12 Months Since Phones 4U Disappeared? Why did it fail? And, Has Anything Changed?

Tech Blog
September 18, 2015
Many different phones from different eras.

John Caudwell undeniably built a powerhouse of a business in Phones 4U. He also famously sold out for £1.5 Billion. I know many people who worked there, from the Board Room to the Shop Floor, which certainly changed upon his 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 a powerful 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 historical 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?

Historically, 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 solid relationship with them and sharing common goals is critical. I believe that it was the latter that ultimately led to the breakdown of the relationship.

What do the Networks need?

Mobile networks are looking for loyalty nowadays. They invest heavily in schemes to keep you locked in and loyal. Some plans are better than others: O2s Priority Moments currently leads the way; however, TV from EE and Spotify Music from Vodafone are popular services. With mobile devices getting more advanced and its customers' network performance expectations getting more demanding, the Networks need a return from their customers. Nowadays, that is only coming in at month 22 of a 24-month contract. The Networks are investing millions every day in network improvements, the Anything Anywhere holy grail.

What went wrong at Phones 4U?

I observed 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 prominent exponents of the cheapest deal. In my opinion, these combined ideals 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 from each other that will be disloyal again next time.

So has anything changed?

In my opinion, I believe it has. I think customers have become more realistic about their mobile deals. What to expect from the networks, i.e. they are starting to increase spending 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 low 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. Now OFCOM is releasing accurate data on each aspect. Hence, the public knows what is what.

Conclusion:

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 price. The focus is on value, Great Coverage, Speed, 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.

Martin

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