Are You Solavei or Giffgaff? Two Social Commerce Business Models

So is your business more Solavei or Giffgaff?

Both Solavei and Giff Gaff are (relatively) new virtual network operators offering consumer mobile phone services, and both have innovative but different social commerce models. Solavei operates in the US, and Giffgaff in the UK:

• Solavei: $49 sign-up fee, and $49 per month for unlimited talk, text and data on T-Mobile’s nationwide network.  The social commerce twist?   Solavei uses social (peer-to-peer) selling to drive new customer acquisition: a networked referral program means that for every three new customers you sign up you receive $20/month, and for every three customers they sign up you receive $20 too.  So recruit three “trios” who each recruit 3 “trios” and you’ll be receiving $240 per month.  Yep, it’s MLM (mutli-level marketing) There are tweaks, with significant added bonuses for the total count of “trios” in your extended network beyond your recruits and their recruits, but you get the idea.  Admirers will call this AT&T’s friends and family – one of the most successful word of mouth campaigns, ever, reinvented for a social networking age.  Detractors will call it pyramid selling. 20K subscribers in first month.
• Giffgaff: Free sign up and $25 (£15) per month for unlimited text and data, and 400 minutes talk on 02 (Telefonica) nationwide network.  The social commerce twist; Giffgaff uses social (peer-to-peer) selling to drive new customer acquisition and customers provide each other with customer support.  Subscribers can order free SIM cards to send to their social network with an invite to join; and for every SIM activated, they receive $8 (£5) into their PayPal account or nominated charity.  In addition, customers service each other by answering queries and trouble-shooting and are financially rewarded for doing so. Currently Giffgaff has approx. 100K subscribers.

With one foot in Miami, and the other in London, it’s interesting to compare the two styles;

• Solavei looks and feels more sales-led; whilst Giffgaff is more community oriented.
• Solavei subscribers use the service and sell the service, whilst Giffgaff subscribers use the service, provide the service, and sell the service.
• Solavei is more social sales, and Giffgaff is more social business.

From a psychological perspective, Solavei has more appeal as a get-rich-quick-and-easy scheme with the promise of big rewards (although partially offset by reputation and experience issues with MLM)), but by employing subscribers as a customer sales force, Giffgaff is perhaps more psychologically “sticky” – subscribers are the company, rather than simply selling it, so are more likely to stay.  With less of an extrinsic incentive to participate, Giffgaff member are paradoxically less likely to defect. We’d predict that Solavei’s initial growth will be phenomenal, but customer tenure will be short – whereas Giffgaff will have a slower growth, but customers will remain longer.

What do you think?  Is your social commerce more Solavei or Giff Gaff?