customer-centered voip marketing

January 23-26, 2007• Ft. Lauderdale, Florida

Customer-Centered VoIP Marketing

Internet Telephony Conference & Expo East 2007Presented by Karen Strouse

Management SolutionsFort Lauderdale, Florida, USA


…but they are nothing until I call them.

Some of them are strikes,and some of them are balls….

…and I call them as they are.

The Customer Defines the Business

The past

The present

The customer

…and I call them as I see them.


Bundle Mythology - Debunked

• Everyone wants bundles, but...

• The motivation for bundles is one provider, one bill, but...

• Customers can’t wait for quadruple play, but...

• Fixed-access providers are well-positioned for quadruple play, but...

• Few buy bundles.

• The purchase criterion is price. Customers are suspicious of too much commitment.

• Most customers only bundle 2-3 services

• Many households don’t bother with conventional wireline voice


Bundling:Pyramid Research Report

From “Transforming Triple Play” research report

• Metrics routinely used by cable companies (measuring revenue-producing applications rather than customers) provide the best management information.

• Telcos routinely sell 1 to 1.5 services per customer; cable companies 1.5 to 1.9.

• Bundles do not compensate for substandard elements.

• Quadruple play availability provides portfolio flexibility. Wireless and VoIP displace fixed-line component in multiple play bundles.

• Discounts aren’t a proven catalyst for bundle sales.


The Good News about Bundles

• Bundles currently aid retention• Bundles could become more popular and

more sustainable when the value they offer is more than the sum of the parts

• The customer’s preferred bundle provider is the best at the service that matters most


Marketing Strategies

• Product development• Pricing• Branding• Segmentation• Database marketing, customer value and

retention


Product Development:Revisiting the Diffusion of Innovation Curve

MinimalMarketing

Focus

NicheMarketing

(bowling alley)

BuildMarket Share

(Tornado)

After: Crossing the Chasm, Geoffrey A. Moore

Sell tothe end user(Main Street)

ProductLeadership

OperationalExcellence

CustomerIntimacy

ValueDisciplines

Market Strategie

s


Product Development:In-Stat findings

0 10 20 30 40 50 60 70

Percent of broadband households

Using VoIP

Using IM

Downloading music

Mobile text messaging

Mobile email


Product Development:Fundamentals

• Customer service expectations– Network reliability– Customer care– Technology innovation

• First-mover advantage is critical• Some of the most successful launches have

been surprises


Price:Pricing Structure Shapes Market Development

• Sprint introduction of per-minute pricing• AOL flat-rate monthly service• Internet service, Europe vs. US• Wireless penetration, Europe vs. US• Monthly flat rates or large buckets of minutes

for wireless and long-distance


Price:Telephia research findings

Price is the most important factorfor customers selecting a bundle


Price:Aim for Sustainable Critical Mass

• Create a profitable commodity service in price-driven segments

• Practice price discrimination • Event-based pricing• Exploit customer initiative


Branding:Demystifying Differentiation

• What it isn’t: 24/7 customer support, high-quality service, and service bundles.

• What it is: Offering something that your competitors don’t offer and probably can’t offer later.

• Exclusive access to content or partners.• Switching costs: the dual-edged sword.


Branding:Value Differentiates

Commodity

Preferred

Brand

MarketLeader

Service provider commands price premium

Purchase decision based on price alone

Service provider’s reputation affects purchase

Bias towards a particular service provider


Branding:Best Practices

• Know the market segment buyer values• Build on strengths• Support brand identity with infrastructure• Be prepared to invest in branding for the long-

term• Recognize that brand extensions have risks


Segmentation:Price/Service

After: Strouse, Karen, Marketing Telecommunications Services: NewApproaches for a Changing Environment, Artech House, 1999

WholesaleSystemsIntegrator

Retail TurnkeyServices

ResellersEducation,

local government,not-for-profit

Consumers,low-end

Price-driven segments

Multinational,Fortune 500,technology-dependent

vertical markets

Mid-sized and vertical markets

where technology isn’t the primary

mission-critical task

Small business, SOHO market,telecommuters

Service-driven segments

Offer ancillary services,

information services,support

Target a verticalor geographical

submarket

Target ademographic

or geographicalsub-segment

Opportunitiesfor

new entrants


Segmentation:Business/Consumer

• Select one segment or serve both through yield management

• High and low volume segmentation • Lessons from the airlines

– can practice price discrimination– benefits all users– benefits provider

• Vary all elements of the marketing mix


Segmentation:Value-Based

• Identify value of factors:– Acquisition costs– Total lifetime revenue– Cost of providing products and services– Length of customer relationship

• Compute net present value of customer relationship

• Focus on high value segments• Provide excellence in the customer’s view


Value and Retention:Anticipate and Meet Customer Needs

• Consult CRM applications to predict and prevent churn proactively

• Analyze customer databases to develop market segments based on buying patterns

• Decentralize authority to react to competitive initiatives

• Detect service problems before customers report them


Value and Retention:Churn

• Conventional wisdom: churn’s expense is the high cost of customer acquisition

• Less evident: wireless customers most likely to churn had higher average bills

• Customers will churn to service providers that make it easy to churn again

• Bundling reduces churn


Value and Retention:Churning for Small Discounts

27%

48%

62%69% 73%

0%

25%

50%

75%

100%

NoDiscount

5% 10% 15% 20%

Source: TNS Telecoms


Thank you!

Karen Strouse

www.karenstrouse.com

customer-centered voip marketing

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