The Prepaid Press - February 2009 - (Page 8)

PREPAID BUSINESS February 15 · 2009 - 8 5 MINUTES WITH Darren Dat Lu, CEO of Lunex Group Interviewed by Gene Retske Lunex is a comparatively new company, founded in 2004. The creation of Vietnamese Americans who have used prepaid phone cards as consumers, Darren Dat Lu and his team have recent memories of what is right, and what is wrong in the marketing of prepaid telecom services. Based on their consumer experience, Lunex’s primary focus is on providing a quality product that consumers will keep buying. Darren shared his thoughts and insights on the prepaid telecom industry. GR: At The Prepaid Press Expo last August, you were telling me about your introduction to prepaid calling cards. Could you tell me that story again? DL: I didn’t have a real need for phone cards for a long time. But, as my interest grew, I started asking about them, and which were the best cards for me. A store owner I knew and trusted said, ‘Well, Darren, for you, you should use this card.’ I just listened to the store owner. GR: So, the most important branding is the store itself? DL: Yes, but they will sometimes sell cards that give them the highest profits. But, if they have problems with those cards, and a lot of them get returned, they will stop selling the cards. GR: So, what was your experience in using the card you bought? DL: A friend of mine told me to use up the card right away. That seemed odd to me. From there, I started looking into the industry, and realized that there are all kinds of things in the cards. Funny stuff happens. The hidden surcharges, the fees, hangup fees, activation fees, maintenance fee. Then, rounding minutes to 5 minutes, 10 minutes. All kinds of things in there. If consumers feel that there are a lot of hidden fees in the phone cards, the consumers will buy 2 dollar cards. GR: Why? DL: Because if you are going to lose money anyway, you want to lose $2. You want to lose the least amount. You don’t want to buy a $10 card and then lose that total amount. So, today, we see people buying 5 $2 cards, instead of one $10 card. GR: At one time? Same card, same brand? DL: Yes, at one time, same card, same brand. We thought of making a whole row of $2 cards that stick together. GR: Like lottery tickets. DL: Yes. We thought of that. But, the world does not have to be like that. A $10 card is better for the consumer. They can even remember the PIN. And, if you take it to the next level, which is PIN-less, customers love it. The convenience of being able to just put an access number in their phone, just click on a button and get access to the system. People just love it. But, to love it, you have to trust it. Once you see that you don’t lose money, you start to put $10, $20 even $50, then $100. If you call a lot, it is very convenient. GR: So, how did you create cards that customers trusted? DL: We didn’t want to get involved in funny business, but, at the same time, we realized that prepaid phone cards were an opportunity. That is why we decided to do something that was truthful, that is honest to the consumers. We believe those cards will stick. So, we started with prepaid calling cards, predominantly to the Vietnamese market. We hired a well known Vietnamese actress, and put her on radio and TV. That shocked the market. Even though our cards offered a few less minutes, people gave it a try. When they try our cards and find that they work as promised, they stick with them. GR: You think that consumers respond positively to clean cards, cards without all the tricky fees and conditions? DL: Everybody wants a good card, a reliable card, but they had to deal with cards that seemed to work well for them one month, but not in subsequent months. That is something that happened very, very often. It took a long time for consumers to believe in the card because many cards sang the same song, but did not deliver. We don’t believe in singing a new song every two months. We met a lot of distributors who feel the same way, but they are caught in this vicious cycle. Every two months, they have to go out and sing a new song about why the new cards are good. Why sing a new song every two months, or with every new label? We believe that you should build a brand, and last. It will save you money in the long run. Especially with the challenging economy we have now. If you have to sing a new song, that’s new card printing, new design, new posters. That’s a lot of work, and a lot of cost. Now, you have to introduce the new cards and sing a new song again. And, then the store owner has to sing the new song too, to the consumer. So, building a brand will save a lot of money, especially in this tough economy. GR: So, you built your brand based on customer loyalty? DL: Yes, that is how we built our brand in the phone card business. Why come out with new labels every two months, new posters and new cards, promising more minutes? Why not focus on providing a reliable card? GR: Do the same principles apply to MVNO services? DL: Definitely. But, it is a bit more complex. In the MVNO world, you are dealing with inventory, expensive inventory. Handsets can cost $100, and you have to buy thousands of them. It’s not like phone cards that are just paper. You can’t cut corners. I also believe that this is the perfect time for prepaid wireless. Everybody has to have a cell phone nowadays. GR: At least one. DL: Right. But, consumers are looking to cut costs and cell phones could add up. In Consumer Reports, January 2009, they did a comparison on all these cell phones. Their bottom line recommendation? The way to go in such a harsh market is prepaid. GR: Why did they recommend prepaid? DL: Because you have more control of your minutes. With postpaid, there are all these fees and services that are added on to your bill. With prepaid, you know exactly what you are paying for, and you have more control, more discipline. If you go over with postpaid, you get hit with a big bill. GR: So, what should MVNO dealers do in these times, given the opportunity? DL: The dealers’ bottom line is constant traffic. If they don’t have constant traffic, they lose. If they have just one product, it is going to be a major challenge. They need to have multiple products. GR: What do you see in the near term for 2009? DL: I think there will be an increase in phone card providers that will be shut down. Either due to economic hardship or regulatory challenges. You should look for cards that are trustworthy. Pay attention to company’s D&B ratings because sometimes it is scary to see what is happening with different companies out there. But, there is also an opportunity to expand because there will be an increasing number of cards that don’t work. Darren Dat Lu is CEO of Lunex Group. Visit Lunex online at www.lunexgroup.com. I will take a hundred $2 quick picks to Vietnam http://www.lunexgroup.com http://www.dvrg.com http://www.dvrg.com

Table of Contents Feed for the Digital Edition of The Prepaid Press - February 2009

Payments & Processing: Prepaid Debit Card Trends Contents The Retske Report: A Courthouse Divided Regulatory Rundown Prepaid Business: 5 Minutes With Darren Dat Lu, CEO of Lunex Group Prepaid Telecom: International Mobile Top-Up Virgin Mobile USA Compliance Plan Accepted by NYSE Tata Communications Launches One IP World KIT Communications Selects PhoenixSoft Sprint Nextel Increases Payments to Virgin Mobile Motorola, Sprint and Boost Mobile Welcome iDEN Flip PhoenixSoft Announces New Program Virgin Mobile Partners with Susan G. Komen The State of Prepaid Technology: Prepaid Virtual Operators Emerge Prepaid Wireless Roundup Boost Launches ‘Monthly Unlimited’ in More Cities Cricket Selects Callidus On-Demand Solution ICC Worldwide Expands Prepaid Products IPsmarx Launches SIP Based Card Platform The Legal Line Prepaid Telecom in Brief Pinnacle Rolls Out Ingenico’s Payment Terminals TransCard Makes Staff Announcements H&R Block Bank Selects MasterCard Avangate Pays Vendors and Affiliates with Prepaid MC TIO Networks Announces Grant of Stock Options TSYS Offers Enhanced Loyalty Solution First American Payment Systems Inks Deal with RDM Hypercom Introduces HyperSafe Remote Key System i2c Expands Team iPayStation Integrates with Movistar Payments & Processing in Brief New Javelin Report on Evolving Prepaid Card Market TransCard, Socialwise Plan to Revolutionize Prepaid Congresswoman Introduces Financial Literacy Act Industry Analysis on Mobile Banking Available Gift Cards & Promotions: Seven Cost-Conscious Marketing Strategies for 2009 Ntreev USA Announces PvP Tournament hhgregg to Help Circuit City Customers NRF Releases December Industry Sales Cellfire Expands Kroger Mobile Coupon Program Petrofix.com Offers a New Fuel Solution Gift Cards & Promotions in Brief Our Advertisers Contact Us

The Prepaid Press - February 2009

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.