GiffGaff is a UK-based telecommunications company where the only thing you can do is buy a SIM card. The company only has 14 employees, yet has been able to stake out a significant share of the UK telecoms market by way of its impassioned customer community. Their business is 100% online – no stores, no physical presence, no call centers. Robbie Hearn (@robsticks) from GiffGaff says that "We are not a company with a community. We are a company that could not exist without its community."
(Robbie Hearn at Lithium's LiNC conference earlier today)
The community aspect of GiffGaff informed the creation and tone of the company from even before the company launched. (According to Hearn, the community actually launched before the company launched product.) It's in the DNA of the organization.
Hearn shared a great story and a shot of the GiffGaff origin notebook. These are the notes that created a company. The key insights and drivers of what the company could be are:
- Mutuality – Members help in recruitment, marketing and advice and this share in the rewards of the business
- A great deal – A lower cost business model leads to lower charges for members
- Member involvement – Members can generate and choose marketing materials and vote on some business decisions. Members help with other members problems
- The collective good – Members can donate their "thank you" rebate to charity
- Simple – SIM only. Converged Pre-Pay/Post-Pay. 1 universal price point
- Online only – We only sell direct online. All top ups and customer service is online
- Start-up mentality – Launched and run as a distinct, separate business from O2
- Environmentally responsible – Carbon neutral, maximum sustainability
An example might be illustrative. Here's an ant's eye view of the journey of customer "Dantup," who started out hearing about GiffGaff in passing on Twitter, and wound up not just becoming a customer, but also an advocate for the brand.
Walking around that circle, it's possible to see the entire evolution of the relationship between Dantup and GiffGaff. The evolution went like this:
- Hears about GiffGaff on Twitter
- Goes to forum, gets answers at 10:30pm
- Orders a SIM using member-get-member
- Activates and stars helping on forum
- Blogs about GiffGaff on his own blog
- Blogs and forum posts again when he gets payback
- Now, Dantup tweets regularly
This customer engagement DNA isn't just in the "support" aspect of the organization, but engages the community in a number of other aspects as well.
- Customer service
- Proposition development
- Ideas on any aspect of company development
- Technology and testing
Even beyond the great results that GiffGaff has had so far from a business and community development perspective, there were two things that absolutely blew me away that have occurred as a result of this deeply organic model of engagement with their community.
The first was that GiffGaff allows (encourages?) fans to make their own GiffGaff sites to market the product. So, check that…all the sites in the image below are customer-created sites promoting the brand. Where many, perhaps most, brands would have shut sites like these down, GiffGaff encourages their creation.
Secondly, when the new iPhone 4 came out, it used a micro SIM card, instead of the traditionally-sized SIM card. GiffGaff doesn't make micro SIM cards; they don't fit their business model, especially from a distribution and supply chain point of view. So, customers hacked a solution, literally. A set of enterprising individuals found that a regular SIM could be hacked into a micro SIM (using scissors!) and created organic distribution network.
Is the GiffGaff model scalable? Is it sustainable? Hearn thinks so. They're hitting their business goals out of the park.
- Their "member-gets-member" (MGM) customer acquisition strategy results in 20% of all activations
- Costs of paid channels are lower than GiffGaff's business plan
- Average Retail Price per Unit (ARPU) is on target
- The organization is on plan to hit all profitability targets
- Current customer support engagement can support a far bigger base — right now, the community answers questions typically within 60 seconds, and provides 24 hour a day response.
So, what do you think? Is this type of model sustainable? Or is GiffGaff in a unique position, having started without legacy baggage, that has enabled it to grow this community and business? Will it be able to continue its phenomenal growth as it attains greater scale?