O2 has already stretched from just being a mobile network, recently launching a pre-pay card you can load money onto. According to partner Nat West in has been the biggest card launch in the history of financial services in the UK, with 100,000 cards issued in 7 weeks.
Now chief executive Ronan Dunne, marketing director Sally Cowdry and customer director Tim Sefton have even bigger ambitions. They plan to stretch into healthcare, via technology that automatically sends regular at-home blood tests or weight monitoring results to the correct hospital department via a text message or iPhone app. They're also looking at education. Sefton describes a vision for “a more multimedia-rich learning environment, probably eliminating the need for text books,and taking education out of the classroom."
On the positive side, I shared the view that O2 are smart in looking at new revenue streams, given that the mobile phone market is becoming more commodity based. For example, T-Mobile are offering free texts for life, and free broadband now widely available.
But is stretching into healthcare and education a good idea?
1. Think business model first
The first view I shared was that most analysis on brand-stretching goes wrong because it focuses on brand equity and not the business model. The key issue is whether O2 can create a compelling value proposition that makes them money? This would mean building the right team with expertise in healthcare and education, which is a big task. It would mean creating a whole new network of contacts with healthcare and education providers.
2. Brand trust
This is where I struggle with the proposed stretching. Do I trust O2 to deliver my confidential medical details to a hospital? Hell, my O2 powered mobile phone drops calls at least a couple of times a day. I don't see O2 as having the authority to pull this off. Rather, O2 could be the telecoms partner for the NHS, in the same way it provides telecoms services for big corporates. This is a B2B play, not a B2C one for me.
3. Forgetting what made you famous
This final issue I have with this stretch is that it wouldn't reinforce what has made O2 famous. The brand has started to achieve the nigh impossible task of making a mobile network brand interesting. They have done this through “interactive partnerships” with entertainment and sports properties, such as The O2 concert venue, offering O2 customer goodies such as priority ticketing. This has added energy and fun to the brand.
But education and health are much more serious. I love booking exclusive early tickets to see U2 in concert at the O2. But do I then want to click again and send my blood test results to my doctor?
In conlcusion, hat's off to O2 for looking at new revenue streams. But when stretching think business model first: do we have the capability and expertise to do this really well, and make money? And focus on stretching that reinforces what made you famous. Doing more with music, sports and entertainment may be better moves than healthcare and education.