Googles Project Fi in Australia

Guilherme Addor Torres Ribeiro

12356294
MSc Marketing
Global Relationship Marketing (MKT9115M)

26 t h May 2016
Word Count: 3772

Table of Contents
Introduction ......................................................................................................................................... 3

1.

Adopting a Relationship Perspective & Potential Difficulties .............................................. 5

2.

Customer Retention Strategy................................................................................................ 11

3.

Key Relationships ................................................................................................................... 20

Referral Markets ........................................................................................................................... 21
Supplier/Alliance Markets ............................................................................................................ 21
Internal Markets ........................................................................................................................... 22
Conclusions ....................................................................................................................................... 23
References ......................................................................................................................................... 24

Introduction
Googles Project Fi is a virtual based mobile carrier, which uses Googles new radio
antenna hardware (within their Nexus line of mobile phones) to automatically search
and switch between different 3rd party networks, in order to give a seamless and
continuous high quality network connectivity (Fox, 2015; Fung 2015; Huet, 2015). It
currently only exists within the USA, and is only available to those with Google Nexus
phones, as the company has made deals with US carriers Sprint and T-Mobile.
However, it has partnered up with over 120 countries to provide signal for those
travelling abroad, and thus, the possibility of the service one-day expanding to another
country is not impossible.

Project Fi was established with 3 simple goals: to help customers get the highestquality connection, to enable easy communication across networks and devices, and
to make the service experience as simple as possible (Fox, 2015). All of these goals are
customer-oriented and revolve around relationship building. Thats why the service is
tailored to provide the best customer experience possible. Project Fi is currently
$20/month for unlimited texts, calls and international texts with and extra $10 for every
GB of data the customer wants (i.e. 5GB = $50). However, it allows unused data to be
refunded to the customer at the end of the month, essentially only charging customers
for what they use. Customers can also keep track of their usage via an easy-to-use
application on their smartphones. The service is as customer-friendly as possible.

Australia was chosen for a few reasons; firstly, one of the largest telecommunications
companies in the country, Telstra, has begun a revamp of its telecom infrastructure
(Wright, 2015). This presents Google the perfect opportunity to introduce Project Fi
into the market, via deals with the carrier, similar to their US partnerships. Secondly,
the Australian geography is similar to Americas in the sense that they have large,
concentrated, urban areas surrounded by large, sparsely populated rural areas; this
environment presents an ideal one for Project Fi, as it could effectively mimic its current
success in the US. Lastly, Australias mobile broadband and telecomm markets have
been slowly decreasing due to oversaturation, and increasing prices; this is the perfect
environment for a customer-focused service like Project Fi to penetrate and win market
share with their lower rates, and improved customer service techniques (MarketLine,
2015; 2016b).

1. Adopting a Relationship Perspective & Potential Difficulties

Although the term Relationship Marketing (RM) may cover a very broad spectrum
within the literature (with multiple sources disagreeing on a singular definition) Egan
(2011) proposes the definition set by Grnroos (1994), whereby RM is a business
practice held by organisations who place creating and maintaining valuable customer
and stakeholder relationships at the heart of their business model. In essence, this
discipline attempts to create long-term valuable and profitable relationships between
its constituents (Miquel-Romero et al., 2014).

This practice or perspective, is mutually beneficial for both the business and the
constituents which form part of its RM network. For the business, building long-term
relationships help improve profits, retain customers, build customer loyalty, create
competitive advantage, create or reinforce brand image, and adds value to the
business overall. From the customers perspective, having long-term relationships
could be beneficial by having improved customer experience, lowered costs or
promotions, and increased trust for both the existing brand and new product offerings.
For suppliers or other key stakeholders, a RM perspective allows for knowledge
sharing across all connections within the network, new business opportunities, longterm stability and profits, or even reduced costs.

An essential part in having a RM perspective, is to know and understand your

customers needs. To achieve this, the organisation must place the customer at the
core of its operations. In doing so, the organisation will be able to determine and
classify customers according to their levels of value or profitability to the company; as
such, there can be three different levels of customers the Most Valuable Customers
(MVC); the Most Growable Customers (MGC); and the Below Zero Customers (BZC)
(Bick, 2009). This Customer Equity classification strategy allows for increased focus on
key customers, and the identification of those which are less profitable to the company,
and thus whose relationships can either be improved or severed; essentially, a firm
must calculate their customers lifetime values (Bick, 2009).

Aside from identifying and classifying customers by their estimated value to the firm,
RM has several other important functions, such as increasing the current usage of
products or services by existing customers, increasing customer satisfaction levels,
increasing referral rates or positive word-of-mouth, tracking customer information and
using said information to move customers up the loyalty ladder or to regain lost
customers or to increase customer retention, and to fully integrate relationship
marketing concepts into other parts of the business.

All of the aforementioned will be vital in the implementation of Googles Project Fi

into the Australian market. As a mobile telephone carrier service, Project Fi needs to
be innately customer centric, as this industry has become oversaturated in both the
Australian market and the current global context (MarketLine, 2014a;2014b). Adapting
a relationship perspective will be necessary in creating long-lasting relationships with
customers, the Australian government, competitors, and other key players within the
market.

Several aspects of the current Project Fi already have a relationship perspective to

them; the initial idea for the project was to provide a better overall service than other
current mobile carriers by placing customer satisfaction as the central goal. For
example, the service was designed to automatically switch from carrier networks to WiFi networks, in order to provide the best source of continuous signal for customers (as
shown in Figure 1 below). This concept also introduces the aspect of collaboration with
existing network providers and their cellular infrastructure. Therefore, Google plans to
form valuable long-term relationships with not only its customers, but also with its
competitors, by referring to them as partners and including them within their valuechain network.

Figure 1 - Example of Project Fi's Customer Centric Focus

Google has also made the relatively new service only available to those who own their
patented mobile phones (the Nexus 5X, 6 and 6P). Whilst they have stated that the
service will eventually become available to all mobile devices, by giving existing
customers the privilege of being first adopters, they further increase the value of the
relationships with these customers, inciting more loyalty, trust, and higher levels of
customer satisfaction. It also implies a greater usage of their products and services,
and as such, could also be seen as a cross-selling technique for both existing and
potential customers (as shown in Figure 2 below).

Figure 2 - Example of Project Fi's Customer Focus and Cross-selling techniques

Lastly, theyve made the entire service customer friendly from the pricing strategy, to
account management, to user experience. Theyve implemented a competitive billing
system in which the base plan ($20USD) is already much cheaper than those of
competitors (which include same unlimited calls, text and international texts), but
Google will also refund customers excess data each month. Every month, the customer
may choose to purchase a certain amount of mobile data (1GB-$10, 2GB-$20, 3GB$30, etc.), however, if the limit is not reached by the end of the month, the customer is
refunded the excess amount (as shown in Figure 3 below). This strategy is designed to
increase customer satisfaction, loyalty and retention, and shows that the organisation
has understood their customers needs. It also encourages customer spending, and
builds competitive advantage for Google.

Figure 3 - Example of Project Fi's Data Plan Strategy

Therefore, as the relationship perspective is currently leading Project Fis strategic

objectives, it is quite clear that these techniques and other RM strategies will become
vital in their entry into Australia.
However, the market presents a few difficulties for Google. Due to its climate and
geography, Australia has a problem of frequent blackspots in signal coverage. This
might jeopardise Project Fis promises of clear and continuous signal with its service,
and thus damage their customer relationships and possibly their brand image.
MarketLine (2015) also identifies that the Australian mobile phone market has been in
decline since 2012, with dropping sales and market value. This coupled with Project
Fis Google Phones Only aspect may mean that growth in Australia might be weak or
limited. Furthermore, Project Fi is able to deliver its incredible deals and service
through long standing negotiations and relationship building in its home country
(USA), and thus, entering a foreign country may mean that establishing these levels of
relationships could take considerable time.
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2. Customer Retention Strategy

Googles Project Fi currently implements several RM strategies, some of which are
customer retention strategies. As previously mentioned, having a relationship
perspective allows for a customer-centric business model, which intends to build longterm valuable relationships.

One of the key outcomes of successful relationship building is customer loyalty. As

outlined by Egan (2011), loyalty can be perceived in two ways: behavioural and
attitudinal loyalty. The former represents repeat purchase behaviour from the same
brand over a period of time; however, the issue with this definition of loyalty is it fails
to recognise that repeat purchases may come from a variety of factors (convenience,
availability, pricing) rather than actual patronage for a brand (Egan, 2011). As such, the
latter represents a more accurate measurement of loyalty, accounting for consumer
preferences and predispositions; thus, attitudinal loyalty is both behavioural and
emotional (Egan, 2011).

Although loyalty does not necessarily correlate to satisfaction, it continues to be a

good indicator for long-term relationship building, and positive loyalty can result is
several valuable factors for the business, such as increased switching barriers, higher
tolerance to mistakes and referrals/word of mouth (Egan, 2011).

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Therefore, it is imperative that a company successfully builds strong customer

relationships and form loyal bonds with their customers. This can often be achieved
via customer retention strategies. As Egan (2011:75) states, the advantages of
customer retention can be summarised in existing customers are less expensive to
retain than to recruit; securing a customers loyalty over time produces superior
profits. Retention strategies are also preferred in saturated markets, where switching
costs are much higher for organisations than for customers, and therefore, customer
retention strategies will be essential for Project Fis entry into Australia.

Project Fi currently utilises several retention strategies, most prominently of which is

perhaps their customer service techniques. Customer service builds bonds between
the business and the customers to ensure long-term relationships; the quality of
service leads to customer satisfaction and to relationship strength. One model for
measuring service quality is the SERVQUAL model, which considers the following
components: Reliability, Assurance, Tangibles, Empathy, Responsiveness (Buttle,
2009:203). The first component relates to the services ability to deliver its promised
results, matching consumer expectations; the second is the reliability of staff, their
knowledge, and their ability to inform and convey trust onto customers; the third
relates to the physical aspect of the service, including personnel; the fourth relates to
the services ability to cater to individual customers needs and issues; and lastly,

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responsiveness refers to the services ability to respond to customer needs swiftly

(Buttle, 2009).

Clearly not all of these components are a match for Project Fis service model,
however, certain comparisons may be made to their customer service strategies.
Customer service elements such as Project Fis automatic reimbursement of unused
data, their network/Wi-Fi switching technology, their coverage and their prices are all
areas of reliability; when entering the Australian market, it is vital that Fi deliver upon
these aspects of the service.

Assurance can be compared to their informative 24/7 support team and their
knowledge base, their clear and well designed website, or their user friendly manager
app. Tangibles can include the aforementioned app, or their Nexus phones. Empathy
may compare to both the attention paid to customers by the support team, or the
personalised way in which the app measures data usage and history.

Lastly, responsiveness is most relatable to the services ability to perform quickly and
smoothly, although it may also include the help services ability. One potential
incremental service which Project Fi does not currently have, and could provide extra
value to customers in Australia, is the ability to cancel new customers old contracts for

13

them. This service is available by some carriers already (i.e. Vodafone), and would
enhance the customer experience for a new potential audience.

Another key retention strategy which revolves around customer loyalty is the idea of a
loyalty scheme. These reward long-standing customers for their patronage by gifting
some form of reward or incentive (Buttle, 2009). Project Fi does not currently have any
such strategy in place, however a possible idea could be to reward those customers
which use large amounts of mobile data monthly. As such, for those who consistently
use, for example 5GB or more every month regularly, could get a 40% discount on
their next bill after every 3 months; therefore, for every $150 spent on data over a
period of 3 months, they would receive a $20 discount on their fourth months bill. This
would be a minimal loss for Google (they would be losing $20 for every $180 gained),
and would incentivise customers to purchase and use large amounts of data, and yet
feel rewarded for their patronage.

Similarly, sales promotions are another form of customer retention, by which

discounted offers are given to customers during short periods of time to incentivise
purchase and increase customer volume (Buttle, 2009). Currently, Project Fi offers an
$150 discount for new customers who purchase a Nexus 5X and sign up for the service;
they also allow monthly instalment plans with discounts for a limited time. Both of
these incentives would be excellent to implement in Australia, as they aim to increase

14

customer volume quickly through monetary incentives for a limited time only, as such
this would help initially attain customers upon entering the Australian market. This is
also one solution for the difficulty presented in the first part of this report, which
identified the Australian mobile market as being saturated and difficult to enter. With
similar strategies such as this, Project Fis ability to penetrate the market quickly is
increased.
Another possibility for sales promotion could be to offer a 10% discount for those
customers who pay for 10GB of data upfront. Although the difference may seem
minimal ($90 rather than $100), because customers know if they do not use data, it is
reimbursed to them the following month, they may be easily tempted to accept such
an offer.

Some of the aforementioned retention strategies may also compliment Kanos

Customer Delight Model; customer delight is when the perceived level of customer
satisfaction is higher than the customers expectations (Buttle, 2009).
Kanos model distinguishes between 3 different types of product or service qualities:
basic qualities (which are expected by customers as minimum qualities the product or
service should have), linear qualities (these are qualities customers would like to expect
from a product or service, such as some small distinction), and attractive qualities
(these are those which the customer does not expect, and thus delight them greatly)
(Buttle, 2009). Figure 4 (below) represents Kanos model; here it can be see that

15

customer delight can either come from the enhancement of linear qualities, or the
creation of attractive qualities (Buttle, 2009).

Figure 4 - Kano's Customer Delight Model taken from Buttle, 2009:266.

If the model is applied to the case of Project Fi in Australia, basic qualities would be
the services ability too run smoothly, and perform its network switching ability in order
to provide continuous strong signals; linear qualities could involve the services
monthly roll-over data plan or the ability to hotspot with the mobile device; attractive
qualities would be extra or peripheral services previously mentioned, such as
rewarding loyal customers, supplying short-term sales promotions, or further
augmenting the service experience in some way.

16

One way to achieve this could be through the use of customisation strategies,
engagement strategies and/or, co-creation strategies. All of these are similar in the
sense that they with to closely interact with customers as individuals, recognising them
as such, and allowing for their personal input in order to increase their perceived sense
of worth to the company and strengthen their relationship; they all provide customer
intimacy (Buttle, 2009).

Customisation strategies build a personal relationship between firms and customers

by providing collaborative, adaptive and cosmetic options or offerings. In the
traditional sense, companies store large in-depth information on their customers and
their habits, or frequently maintain a line of communication with them, after which they
then provide customers with unique, specialised offerings tailored to the individual
(Buttle, 2009).

In Project Fis strategy, customisation could involve current options such as, adapting
the data limit, choosing data plans, setting data caps, etc. Or they could be more
aesthetic, such as personalising the management app. However, one opportunity for
customisation in Australia could involve Googles other applications to enhance their
knowledge base on customers of their Fi services, and consequently adapt that
customers service to this information. For example, if a customer takes the same bus
route every day to work, and uses Fis services throughout the ride, Google Maps in

17

conjunction with Project Fi could suggest places to stop for coffee or food along the
way, or improve network connections by knowing which direction theyll take, thus
improving signal quality further.

Engagement strategies are those by which the organisation or other customers

interact with each other regularly, thus strengthening the bond between users and the
company. This can often be achieved through blogs, social media, forums, etc.
Potential for Project Fi in this area is enormous; although the service does not currently
offer any such strategy, as previously mentioned, using other Google apps to enhance
customer service, while maintaining a level of interaction and constant updates on
customer information is quite plausible.

Lastly, co-creation strategies are those by which customers take an active role in the
creation, or participate in some way in the development of new product offerings.
Many consider these strategies to be the best form of engagement and retention; the
pinnacle of loyalty creation (Prahalad and Ramaswamy, 2004). Project Fi could use this
concept in order to further their main objective of creating the most user friendly
carrier service, by allowing the actual customers to input ideas into how the service
might improve in the future.

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Overall, although Googles Project Fi currently has very good customer retention
strategies, the possibility of entry into a new market, such as Australia, presents the
company with an array of further increasing their relationship marketing and loyalty
building strategies, mutually benefiting their growth in Australia, as well as the creation
of new, strong, loyal, long-term customer relationships in a saturated market.

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3. Key Relationships
In order to identify and categorise the key relationships which may be needed by
Google when introducing Project Fi into Australia, the conceptual Six Markets Model
was used as an outline for better determining the extent of possible stakeholder
relationships. The Six Markets Stakeholders Model outlines six potential markets an
organisation may come in contact with when building relationships with stakeholders;
these are: Customer markets, Referral markets, Influencer markets, Recruitment
markets, Supplier/Alliance markets, and Internal markets (Buttle, 2009; Payne et al.,
2005). While customer markets were dealt within the previous sections of this report, it
is necessary to identify key players within the other five. Figure 5 below is an illustration
of the Six Markets Model.

Figure 5 - Six Markets Model taken from Buttle, 2009:53

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Referral Markets
This market category is divided into two further subcategories: customer referrals, and
referral sources (Payne, et al., 2005). Customer referral markets include those by which
successful word-of-mouth is spread via existing customers onto further customers; this
is the most relevant out of the two referral markets to the Project Fi case. Customer
referral markets will be of great of importance to Project Fis entry in Australia because
the service focuses so heavily on customer service experience and quality. Therefore,
it is hoped that this focus and effort will be reciprocated by the customers, who will
then help reach further potential customers, and penetrate the market. As previously
mentioned, the Australian mobile market is very saturated, therefore Google must rely
on proving the highest quality standards so that it can attain market share naturally.
Supplier/Alliance Markets
Relationships within this market can take on two forms: vertical alignment with
suppliers, or horizontal alignment through alliances (Payne et al., 2005). Just as in the
USA, Project Fi hopes to establish itself within Australia by creating alliances with the
local telecommunication companies within Australia. As mentioned earlier, Telstra is
launching their VoLTE project, paving the way for faster 4G connections throughout
the country (Wright, 2015). Telstra is the largest wireless telecommunications company
in the Australian market, holding 54.2% of the total market share (MarketLine, 2016b).
Therefore, if Google could negotiate an alliance with this local giant, then two major

21

difficulties could be dealt with in one solution (the difficulty of nation wide connectivity
networks, and the issue of market penetration).
Internal Markets
This market dictates how the organisation forms relationships with its own employees,
as well as how they deal with and manage internal marketing strategies. Google
currently has a very strong company culture in place already. Managing employee
behaviour within a new country should not be a problem for Google as they are very
selective about their employees. Gummessons (2008) Part Time Marketers strategy
sees that all employees who come in contact with or in any way influence customer
relationships, satisfaction or perceptions of quality must be treated as brand
ambassadors.

22

Conclusions
In conclusion, the introduction of Googles Project Fi into the Australian
Telecommunications market appears to not only be feasible as a project, but very
similar to the services current endeavours in the USA, however, due to the foreign
nature of the market, certain peripheral customer attraction and retention strategies
were supplemented to Project Fis existing customer relationship marketing strategies.
The service will focus on providing the highest level of quality, and following the
SERVQUAL model, it shall take care to create customer delight regularly through the
various proposed loyalty and relationship techniques, such as the sales promotion
offer upon market entry in order to quickly enter the market and obtain market share.
Besides the customer markets, the only other crucial stakeholder market would be the
alliance with Telstras network. If possible, a similar arrangement made with Sprint and
T-Mobile could serve as the basis for developing negotiations within the Australian
market.

Overall, it would appear that Googles Project Fi within Australia would be a highly
successful business venture, and perhaps Google Fis first step outside the USA into
global service expansion.

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