by Chris Lehner
(Reprinted from the July/August 2006 issue of NTCA's Rural Telecommunications)
Recently, United Airlines announced a partnership with a high-profile consulting firm on an ambitious customer-service initiative. Still suffering the PR bruises it suffered emerging from bankruptcy in January, United hoped its workforce could help it change passengers' perceptions of the airline. The best way to accomplish this, the carrier reasoned, was to emulate the consulting firm's success with such customer-centric companies as Starbucks and Nordstrom. Randy Rotondo, a United human resources executive, said the airline's goal was to make sure its employees have "customer service in their DNA."
Community based telecom providers should see a strong connection between United's image efforts and their own positions in a telecom arena growing increasingly competitive. United, a legacy carrier, finds itself in an industry being redefined by upstart, low-fare competitors that do not have to account for the generations of costs they incurred building their businesses. And the company has to woo a customer base more interested in "What have you done for me lately?" than any historic allegiance to the carrier their parents flew. For community based providers, it ought to sound like déjà vu all over again.
While "desperate times call for desperate measures" may overstate it, there should be little argument that the gloves are off in the telecom marketplace. Let's see: IP-based technologies are redefining the way telecom works ... the list of rivals now includes companies like Vonage and Skype ... cable TV providers are packaging voice, and voice providers are packaging video ... and, according to the marketing hype, everybody offers a better, more economical package than everybody else. What's an independent telecom marketer to do? How do we make the connection between all the choices and making a customer's life better? How do we compete toe-to-toe with AT&T and Verizon, Comcast and Time Warner, Vonage and Skype ... and down the road, perhaps even Microsoft or Apple. On a dollar-for-dollar basis, whether we're talking price or marketing budgets, we don't, and that's what we talk about below. First, however, perhaps we should review a few basics that apply to one and all.
On the Campaign Trail: Marketing Strategically
As we contemplate a response to increased competition, one place to start is with a plan - and one with a strategy to manage it. As far as marketing is concerned, the plan won't work if it's not managed strategically. The essence of any strategic plan is to identify where you want to go; the essence of strategic management is to get there - to establish the best route, to learn whom you need to count on (your markets) and whom you need to account for (your competitors), and to set aside appropriate resources - time, dollars, and people - to reach your destination.
Today, management must examine its structure, culture, and operational efficiency to determine its organizational strengths and weaknesses, and market viability. Only then can it react and strategize. Gone are the days when community based providers could do things because there's little risk, offer a service to see if there's interest, or operate as if in a vacuum. Managing the marketing plan strategically now entails developing the best specific means to a specific end, and plotting the most direct route to achieve measurable objectives.
How can you hope to compete successfully against the forces with which you now do battle? One way is not to let the technological stars get in your eyes, but continue to play to your strengths that have always led to your success. Amid the anarchy of cutthroat competition, we must not let the technological wonders mask our understanding of simpler things, such as appealing to customers' quality-of-life concerns. Don't lose sight of the power of local or the quality service you've always provided. That's what you do; that's what you're known for; that's what differentiates you from the others.
While "disruptive" technologies and the purveyors who wave them around offer a lot of sizzle, telecom providers must not lose sight of the steak; i.e., the services those technologies make possible within a market-driven environment. Ed Niehaus, president of Niehaus Ryan Wong, Inc., the PR firm that helped Yahoo launch its Web directory/search engine, credits a branding strategy, not high-tech hype, with Yahoo's success. "Our first strategy meeting was about positioning Yahoo in the fast-moving Internet market," Niehaus says. "We didn't want to be covered as a technology... we wanted to evangelize about how the Internet would change people's lives." Thus, Yahoo sought to build a "folksy, anybody-can-use-it" image. While independent providers may not be promoting their own search engines, they do face the same temptation to go overboard on technology, while overlooking the benefits the resulting services offer their customers. The broadband age is no time to lose focus on what's important.
Whether it's voice, data, or video - or any bundle combo - you have to know who wants it and how much they're willing to pay. The ultimate outcome of marketing, after all, is sales; the ultimate objective of marketing management is the establishment of clear, measurable actions to make those sales. Understanding customers' perceptions of any service or product - old or new - within the context of a competitive marketplace is key to sales success. Market surveys and demographic analysis help define the customer base and determine buyers' willingness to embrace new services and their price points, and a comparative review of other providers - regardless of technology used to deliver the product - provides insight on your competitive viability.
Creative Positioning: The Best of Both Worlds
Returning to the topic du jour, if we can't match the big guys on price and/or marketing budgets, where do we turn? In a word, positioning. And, in addition to "creatively" positioning your product or service as customers' best option and explaining the benefits and advantages in simple terms, it's equally critical to market or promote the company itself. In a sentence, how is your company perceived? Before you can market strategically, you must be sure the organization's image and identity (the company's brand, if you will) is creatively positioned and customers are aware of the company's credibility and value to their community.
One company that has met the positioning challenge head-on is Chesnee Telephone in South Carolina. Located roughly halfway between two growing urban centers, Greenville-Spartanburg, S.C. and Charlotte, N.C., Chesnee has been "connecting its community for more than 70 years." About three years ago, the company began to experience intensified competition for itself, partly as a result of the growth of the two nearby urban markets. "It was like we woke up one morning and were beset on all sides," recalls Annette Williams, special services manager. "Some aggressive CLECs, Charter Cable, and the satellite companies all had rushed into the Spartanburg market, and it didn't look like they were going to waste much time coming into ours. In fact, Charter began promising voice service more than a year ago - while it's run into difficulties rolling it out, we felt we had no choice but to come up with an answer."
Chesnee felt the competitive pressures in two distinct ways: First, its traditional customer base was being seduced by all the hype and promises that the new entrants were making in the nearby markets. Second, some of the growth was spilling into Chesnee's rural service area. "Chesnee had always made sure our communities could count on quality service," Williams observes. "Long distance, dial-up and high-speed Internet, and cable TV business - all because we wanted our customers to have access to all the advantages telecom offers. Now, we realized we had to sharpen our competitive appearance but not reduce our community focus. So, we moved to update our image to fit what customers expect of a service provider today, but we also made it a point to reassure our longtime customers we would not retreat from our service mission."
Translated into a strategy, Chesnee's response was to position itself as part of the new market structure by updating its website, adding nationwide calling to its long-distance choices, offering a variety of DSL and cable high-speed plans (and, more recently, doubling the speeds at no additional cost), and rolling out a variety of double-play and triple-play service bundles. At the same time, Chesnee never lost touch with its customer base. For example, while promoting the video results of upgrading to "digital" cable TV, Chesnee has maintained its basic service tier and designed one of its service bundles as voice and cable TV. Why? "A lot of our customers are older, on fixed income, and have not yet gotten into the Internet," notes Williams. "But we specifically did not want to leave them out of all the exciting new things we're doing."
Creative Positioning: Crunching the Numbers
A little south and east of Chesnee, Sandhill Telephone Cooperative in Jefferson, S.C., faced a different positioning challenge. Serving a rural area that to date has not seen an abundance of direct competitors, Sandhill still has had to react to wireless migration and the shrinking loyalty of a customer base with declining ties to the cooperative. "It's one thing to talk about access-line loss," says General Manager Irvin Williams (a friend of but not related to Annette). "We all have to cope with the decreases in the number of access lines. It's quite another thing to talk about real people."
For cooperatives, there are numbers, and then there are numbers. When the issue is co-op members, the talk gets serious. "About a year ago, our data showed we were beginning to see a real decline in our membership numbers," remembers Williams. "That was a real eye-opener. We felt we had to promote the concept of cooperative membership, so we began to look at our services and our marketing to do just that." Under a "Membership has its benefits" promotional banner, Sandhill introduced residential calling plans last summer, offering unlimited local and varying nationwide minutes. In addition, the co-op came up with another way to enhance the perceived value of membership. "We're all aware that the SLCs and other surcharges are a source of tremendous customer irritation," comments Williams. "So we decided to include the $6.50 single-line SLC in our package price, as one more member ‘benefit.' It was a win-win for us - the members like the plans; they've told us they like the package pricing; and, we've found a way to strengthen members' ties to their cooperative. "
Sandhill came up with another good tactic in creative positioning with its calling plans. While targeting residential members with the calling plans, the cooperative decided to call business customers' attention to its "membership benefits" message. "We did not want to leave our business customers out as we marketed our new plans and rates," emphasizes Williams. "About the same time we sent out our residential promotion, we told our businesses that Sandhill recognizes that business customers ‘are members too.'" Sandhill sent out a letter with information on its new "Business Value" long-distance plans offering reduced rates based on monthly usage. To drive home the benefits idea, Williams notes, "We let businesses using our long-distance service know that ‘to take advantage of our new rates, you don't have to do anything - you don't have to come in ... you don't have to call ... nothing.' We got a tremendous response."
Marketing For the Times
Competition is no longer an abstract threat, but a fact of life. And as technology and bundles erase the differences between service providers, the competitive fires are burning much more intensely. In the broadband era, marketing and public relations will overlap more and more. In a bygone era, customers might have been content to take your word for it - choice was not an issue. Now, customers need to know what services - and which service providers - best meet their needs and how much their options cost. Your viability will depend on your success in getting your name and reputation out in the community through creative marketing - promoting your products and brands - and public relations - promoting yourself.
In an important sense, marketing is as much a state-of-mind as it is specific activities. As part of its effectiveness, marketing feeds off other issues of consequence to a company - say, positive demographic shifts or regional economic growth. On the national scene, marketing has taken on an aggressive, rock-and-roll tone - Cadillac uses Led Zeppelin to sell luxury cars, Bob Dylan protest songs hype life-sustaining HMO care, and the Rolling Stones seem to be selling everything. Marketing professionals also have sought to capitalize on Americans' renewed interest in restoring the sense of community once such a staple in our way of life. Trying to connect with that sense of community, savvy consultants preach that people do not like dealing with big, faceless conglomerates; they want small, down-home businesses with which they can identify. Thus, responding to their research, big faceless conglomerates spend vast sums of money trying to look like small, down-home companies.
Community based telecom providers really are down-home businesses, locally owned and operated. Because they've always had close relationships with their customers, the independent companies and cooperatives serving rural America know full well the importance of connecting with the individual. The sense of trust, reliability, and "being there" that a local company can instill in existing and potential customers is a tremendous strategic advantage in an industry where competition is growing more and more intense.
