Being successful in business is to a great extent about being at the right place at the right time. For some, this can simply be down to luck, whilst others have effectively placed themselves to take advantage of circumstances. Andrew McGrath, director of marketing & strategy at NTL Telewest Business, is certainly amongst the latter, having successfully negotiated his career through various mergers and acquisitions amidst the politics of global organisations, into what he describes as the best job in telecoms.
This is a bold claim for any marketer so how can McGrath justify it? The company was formed through the merger of the separate NTL and Telewest businesses in 2006 and bolstered earlier this year by its acquisition by Virgin. But prior to Branson’s high-profile swoop, it was already the largest competitor to BT in the UK telecoms market and more significantly, the most profitable. We generate more profit than all of the other ‘alt-nets’ (alternative networks to BT) put together, explains McGrath.
The main reason for such economic disparity is that unlike other BT rivals, it owns its own high-bandwidth physical cable network through which it transmits voice and data services. This network was built to deliver consumer TV, but also delivers a business service at a significantly reduced cost. Other alt-nets have to pay to piggyback BT’s services, which means they pass on costs to customers.
Telecoms is a highly competitive market and whilst most companies are in survival mode, we’ve got enormous potential, continues McGrath. At the moment I classify NTL Telewest Business as the best-kept secret in the telecoms industry. Our objective is to become the natural choice for our target audience.
This simply-stated and yet lofty ambition is typical of McGrath. His bold claims may come across as smug, but in the flesh he is nothing of the sort; confident but understated, politically aware and highly competent. He is a slick corporate operator and the ultimate safe pair of hands for the marketing function; but also someone who can see the bigger picture.
Although McGrath may be sitting on an ideal job right now, his career has not always been so straightforward and he has had to work hard to achieve this position. Having started his career in product management in the technology industry, he completed an MBA in 1994, majoring in marketing whilst working at Cable & Wireless.
Yet it was the brave some might say foolhardy decision to jump ship and join troubled telecompany Worldcom in 2003 as vice president of marketing & strategy for EMEA that appears to have been the cornerstone of his future success. Prior to his arrival, the US-parented telecompany had been the much-publicised victim of what McGrath describes as the biggest fraud in corporate history. Worldcom was on the ropes when I joined. It was a broken organisation that had lost its self confidence.
McGrath joined as part of a new management team tasked with rebuilding the organisation. Part of this process was to ditch the sullied Worldcom brand and reposition it using the US identity MCI, which had some resonance in Europe, but more importantly had no association with corporate malpractice.
McGrath was in this role for only two years, but he says a lot was achieved and learned. MCI/Worldcom was an enjoyably complex organisation with offices in 15 European countries. There were a lot of different cultures and various stakeholders, which needed to be influenced to get things done.
The company was eventually acquired by competitor, Verizon, and soon after, McGrath tendered his resignation. However, he denies these events were connected. I saw another opportunity which attracted me even more, he says, adding that despite the Herculean effort involved in getting MCI back on track which included painful cost cutting the company had still only achieved a break-even position. Even with enormous effort, we didn’t have a realistic chance of making it significantly profitable. Understandably, this was not a situation that he found inspiring; the potential was limited.
For MCI therefore the writing was on the wall. But for McGrath, this was a springboard to better things. In February 2005 he joined Telewest Business, sensing a bigger opportunity and significantly greater potential.
Yet far from being the steady ship that many who had endured the turmoil at MCI / Worldcom might have craved, Telewest had an entirely different set of issues. So was it a blow for McGrath to arrive at a new employer which was anticipating and to a certain extent, actively working towards a merger? Not at all. Andrew McGrath was fully aware of the rumours of merger with NTL and bizarrely, the prospect was part of the appeal of the role. Rumours of a merger between NTL and Telewest had been around for a decade and at the point when I joined they were getting very loud, he says. I joined in the hope it would happen and that I would emerge with the role that I currently have director of marketing & strategy.
Many marketers would run a mile from the potentially fraught and difficult situation that constitutes merger, given the corporate turmoil involved and the fact that only 50 per cent of key staff could be expected to retain their jobs. Not only that, but given the high failure rate for mergers, even those individuals who did retain their jobs might find themselves victims of an unsuccessful attempt at integration. But not McGrath. He denies any inside information regarding the strength of the NTL Business division or the skills of his opposite number, but given the company’s well documented problems, it is possible he had reason to suspect he was well placed to win the new combined position. He does suggest that his experience of managing merger activity and operating in complex environments are likely to have helped his cause. There was a rigorous selection procedure, he adds. It was a risky move, but occasionally you’re allowed to take risks and have confidence in your own abilities.
The merger of NTL and Telewest was formally announced in autumn 2005 and completed within a year. Once the two companies had become one, for McGrath and his new marketing department the focus was on building teams and integrating the product portfolio whilst at the same time keeping customers informed about what was happening. He describes the process as gradual. It’s a complex thing to bring two organisations together and make them function as one. We had to make sure this happens seamlessly for customers and that from their perspective it just gradually gets better.
McGrath was particularly pleased that the company was recognised as the industry leader for customer service in the telecoms industry, as a result of a survey by the Communication Managers Association during the merger year.
Despite promising beginnings, the new entity did not have long to establish itself as the serious rival to BT before another merger came to the table. Virgin’s much-publicised deal to acquire NTL Telewest was finalised in March this year and the new Virgin Media brand incorporating its existing mobile operation was launched with fanfare and massive marketing spend. The repercussions for consumer media consumption still continue, including an ongoing spat between Branson and Sky’s major shareholder media tycoon Rupert Murdoch.
Meanwhile, it was business as usual for NTL Telewest Business. After a long hard look at the brand positioning, McGrath decided not to take the rebrand option and continue to operate as NTL Telewest Business. The irony of declining the opportunity to utilise what is certainly one of the world’s strongest brands (Virgin) whilst retaining a brand with significant negative equity (NTL’s nickname was ‘NT Hell’) is not lost on McGrath, but he says there were three key reasons for this contentious decision.
The first of these was customer research, which showed there was no pressing reason to abandon the established identity. There wasn’t a particularly strong calling from our customers to rebrand, he says. They like many of the things that Virgin stands for such as value for money and innovation, but actually they felt NTL Telewest Business wasn’t doing too badly in these areas already.
Critically, whilst the consumer division had historic reputation for poor customer service, the B2B operation had no such problem: in fact its customer service was regarded as excellent. The primary reason for this, says McGrath, is that its core market of large, nationally-focused businesses is serviced by core account managers. Our customers are on first name terms with their account managers and engaged in constant dialogue. It is not a one-off transaction.
So whilst for NTL Telewest’s domestic customers the rebrand was a no-brainer, in B2B arguably there was the potential to damage a relationship that was already highly effective. And this brings us to the second reason the NTL Telewest Business brand was retained: the appropriateness or lack of it of Virgin to a business audience.
Virgin is a fantastically strong brand in the consumer space, but it isn’t known in the business market, says McGrath. To his knowledge, there is only one other company in the Virgin group with a dedicated B2B operation, a specialist in aircraft maintenance operating from Gatwick Airport, which hardly has broad appeal. And although he says Virgin Atlantic has a small B2B sales team and business people undoubtedly use Virgin Trains to get to meetings and Virgin Media to relax, the brand does not have precedent as a supplier of business products and services.
The third and final reason for retention of the NTL Telewest brand is perhaps the most fundamental of all: money. It’s very costly, says McGrath. Millions of pounds were spent on the consumer rebrand and our news would have been lost in the noise. Instead, we have spent £10 million on provisioning to improve our ability to connect up new customers to make it an easier experience for them. We have been supply-constrained to a degree and this investment means we can target small customers more aggressively. And this is where our brand will become more important the SME market is more like the consumer market where it is more important for your brand to stand for something. Ninety per cent of NTL Telewest Business’s customers fall into the larger organisation category, but for SMEs individual account management is neither appropriate or practical, therefore its success in this area will count for little: the brand will come back into play.
Once this provisioning investment is completed in 2008, new systems come online and new customers are within its reach, it is likely McGrath will look again at the issue of brand. He says representatives from Virgin Group were extremely helpful and the option still exists to rebrand as ‘Virgin Business’, but it is possible a looser relationship with the parent company might be utilised. However, the issue is still being considered and evaluated. At some point we will probably rebrand, he says. Now that we’ve got the hard work of integration done and once the provision work is finished, it is more important for us to shout from the hilltops.
In the meantime acquisition has delivered additional, and perhaps unexpected, benefits. It had a significant unifying effect, explains McGrath. People stopped calling themselves ex-NTL or ex-Telewest. We’re all Virgin now and everyone feels like Virgin Media employees. We have the same email addresses and Virgin Tribe cards that all Virgin employees get.
Additionally, McGrath and his team are getting to grips with the opportunities presented by Virgin Media’s mobile phone service, including trialling bundled broadband and voice services to SMEs and piloting a package incorporating mobile as well. This offering of all three services together reflects what is going on in the consumer market, bringing it closer to the B2C brand.
Once the new investment in provisioning goes live, it is certain there will be more emphasis on such services and on the SME market generally. Although McGrath denies that marketing is on hold, the true potential of the Virgin acquisition for the business operation will only be leveragable at this point. For some marketers, this might be a source of frustration, but for McGrath, with his experience of seeing the bigger picture and direct strategy remit, there is a sense he’s content to wait for it. And given the highly competitive nature of this market and the thin margins its competitors are operating, the company looks set to make significant headway.
In the meantime, NTL Telewest Business will continue to exist as an odd bedfellow to its sister brands in the Virgin group. As McGrath acknowledges, there is only one other instance of Virgin acquiring a company which it did not rebrand: the condom brand Mates. But I don’t think Virgin Condoms would have quite worked… he adds. It seems that even for Virgin there are limits to how far you can extend your brand.
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