The Now Generation, part2
- A success story. The growth of Nova, the #1 telecom company in Iceland.
In Iceland, a telecom company called Nova realized first in their market the importance of younger customers. They didn’t actually have to look no further than to see the effect the younger people had on the older ones in the case of Facebook.
When Nova was developing their business case in 2007 the Icelandic telecom market was heavily saturated and homogeneous. Two dominant operators, Síminn and Vodafone, divided the market between them. One with 60% market share and the other one 40%. Both companies seemed comfortable with their share and their stable operation – offering similar services with no indications it was going to change in the near future. Does this sound familiar?
It was not until Nova emerged with new service offerings, together with new business model and marketing approach that the market balance started to shift. What Nova quickly realized was the opportunity in mobile network technology, more specifically 3G service, even though majority of phones didn’t support it at the time. The dominant players had no incentives to invest in a risky service like that which opened up an opportunity for our new challenger to enter the market.
Fresh and cool breeze in a dull market
The old saying you have to spend money to make money is quite accurate since user-bases rarely appear out of nowhere. In this case, the saying fits perfectly as Nova decided to invest heavily in an end-customer value proposition by providing their core services for free.
Nova launched a model tailored to younger audience by offering phone subscriptions enabling customers to send messages and to make calls for free – if done within the Nova network. To most people this didn’t sound very economical. No one understood how Nova was going to create a profitable revenue stream. Which was the case to begin with as Nova lost a lot of money – though in line with their expectations.
Concurrently to the adoption of a new operation model, Nova came up with a new marketing approach. What Nova did was changing the image everyone had on telecom companies. They decided not to become a conventional telecom operator. Instead they wanted to create a fun environment or some kind of a community – constantly radiating good vibes and youthful atmosphere. They were not in the obvious business of selling devices and subscriptions. They wanted to sell experiences and step out of the typical institutional culture, characterizing most larger companies.
Eventually uptake kicked in as different groups of friends started to migrate over by the masses. Nova was slowly becoming a choice of lifestyle. “Sorry, I can’t call you… unless you’re with Nova of course”, was a common phrase. Most of the times it didn’t even occur to Nova customers to fill up their credit. But then again why would it have? All of their closest friends were also using Nova, and those who weren’t would eventually come around.
Marketing a lifestyle – Nova,”the biggest party in the world”
“Even if you have a really good product and it’s technically perfect and user friendly, you still need some hype around it. You need PR and marketing to make sure that a sufficient number of people start using it at once. You have to make sure that sufficiently many people start using it at the same time. So they can start telling their friends it’s really cool and they should start using it too.”
– Jørn Larsen, CEO of Trifork (developed MobilePay app for Danske Bank)
Nova came up with a catch phrase quite early in their development phase. It emerged through their vision of being an intermediary opening the door for people to the “biggest party in the world” by bringing fast internet connection straight to the phone and thus connecting friends and giving them access to entertainment. Even though this phrase was never meant to become the company slogan it somehow got stuck and is now the essence of the company and it has made a huge impact on their mindset and life long company culture. This company policy, however, requires a lot of live marketing.
Nova does not run their company in the traditional sense. Often there is no way telling if Nova is a telecom company or a professional event manager. And here is where they really excel!
Throughout the company development phase Nova kept on shaping their free-spirit company image and soon enough they started organizing various events. There is always something going on every single month. Parties, concerts, festivals, school events, gatherings, charity events, flea markets, waterslide located downtown Reykjavik, mountain climbing DJ parties, christmas ice skating rinks, summer boat rides to islands festivals, fan zones for sports events, and so on. And Nova is always there, right in the middle.
Nova’s carnival, Downtown Reykjavik
It is so much easier to be working in a marketing department where the focus is on tv- and newspaper advertising, instead of running around town, hiking up a mountain or standing in the cold on an ice skating rink. Our focus is on life marketing, which will always be challenging.
– Liv Bergþórsdóttir, CEO of Nova
But this is not the only thing they have been focusing on – to support and promote different events that is.
The easy going atmosphere shines throughout their whole brand. Their stores are built like nightclubs, with disco balls in the ceiling. They also have inbuilt café’s at their stores. There is somehow a nice and modern feeling to all of their infrastructure.
They give you access to a candy buffet and allow you to spin a lucky wheel for random gifts. Often they also give merchandise in connection with events. For all big events they sell theme-related items such as cheap tents for festivals. And for few years now they have worked with all of Iceland’s most popular restaurants handing out ‘2 for the price of 1’ discounts at set times.
Nova became highly visible on social media like Instagram, Facebook and Twitter and today they have one of the most popular SnapChat channels in Iceland. Every now and then they get Icelandic celebrities to overtake their SnapChat account to do something fun. Thus promoting themselves, and of course Nova at the same time. Nowadays, almost no one promotes a hip event without Nova’s involvement at some point.
This is of course all mixed with great customer service. Their staff is young and fresh but still very disciplined. The company culture reflects this ambition as Nova operates special school for new employees.
It is safe to say that Nova is a life-style oriented brand and generally they have done an outstanding job. Nova is everywhere. They have become one with the people.
10 years later – and the most popular telecom company in the country
Nova’s revenue in 2015 was about $70 Million USD and the company is valued around $135 Million USD according to latest valuation.
Mid year 2016 Nova had a market share of 34,4% for total subscriptions, compared to 33,7% Siminn and 27,5% Vodafone. Nova even had greater market share for mobile network usage (voice and data subscriptions) where they had 42,1%, compared to Siminn 30,6% and Vodafone 22,8%. This rapid growth, out of nowhere, is remarkable.
Today both young people as well as older ones are customers of Nova, which can mostly be attributed to the “parent trap”. Recently Nova is even gaining traction in the corporate market – which can be linked to the newly added, older customer.
Whether Nova had foreseen it all in the beginning or not their bet on the Now Generation has paid off. Today their operational base is strong with various revenue streams to work with.
Banks should learn from this…
In my next blog I will go over my key findings in Nova’s strategy as well as some general thoughts on how to create bank fans. Coming soon, stay tuned.
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