The giant Co-operative Group and several regional co-operative societies have been hard at work in recent years rebadging their businesses to reflect "The Co-operative" brand. But, until now, the brand has gone no further than the long-established and traditional wing of the consumer co-operative movement. Now it is being stretched further, to embrace an independent co-operative offering telecoms services.
The decision by the Phone Co-op to take up the brand is significant, both for its own future and, arguably, for the co-operative movement more widely. The Phone Co-op is a relative youngster co-operatively speaking, having been set up in 1998 by its managing director Vivian Woodell, who felt there should be a co-op presence in the rapidly liberalising world of telecoms provision. Its 9,000 members have enthusiastically demonstrated that the nineteenth century idea of consumer co-operatives still works well today. The annual elections for board members are usually very strongly contested and, with broadly a quarter of the membership voting in elections, the Phone Co-op has the sort of active democracy larger co-operative societies dream of.
Its members are loyal, too, in an industry where customer churn is commonplace. Helped by some recent acquisitions (most notably the purchase of Saga's phone business), turnover has passed £10m. But, as Vivian Woodell explains, growing a telecoms business remains challenging. "The cost in the industry of acquiring customers is going up and up, and is becoming a very significant part of what people are paying," he says.
The Phone Co-op has successfully gained customers through affinity schemes with a host of campaigns and charities, including the Green Party, the Soil Association, WWF and the Campaign to Protect Rural England and it is about to launch a new tie-up with Amnesty International. Nevertheless, there is a sense that this pool of potential customers is becoming exhausted. "The [Co-operative] brand gives us an opportunity to get in front of a lot more people," Woodell says.
He says that the decision followed focus group work by the Phone Co-op, which suggested an encouraging level of recognition of the standard Co-operative brand. "People talked about ethics and fair trade, and knew what a co-operative was," he says. "Using the Co-operative brand is in a sense a shortcut for us in demonstrating what we stand for."
The Co-operative brand is looked after by the Co-operative Group and by representatives of those regional societies which have adopted it, and their acceptance of the Phone Co-op as a participant is a clear signal of Woodell's success in creating a credible new co-operative society. The Phone Co-op is now marketing itself to individual customers as "The Co-operative Phone and Broadband" and "The Co-operative Mobile", and to business clients as "The Co-operative Business Telecoms".
If there has been a criticism within the movement of the brand, however, it is that the general public may not understand that some of the businesses using it are independent co-operatives and not part of the dominant Co-operative Group. It was this inability to flag up their own autonomy which has prevented the Lincolnshire Co-operative, for example, from joining the national brand.
Woodell readily agrees that this is an issue which his co-operative considered carefully. The Phone Co-op has previously tried to bring as many of its customers as possible into membership (currently about a third of its customers are members), but the risk is there, that new customers who are already members of other co-ops may not understand the need to pay a further £1 to join the Phone Co-op. "We are adapting our communications to get the message across that the services are being brought by the Phone Co-op. In all our member communications, we're going to be very clear about that," Woodell explains. He points out that Midcounties co-operative society already uses the brand and still attracts a relatively strong level of member engagement.
Just possibly, the Phone Co-op's adoption of the brand may have a spin-off in helping raise public awareness more generally about the organisation of Britain's complicated consumer co-operative movement. Matt Lane, the Phone Co-op's marketing and partnerships manager, certainly sees an opportunity . "We feel we have a responsibility to educate people about the movement," he says, arguing that more people may begin to understand that the brand is a collective venture by several co-operative societies. The brand has been adopted by Midcounties,Anglia, Midlands, Southern, Chelmsford Star, Heart of England,Tamworth, and Radstock societies, as well as by the Co-operative Group itself.
Meanwhile the Phone Co-op itself may not necessarily always stick just to the relatively low-margin business of telecoms re-selling. It is known to have previously looked into electricity and gas re-selling, and has recently dipped a toe into micro-generation, particularly the solar panel business. It has also been exploring possible partnership arrangements with like-minded business organisations in continental Europe. Woodell says that he remains alert for possible acquisitions: "In the current market, in a rapidly consolidating industry it's very hard not to be in the market to do acquisitions," he says. As well as the Saga deal, the Phone Co-op recently took over a small venture, Transcend Communications.
The prognosis looks promising. After three years of limited growth, the Phone Co-op has, according to Woodell, just completed a much more profitable trading year. The level of dividends to be paid to members is something which legally the members themselves will vote on at the AGM early next year, but the prospects for an increase on last year's 1% dividend must be looking encouraging.
