Published on the 06/09/2016 | Written by Donovan Jackson

Prepaid operator Skinny has gone Janus and is no longer just Skinny Mobile…

With the launch of a ‘sister’ brand, Skinny Mobile is stealing a march on the competition by innovating (digitally, of course) its business model before any upstart can. Skinny Direct is a new digital -only channel designed to appeal to those who want more automation, more self-help and less or no interaction with ‘real people’.

Skinny Direct sits alongside Skinny Mobile, hedging the company’s digital-only bet by retaining the existing prepaid business model.

Asked if Skinny Mobile has cannibalised parent Spark and if Skinny Direct is likely to do the same to Skinny Mobile, GM Ross Parker said, “No we don’t think so. This is a new product for a distinct segment of the market. We’ve found that there is a group of our customers that effectively developed this product for themselves using our [existing] app, registering their credit cards and self-serving. When we looked at the Net Promotor Scores, we found that these were the happiest of all our customers, so there must be something in this.”

The business model makes sense, perhaps most apparently for ‘digital first’ customers, who we tend to think of as millennials. But Parker made the point that it isn’t limited to the younger generation, but rather extends to those looking for the convenience of online self-service.  “Obviously, we’re prepay, so not everyone tells you their demographics, but yes, millennials is the group we would think likely to make up the largest portion of the customer base. But times are changing and there are heaps of people moving to things that save time and make it simple.”

iStart  logged on to Skinny Direct’s website and had a go at registering an account. It is indeed a simple process, with three steps to sign up for deals which include a $50 option for 6GB of data, unlimited calling and unlimited TXTs. The only annoyance was the site’s insistence on a serious password; being cheapskates, we didn’t go as far as entering credit card details and paying.

It’s well known that Skinny was carved out of Spark; when it launched some 4 years ago, it did so with its own distinct platform, provided by Austrian vendor I-new, dispensing with the legacy systems of its parent. It is this system which Parker said has enabled the creation of Skinny Direct. “That has given us a fresh base to create some of the stuff we need to run the online business; it sounds really simple, things like you don’t top up but buy a plan with a credit card, but in practice it is quite complicated. The new platform is geared to be as simple and user friendly as possible.”

Moving into a fully digital business, Parker said, starts with the customer. “Look, there are two sides to every story; as a business, we’re looking for efficiency, but that has to coincide with what customers want. We try to force online channels [owing to low costs and efficiencies], but to do that it has to deliver advantage for the customer. While Skinny Mobile has had an app for two years, it wasn’t quite as smooth as we wanted and we didn’t feel like the customer was benefiting from being online only – so, we looked at how we can offer more value and what customers were doing, and that collided.”

Why not just shunt all of Skinny Mobile into the Direct model? “Well, we held the mirror up and asked if our digital journey was good enough and the answer was ‘not really’. We thought about iterating with Skinny Mobile, or starting fresh.” It opted for the latter and Parker said he believes there is room for both models, as some customers will continue to prefer to buy vouchers while others will adopt the online only channel.

In terms of support, those on Direct, he added, still have the option to talk to someone if they get in a pickle (“There is no extra charge for that at the moment,” he noted), but the expectation is that something would have to have gone seriously wrong for that to happen. “99 percent of the time, we expect customers to be able to sort it out themselves.”

The big question for low-cost prepaid operators is also a simple one: is it a profitable business? Skinny doesn’t like to talk about that sort of thing. “We don’t break out those numbers, but we have passed 200 000 customers,” Parker said. How many of those will migrate to Skinny Direct? No direct answer on that; whether Skinny Mobile will make way for Direct over time also isn’t clear at this stage, though Parker noted that as digital maturity is reached, more people are likely to look for the convenience offered by online options not only in telecoms, but elsewhere too.