Vodafone’s EVO Pay monthly refresh: Off to a good start, but still room for improvement

Vodafone’s EVO Pay Monthly Refresh: Off to a Good Start, But Still Room for Improvement

Vodafone UK recently launched EVO, its new pay monthly device proposition. EVO is described as the “ultimate flexibility” in mobile phone plans.

How does the new proposition stack up? Let’s take a look.

What EVO replaces

Prior to EVO, Vodafone relied on traditional approach to pay monthly in the form of 24-month combined device and airtime bundles. To create point of differentiation in the market, Vodafone layered in additional elements to the proposition over time:

  • Bundled entertainment: Since the launch of its 4G service in 2013, Vodafone has provided the choice of an inclusive streaming service on its premium plans. Current streaming options for premium plans are YouTube Premium, Amazon Prime Membership, and Spotify Premium.
  • Customer loyalty rewards: Vodafone launched the “VeryMe” loyalty program in 2018, offering free treats, give-aways and discounts off retail brands. It followed O2’s successful Priority loyalty program, launched in 2011.
  • Speed tiered unlimited plans: To coincide with its 5G launch in 2019, Vodafone launched speed tiered unlimited 5G data plans: Lite (up to 2Mbps), Unlimited (up to 10 Mbps) and Max (maximum speed).
  • Annual upgrade program: Prior to the iPhone 12 launch in 2020, Vodafone introduced the Annual Upgrade Promise. This allowed customers who bought an iPhone 11 to trade it in for the latest iPhone anytime after 12 months with no upgrade fee.

What EVO needs to achieve

The success of EVO can be measured against two objectives:

  • Device positioning: How does EVO position Vodafone to meet the market challenges of longer device upgrade cycles, higher priced premium devices from Apple and Samsung?
  • Plan positioning: How does EVO create meaningful points of differentiation for Vodafone’s pay-monthly plan versus the competition? What upsell incentives are provided to customers to move up the pay monthly tariff ladder?

Let’s take a look at the main elements of EVO and then see how they work together to attack these problems.

Vodafone follows O2 into split contracts, allowing up to 36 month device financing terms

From a device perspective, the main elements of EVO are:

  • Split plans: Vodafone moves from combined handset and airtime plans to O2 Refresh-style split device finance plans and separate airtime plans. Vodafone calls the two components the “Device Plan” (credit agreement) and “Xtra Plan” (airtime plan). Customers can choose a Device Plan of any length between 12 and 36 months. Device Plans are available on phones, tablets and smart watches. Xtra Plans (airtime) are 12 or 24 months, depending on the length of Device Plan term. Customer can only take a 12-month Xtra Plan if their Device Plan is a duration of 12 months or shorter.
  • Guaranteed trade-in value: Customers can get an instant guaranteed trade-in value on an eligible device to reduce the cost of a new EVO plan, using the Trade-in Tool contained in the My Vodafone app.
  • Flexible upgrades from 12 months: EVO customers can upgrade to a new phone any time after 12 months, with the ability to apply the trade-in value to help pay off the device loan.

On the airtime side, EVO’s Xtra Plans offers a suite of benefits: some available to all EVO customers, and others being dependent on EVO plan selection.

All EVO plans benefit from:

  • Battery Refresh: Battery health checks and replacements for length of Device Plan.
  • Total Care Warranty: 2-year warranty on new devices covering manufacturing defects.

Selected EVO airtime plans include “Xtra benefits”. Some of these benefits come automatically with the plan, others are additional bolt-ons that become available during the purchase journey for an incremental monthly fee.

  • Unlimited Picture Messaging: Free MMS messaging within the UK and inclusive roaming destinations.
  • 50% off Smartwatch Connectivity: The standard £7 per month smartwatch airtime plan is reduced to £3.50 per month when combined with selected Xtra Plans.
  • Up to 6 Unlimited Data Boosters: For customers on non-unlimited data Xtra Plans, Data Boosters allow activation of unlimited data for 30 days. 24-month Xtra Plans come with 6 boosts, 12-month Xtra Plans come with 3 boosts.
  • European Roaming: Roam for no extra cost in 51 European destinations worldwide.
  • Worldwide Roaming: Roam for no extra cost in 81 worldwide destinations (including USA, Canada, Australia and New Zealand).
  • Entertainment: Choice of Amazon Prime, Spotify Premium or YouTube Premium.

A notable element of EVO is that the airtime plans have variable price-points. For example, Vodafone will vary the price of a 100GB Xtra Plan depending on which device it is bundled with. This allows Vodafone to add subsidy into particular devices when it needs to hit a combined monthly price point target. This is useful for competing for iPhone and Samsung customers during new model launch periods.

Device positioning

The big step for Vodafone pay-monthly under EVO is the shift to device financing with terms up to 36months. This immediately improves affordability of premium devices (iPhone, Samsung Galaxy S / Z) for Vodafone’s customers. Affordability is further improved via the guaranteed trade-in value benefit element. Now customers can see in the form of a monthly price reduction the benefit of trading in an older device when taking an EVO plan.

It also allows Vodafone to counter pricing offered by the other split model pay-monthly providers: O2, Virgin, Tesco Mobile, Sky Mobile and a revamped Carphone Warehouse via the new Currys mobile proposition.

Vodafone’s guaranteed trade-in value promise drives customers to Vodafone’s app to check the resale value of their device. This in turn kicks off a digital sales upgrade journey, acting as a funnel for new upgrades.

The guaranteed trade-in value benefit also gives Vodafone flexibility to vary its traded-in valuation at different times of the year. For example, Vodafone could temporarily increase the guaranteed trade-in value of specific older iPhone models above market rates when a new iPhone model is released to encourage upgrading.

Plan Positioning

On the airtime side, Vodafone needs EVO to help build two value elements into its pay-monthly story:

  • Why Vodafone?: What does a customer get with a Vodafone pay-monthly plan that they don’t get from a competitor?
  • More for more: Once won over to the merits of Vodafone pay-monthly, what are the incentives for a customer to trade-up from a basic to premium Vodafone pay-monthly plan?

The “Why Vodafone?” story is built around the Battery Refresh and Total Care Warranty elements of EVO. These come as standard with all EVO plans and create a point of differentiation against competitor pay monthly offerings.

The free battery replacement benefit is a smart differentiator. It can be easily communicated at point of sale. It feels genuinely fresh.

The two year warranty benefit is less interesting. It is a one year extension of the manufacturer’s existing one year warranty. A much neater message would have been to offer both battery replacement and extended warranty for the duration of the Device Plan.

The “more for more” elements of EVO get very busy, very quickly.

  • Unlimited 5G data: An easy win would be to position unlimited 5G data as the premium tier plan. However Vodafone chose to retain the 2 Mbps and 10 Mbps speed-capped unlimited data options for most handsets . The use-case of when a customer is better off taking a 10 Mbps, or much worse, a 2 Mbps 5G plan versus a full speed fixed allowance 5G plan remains very unclear.
  • Inclusive MMS: It is doubtful consumers see any per message charging as reasonable in 2021. Making a virtue of scrapping MMS charging for some EVO plans, or trying to position free MMS as an upsell option, feels difficult.
  • 50% off Smartwatch Connectivity: Offering an incentive to take a smartwatch and airtime plan at point of purchase of a phone and airtime plan feels like a standard sales upsell tool rather than a specific plan benefit.
  • 3 / 6 unlimited data boosts: Data boosts feels gimmicky, and may create an inventive for customers to trade down allowance sizes. Customers are also likely to demand data boosts to be applied retrospectively should they receive out-of-allowance data charges.
  • Roaming: EVO offers three tiers of roaming benefit: none, Europe (51 destinations), and Worldwide (83 destinations). The roaming tiers are not clearly featured as inclusive benefits with specific plans. Instead, they become point-of-sale upsells. Customers taking fixed data allowance plans can take European roaming for £2 extra. Customers on unlimited maximum speed data plans can take worldwide roaming also for £2 extra. Customers interested in the roaming elements will need to complete a digital sales journey or have a guided sale in-store to understand exactly what roaming benefits are available on what plans. There is no obvious positioning to a customer as to which plan gets which roaming benefit.

Quick win improvements to EVO’s airtime plan story would be:

  • Scrap the 2Mbps and 10 Mbps unlimited data tiers: Vodafone needs to be part of an industry effort to educate consumers on the speed and latency benefits of 5G devices and services. Mixed messaging around speed-capped 5G plans is unhelpful.
  • Beef up “core” EVO benefits: Free battery replacement, free extended warranty, discounted smartphone connectivity, and free MMS sit better as benefits for all EVO customers regardless of plan. Additional core EVO benefits can be built out over time.
  • Simplify the benefits: Vodafone should only include benefits as standard where those benefits have a fairly uniform perceived value, and where the benefits can be easily communicated. Does £3.50 off smartwatch connectivity really fit that bill?
  • Sharpen “more” EVO benefits: EVO plans could be sharpened with a clearer “good / better / best” focus. Roaming is a good example of a benefit that could be tiered across plan tiers to create clear upsell steps. Under this scenario, customers would be offered no inclusive roaming on plans <20GB, European inclusive roaming on plans 20GB – 100GB, and inclusive worldwide roaming on unlimited data plans. Each roaming upgrade could also be sold as a stand-alone bolt-on to deal with edge case users who value lower data allowances and higher inclusive roaming benefits. Overall, EVO customers need clarity from Vodafone as to how price and benefits trade-off when choosing between data tiers.

Verdict on EVO

The best elements of EVO are the move to device financing, the free battery replacement benefit and the guaranteed trade-in incentive. All of these elements complement each other in allowing Vodafone to improve its ability to win and retain pay monthly customers.

Secondary areas of EVO – the 5G unlimited data speed options and myriad of Xtra benefits – are too cluttered and confusing. An opportunity exists for Vodafone to sweep away the clutter and improve messaging on the value customers receive for spending more to move up the tariff ladder.

Overall EVO is a good start for Vodafone, but work remains to be done to simplify and strengthen the proposition story.