Orange Q&A: VP for sales and loyalty Guillaume van Gaver

Guillaume van Gaver rejoined Orange UK just as the ‘agenda’ set out by chief Tom Alexander in late 2008 to restore some of the operator’s original spark was about to show results.

Last month, and six months in for van Gaver, Orange reflected on a very decent financial quarter, as it led the UK contract market with 266,000 new subscribers, also putting through its best revenue for the year.

At the same time, the European Commission passed approval for Orange to merge with T-Mobile in the UK to create a new operator giant; a move which should be reality on paper by late April. Fast times.

Clearly, the ground had been set by Alexander and his team, and van Gaver was to an extent familiarising himself with the UK operation still.

In fact, his appointment was a long time coming. He is well-regarded within Orange parent France Telecom, and close to Orange senior executive vice president Olaf Swantee. He had been tipped in these pages for the role of UK sales chief as long ago as 2006, when the role was vacated by Stuart Henry.

But van Gaver is different to Henry in style, as he is to previous incumbent Jean-Pascal van Overbeke. Those two led on personality, when business in the industry was regularly done by handshake.

Van Gaver has a reputation in the sales channel already for a more forensic approach, which better reflects a suddenly-matured industry ringing out value in a difficult economic climate. But it is a fair sign of a business progressing that transition at managerial level can appear easy, and van Gaver has joined an operator certainly busy in the market place.

How do you reflect on this latest set of results? They look pretty good.
We have broken the record for contract growth across the entire Orange Group. The performance in that sense has never been so good – it is probably 15 per cent higher than the previous best, for which you’d have to go back to 1994.

We have done very well in terms of new offerings – such as the iPhone. There were some good results there. And we have done some cracking work with both direct and indirect channels – the highest ever sales in retail, so we are leveraging our new footprint. There has been a lot of good stuff.

What has changed?
One of the key reasons is that we are better dealing with churn, which was historically an area of concern for us. You know, the quality of the business we acquired last quarter improved – we have made sure where possible we don’t let through customers who never pay, or who are likely to churn.

We have also done well to fix some of the basics around our network, which has really improved in terms of customer service and 3G coverage.

And you’re closing on Vodafone for customer numbers.
With this kind of momentum, we would take second place in the market this year [separately of T-Mobile]. We would overtake Vodafone by the summer with this run-rate.

There was a point when the results came out that we were very excited because we were so close to it. You know, I have been in competition with the Vodafone red for 15 years in various markets, and always fought that colour. So I take great pride in this latest set of results, and the challenge ahead now.

What about Vodafone in revenue terms? How can you make up that ground?
Well, yes, it is number two from a revenue perspective. Vodafone has a very strong base in the corporate market, and does well there. It is its legacy from the analogue years in wireless, and is a tough one to crack.

Because corporate customers bring a higher revenue than prepay users, which is where Orange has historically taken share. But, then, those corporate customers tend to be difficult to serve and aggressive to reduce prices. I think we have good momentum across all the UK business, and it has been recognised also in latest investor transcripts. 

It appears your joint venture partner is doing okay, also.
Yes, it had a very complementary approach in the fourth quarter. Everyone has invested in the future by pushing smartphones, and we did well in terms of our performance with BlackBerry and HTC, and those devices, which impacted our bottom line.

T-Mobile has done a good job extracting more value from prepay and SIM-only.

Your retail operation has performed well. How has the indirect channel done? And can you talk also about your approach? We understand you have been forensic with your sales channels, and are not letting them get away with perhaps what they used to. Can you talk about those tweaks behind the scenes?
Well, ‘tweaks’ are part of the job. Let me tell you, we are very happy with the overall performance in 2009 – not only in direct, or we wouldn’t have been able to deliver that strong performance. If you are going to break the record of contract net additions of Orange UK, you’re not going to do it only with direct channels.

Our market share among dealers, distributors and high street specialists has been tremendours. Tremendous.We have focused on high-value, high-end smartphones and, as a result, today, we have four million daily users of the mobile internet.

What percentage of business goes via your direct/indirect channels? 70/30?
Roughly speaking, 70/30 is not a statistic I’d recognise. We are a very balanced business. I have worked in this industry in markets where 70 per cent of business goes direct and 30 per cent goes indirect, and also where 90 per cent goes indirect and 10 per cent goes direct. So there is no religion. The only religion is profitability from the respective channels.

Does Orange work with too many distributors? I mean, Orange part-owns two businesses, which allow it to work in a way others are aiming for. And Anglia, Avenir, Fone Logistics, HSC; these cannot support four or five paymasters, surely, and none of them will give you preference over Vodafone/O2.
Yes, there are decisions to be made. The thing is we have to recognise where the customers are, where the business takes place. No matter how you shape the distributor layer, interaction with the customer is not on that level. It is at dealer level.

So, how your dealers interact with customers, and the propositions they present, how you help them drive business; that is the most practical part. You can organise distribution in many ways, shapes or forms. And I don’t think there is a right or wrong answer.

Does distribution hold much value?
Yes, of course. Because distributors are able to interact in a leaner, faster and fit-for-purpose fashion with dealers, in a way sometimes large operators cannot.

So, does the multi-network distribution model stack up?
Yes. Put yourself in the shoes of a distributor; you can get more leverage with more than one network because you have economies of scale through several providers.

There is a fine balance, and no right and wrong way. What matters is distributors work in an efficient way. And as a joint venture business, we will have a very significant share of that market and the kind of scale that can help partners.

Will you make the iPhone available through more stockists?
We are not looking to expand [distribution] until we have seen the behaviours and revise it. It comes down to the relevancy of smartphones to the channels we work in. There’s a focus on quality and training.

How is your network holding up?
We had the benefit of launching it in 24 countries before we launched in the UK and, of those, there were several meaningful markets in terms of radio design and levels of usage. The iPhone has a very demanding signal, which is very different to, for instance, mobile broadband.

When we built the network we had a mobile broadband-type of usage in mind, rather than very short signal intensive requests. So we asked the UK teams to travel the road and see how the guys got it wrong elsewhere. All the KPIs on the network, here, are okay.

So whatever network issues they are not down to the iPhone?
No, I won’t dispute the fact we still have network issues, but the iPhone has nothing to do with those issues.

Is it right one device receives such demand in terms of your attention and resources?
You have to look at Apple in terms of the absolute consistency of its approach. Which is basically linked with some marketing fundamentals, including such things as merchandising. And it has stretched those fundamentals to a new limit.

You want to sell the iPhone? What shelf space will you give? You want the MacBook? What shelf space? It starts with shelf space, and then goes to training.

Clearly, your results suggest the iPhone makes a difference in winning new business. But T-Mobile is improving its yield without that device. Or would you argue T-Mobile’s approach can only be successful in the short-term?
But what is T-Mobile’s performance for smartphone contracts? This market will have sustainable growth if customers regularly engage with the mobile internet.

So, the iPhone, like the HTCs and the BlackBerrys, is important. Customer satisfaction on these devices is very high. We strongly believe in this story of smartphones, and we have more action with Android down the line. But all manufacturers have a role to play.

And if you do a good job with BlackBerry, HTC, Nokia, then you’re not in a bad position. But Apple has a distinctive approach, and offers something extra. So it is important.

Full interview in Mobile News issue 459 (March 15, 2010).

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