The Blue Label deal with Retail Mobile Credit Specialists is interesting on many levels, but for me, the most interesting aspect of the deal is CEO Brett Levy’s excitement about the access to a huge database of information about Edcon customers that the deal gives Blue Label. Data is the most important resource in the information economy, a fact which Levy seems to understand when he talks about how Blue Label now has access to RMCS’s intelligent customer base – a database of four million RCMS credit customers and eight million other people that the company holds a huge amount of information about.
If Blue Label is smart, it can really leverage this information, not only to sell airtime, but to sell handsets and event tickets. Knowing your customers and understanding their behaviour is the key to building sales, and with its new database, Blue Label is well-positioned to mine deep into the behaviour of Edcon customers and give them exactly what they want, when they want it, which as we all know, is the key to effortless selling. – FD
GUGULETHU MFUPHI: Moving on to Blue Label’s Telecoms now, their Prepaid Company has entered into an agreement with Retail Mobile Credit Specialists and the Prepaid Company. Blue Label Telecoms says that the transaction deal is unconditional. Brett Levy is the Joint CEO of Blue Label. He joins us now for more. Brett, it’s good to see you here.
BRETT LEVY: Thanks you, it’s nice to be back.
GUGULETHU MFUPHI: Are you missing our brother Mark, though?
BRETT LEVY: I’ll give it a bash without him.
GUGULETHU MFUPHI: No problem. Well, coming back to this announcement, it was made towards the end of last year. Is there an update on this, perhaps?
BRETT LEVY: We announced that unfortunately, it ran quite late last year, round about the 20th of December, so the update is that basically, all the conditions were met and it was paid away yesterday, so we’re really excited about it.
ALEC HOGG: Paid away…
BRETT LEVY: We paid it out yesterday.
ALEC HOGG: A cheque, the biggest you’ve ever written.
BRETT LEVY: It’s a big cheque for us, the biggest we have written, but a really exciting one. It brings in part of what we do on the acquisition trail. When we look at acquisitions, we look at anything that fits in a product range, distribution, and obviously, profit enhances it if possible. It has a great contract and a really good relationship with the EDCON Group, and we see a fortune of potential of what we can do inside the EDCON Group.
ALEC HOGG: How?
BRETT LEVY: For starters, they have a tremendous credit base. They have a really intelligent base. They have an intelligent customer – ‘intelligent’ meaning a lot of information on them – and over and above that, which sits around the four million mark, they also have around four million cash customers, and probably about 12 million people on their database. It therefore gives us a great opportunity to market to their base from behind the scenes, if I can call it that, from a call-centre point of view. It also gives us a great potential to go into the stores at EDCON and add on a whole new product range for them, capture their client, and give a great new product to them.
GUGULETHU MFUPHI: What does this mean? Will you be providing some type of devices or airtime?
BRETT LEVY: We’ll be providing devices and many value-added services. For the first time, you’ll see EDCON going into ticketing, from transport ticketing all the way to game ticketing, event ticketing, and bills, so really giving their customers a one-stop shop to do absolutely everything they do. From a product point of view: just trying to add to the range they already have, and try to enhance the rollout of what they’re actually doing.
ALEC HOGG: Since we last saw you, there were two developments that must be affecting you and must perhaps be keeping you awake at night – perhaps not. The first one was MTN making airtime transferable between people, giving us an incentive to sell to each other, starting with entrepreneurs, and trying to get an entrepreneurial issue going with them paying five percent margins. Is that something that could threaten Blue Label?
BRETT LEVY: I think it’s a great initiative by MTN. What they’re really doing is they did it through Pick & Pay as their main channel actually, and what it does is it allows people to come and buy in bulk from Pick & Pay and resell it as they go down the channel. For us, one thing we’ve always been confident about is the distribution channel of where we exist. Only 20 percent of our business really comes from the urban Blue-Chip customers. Eighty percent is really the heart and soul of the independents, your mom and pop stores, shebeens, and spaza shops, so a much more complicated market…a much more difficult market on how to trade and how to collect. We therefore think it’s great for…it is competition for us, but it’s definitely not keeping me up at night.
GUGULETHU MFUPHI: Another set of issues, which probably kept you up at night was the MTR’s. Before we spoke, they hadn’t take effect. On the 1st of March, they kicked in. Has it had an impact on your numbers, or could it?
BRETT LEVY: I think from a Blue Label perspective, we actually sit just below the network, so it doesn’t affect us directly. Where I think it’s really great is that this will have consumer benefit. It really will feed down to the consumer. I think the consumer will be paying a cheaper price. They’re already paying a much cheaper price. During the next six months as it sets in, they will decide on what the future is afterwards. I’m not quite sure if they’ll go backwards from what they’ve done. Will they implement the two and three-year plan? That will tell. We’ll only find out in six months, but I think it’s good. I think that it’s more competition and more product. What we find is when the networks start to compete more competitively against themselves, what becomes interesting in our world is that distribution becomes extremely important, so we actually become a bit more valuable than when it’s really just running smoothly.
ALEC HOGG: Good news. Not such good news was our cricket team, which you sponsor. Good sponsorship, though, they made it to the semis. How does something like that work? Do you pay them to get through the initial stages and then, if they win, a bonus etcetera?
BRETT LEVY: The worst news actually, is if they won on Friday, we were having a full press conference at Blue Label with all the players and everyone, so that would have been really special. However, we took out a three-year sponsorship with them, so it has nothing to do with their wins or losses. It’s really a fee, which we pay them yearly for three years. It was however, bigger than that, because we wanted a commercial relationship with them. One of the things we were able to do is we got all the ticketing of all the cricket out of them, so when you go to cricket games now, it doesn’t matter which stadium it is. It all goes through Blue Label. We get the ability to market to their database. In South Africa, there are approximately seven to nine million supporters of cricket. It’s definitely one of the most watched sports, and a pretty loyal one, but it doesn’t boil down to the people who hold the membership – many supporters, but very few members. One of the main drives we have with Cricket South Africa, is to create all the supporters (or many of them, at least) to members. It’s a great commercial and great marketing aspect for us and it’s actually nice to be part of it.
ALEC HOGG: Did you go?
BRETT LEVY: I didn’t go.
ALEC HOGG: So it was as Piet Viljoen was saying a bit earlier. His customers are more important now compared to Warren Buffet.
BRETT LEVY: Correct.
ALEC HOGG: If we understand your operations in India where cricket is a religion, did that play any part in this, the fact that perhaps the Indian viewers would have seen Blue Label for the first time on their screens?
BRETT LEVY: Definitely. In fact, one of the things that was a bit of a disappointment is when India were meant to come here – or they did come here in December – two of the T20 (because we only sponsor the T20’s. We’re not part of the five-day or the 50-over). India were meant to come and we were actually going to put the branding of our Indian company on the branding when India played in South Africa, so we definitely do try to mix it with the two. Cricket in India is massive, so yes, we’ll definitely try to share it and see what value we can get out of the different countries we’re in.
