read, and inwardly digest. It’s a great, enjoyable book. I think you’ll like it, too.

Update: levelling off…

OK. Having followed some of the discussion on the @O2 Twitter channel today, my attention was drawn to the notion of the Priority List, which is an account feature I’d previously been unaware of, as I’d opted out of marketing material from O2. The only thing is, there’s no easy way to find out which “level” of priority my account was set at. I logged in to my account through the website, and found a contact number which got me through to a really helpful lady (evidently not the same number I’d called this morning, not sure what happened there). I explained that I potentially wanted to upgrade, and that I’m a customer of both a pay monthly tariff and the home broadband service. The customer service rep very helpfully and patiently went through all of the upgrade options with me… and it looks like it’s not quite as dire as I’d thought – my potential upgrade date is earlier than I’d feared, but I’m still unlikely to be getting an iPhone 3GS on launch day.

So kudos to the helpful customer service staff, and I’m also impressed with the resilience and patience of the @O2 person. That has gone some way to restoring my opinion, even though I’m still disappointed with some aspects of the upgrade process. The Priority List is actually a way of rewarding customer loyalty, but it just hadn’t been on my radar.

The final word on this, from my perspective, is that it’s still somewhat confusing, and I’d particularly advise O2 to make their Priority List stuff more visible and simpler to understand. I’d also suggest that people give them a call and check individual circumstances!

Advertisements

10 responses to “Whuffie and the importance of loyalty

  1. What about people who previously bought say a nokia n96 on an 18 month contract and then the n97 was released a month later? Should they also expect to be let off their contract to do a fully-subsidised upgrade?

    The previous iPhone 2G –> iPhone 3G subsidised upgrade for existing owners was a courtesy by o2. They have no financial reason to keep doing so.

    You can always buy the 3GS unsubsidised on a PAYG basis, and just swap your existing sim into it (putting the PAYG sim in your old iPhone for resale value).

    Like

  2. quoting you “it just seems bizarre that it is non-transferrable and that I’m actually penalised for staying with O2.”

    The contract is to subsidise the cost of the handset. They are tied together, you want a new handset then you need a new contract with a fixed length to subsidise the cost of the new one.
    This has always been true, with some fudging in the last three months of some contracts.
    Waiting out your contract with a mobile phone company is standard practice, not an appealing one, but plainly there in your contract. Put yourself in the telco’s shoes, why should they cut you a deal?

    What is it about the iPhone 3GS that means your existing iPhone is no good anymore? At least Apple have cut through the telco specific software releases so that you can do the upgrade to v3 on day of release. With Orange they rarely released new Nokia software for existing phones.

    Like

  3. Hi Andy,
    great post! I was a O2 customer and left them as they always played the “new customers only” game. I went back purely for the iPhone and would not be with them otherwise.

    I want the iPhone 3GS, but that Pre is looking pretty darn good right now.

    The charging for tethering is mad, I remember downloading from the web via my mobile about 10 years ago! Modem function has been there on pretty much every mobile I’ve had, so why are we suddenly going to be charged £15/month for this “new feature”.

    Great post, I’ll Wuffie++ you in my HUD… 🙂

    Lance

    Like

  4. p.s. regarding the original iPhone 2G –> 3G upgrade, the 2G handset was originally practically unsubsidised (i.e., you had to pay for it) so they had no real reason for forcing you to stay in contract when the 3G came out, and they could offer it as a subsidised free upgrade

    Like

  5. That’s the joy of mobile phone contracts, and the reason I don’t have one. Paid for my last handset up front and haven’t looked back.

    I’m whuffie-neutral on O2. I did briefly switch to them from Vodafone, but I wasn’t too impressed with their network and they borked the handset they provided (that was the last time I got a ‘free’ handset). Like most companies, customer service was painful until a recorded delivery letter of complaint (usually does the trick) got me in touch with the right person. Contract cancelled and a suitable apology, so I would consider O2 again if Vodafone ever annoy me.

    Plus, the Palm Pre does look interesting- let me know if you get one!

    Like

  6. O2 might not have impressed you by failing to provide an easy way to update, but you’ve hardly been penalised. You signed up for an 18 month contract, and they’re keeping you to that, and why shouldn’t they?

    The thing I really don’t understand is why you’re not implicating Apple themselves in any of this. It was them who chose to deal with exclusive suppliers in the first place, them who set pricing that O2 have passed on to you (either through handset costs or contract) and them who have waited less than 18 months between releases, leading you to still be within contract (bearing in mind a lot of AT&T customers were actually in 24 month contracts).

    And I don’t like to piss in your tea, but the Pre also has an exclusive deal with O2 (so the rumours go) so you’re stuck in the same situation there too.

    Personally, I don’t think that O2 have done anything wrong other than acting as perfectly sensible business people.

    AT&T, however, have failed to provide US customers with the MMS updates and Tethering (at any price) in time for launch – now *that’s* some sub-standard customer care.

    Like

  7. All good points, folks, thanks for the contributions.

    I think the comment that it’s standard practice for telcos to do this hits the mark, and that maybe O2 is not unique here. It does not make it any less frustrating – actually, O2 has the opportunity to be innovative in the industry here, and become whuffie-rich by making customers happier. I’m not asking to be “let off” my contract… assuming the cost remains the same, why not extend the new contract by a further six months which I’m already committed to, rather than making me pay for those and then “lose” the benefit of using them. Or is my logic unsound here? Maybe I’ve not had enough coffee. Of course, I’d expect that same process to apply to any handset a provider offered, not just an iPhone. If I’m staying with a provider (not bunking off somewhere else, thus denying them the revenue of my continued custom) then why should I have to pay to “escape”?

    minifig and Gavin, fair points about Apple’s part in this, and the upgradability of the handset. Right now I’m guessing it’s fairly likely I will go with the 3.0 upgrade and wait out the 6 months. I’d be undecided whether to stick around after that. You’re also right to point out that we still have a better deal than US iPhone users – that *is* a plus point.

    Like

  8. Imagine that O2 decided just to tack the extra 6 months of your contract onto the next 18 month contract you buy. You’d then be tied to your 3GS for 24 months. In 12 months time, Apple will (inevitably) release a new shiny thing. What should O2 do then? Tack the 12 months you already owe them onto another 18 month contract? In what way is that a sustainable solution?

    Like

  9. I agree that the upgrade issue will keep coming around, particularly if Apple stick to the 12 month upgrade cycle. I’d half-typed a sentence about this into my last comment but couldn’t form a conclusion in my mind.

    The upshot is, I suppose, that the interaction of an exclusive deal, a handset manufacturer with an aggressive and compelling upgrade cycle, and an inflexible subsidised contract, means we are pretty stuck. It’s just a shame.

    Like

  10. Pingback: A 3G S hit-and-run « The lost outpost

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s