The Yatango Model

 Does crowd-sourced customer service work? In this case, the numbers don't quite add up.

Last month, a new mobile carrier called Yatango was launched in Australia, with an intriguing new modular pricing model, backed up by an encouragingly customer-focussed mission, leveraging what they term ‘collaborative consumption’. A good review of how it works can be found here (Lifehacker). I encourage you to read it, since it is worth the look. The crux of ‘collaborative consumption’ is that discounts accrue as more customers join, and that the customer service is crowd-sourced among the user-base. Helpful people are rewarded. The focus is very much on social media. In fact, you cannot even sign up without a Facebook account.

For the nuts and bolts, Yatango is a mobile virtual network operator (MVNO) which operates on the Optus network, although it doesn’t provide LTE services (‘Yet’). It is also SIM only, as is increasingly the trend in this space, meaning you have to bring your own phone.

By running some simulations, Dog and Bone ascertained that Yatango’s customisable voice packs provide better value than comparable plans from Layer One providers such as Telstra and Optus.These results were consistent across most reasonable price points. However, the price difference is not especially substantial, and it should be borne in mind that the big telcos also provide 4G.

Then again, Yatango has a few benefits. It offers greater flexibility, since there are no contracts, and voice pack configuration can be adjusted month to month. On the other hand, Yatango costs considerably more than budget MNVOs such as Vaya, Amaysim or Kogan, who are equally as flexible. How does Yatango realistically hope to compete?

We ascertained that for Yatango’s plans to be at all competitive in the budget space, a customer needs to take advantage of the ‘collaborative consumption’ provisions. For example, bringing in a new customer generates a $20 discount to your account. Meanwhile, every time you successfully answer a fellow-customer’s query (as voted on by other users), you receive a 50c discount.*

As far as we can model, in order for Yatango to be even comparable to any of the truly budget resellers, a customer would have to be very active indeed. Let’s say you’re a lighter user, with a total Yatango spend of about $50 per month. Let’s say you bring in one customer per week (likely unsustainable) and help 10 of your peers – that will bring your monthly bill down to $25, which is at least in the ball park of the budget MVNOs, although it’s still quite a lot more than Vaya’s cheapest plans.

The obvious upshot is that the most helpful people will be the most rewarded. But here we run up against an issue with crowd-sourced behaviour, notably the shortcomings of finite rewards. The limit here is defined by the number of customers actually needing help each month. Only so many people will ever need help, therefore there are only so many credits that can be accrued by helping them. Securing these credits therefore becomes competitive. In fact, it becomes something like a game.

In order to gain enough credits for Yatango to be comparable to the other budget providers, a customer will have to do well at this particular game. Anyone who has spent much time on Whirlpool, Delimiter or any other tech site will probably have noted that the same bunch of people tend to spend all day on there. Like me, you might have wondered where they find the time. Anyway, Yatango’s crowd-sourced model is seemingly tailor made for people like this.

Now, I’m pleased that people providing assistance will be rewarded for their efforts, and the goal of the policy is admirable: people with problems will see them resolved.But I don’t think anyone should sign up to Yatango dreaming that they’ll earned worthwhile discounts merely by providing the odd bit of advice. That’s just not how the internet works.

For whatever reason, some people just have to ‘own’ being helpful. Various ‘up-voting’ systems merely exacerbate this, which is to say, they make it even more game-like. In many ways it’s a good thing – you feel like you’re levelling up while helping people. By making it competitive you incentivise certain outcomes. But the downside of it being competitive is that competitive people will gravitate towards it.

Yatango is not competitive with the budget carriers when it comes to price, and although it is on average slightly cheaper than comparable plans from the big carriers, it offers none of their advantages, such as LTE (4G). Furthermore, I cannot for the life of me see how general users wil gain enough benefit from the ‘collaborative consumption’ model to see true value. Five years ago, it would have seemed revolutionary. In 2013 it's more of a nice idea that seems unworkable unless the prices are slashed heavily. This is a shame, since they seem like good people trying to do the right thing.

 * Numbers are taken from the Yatango website, and were correct at time of publication.