Customer-Centered VoIP Marketing

1. Customer-Centered VoIP Marketing Internet Telephony Conference & Expo East 2007 Presented by Karen Strouse Management Solutions Fort Lauderdale, Florida, USA

2. The past The present The customer The Customer Defines the Business Some of them are strikes, and some of them are balls…. …and I call them as they are. …and I call them as I see them. …but they are nothing until I call them.

3. 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 Bundle Mythology - Debunked

4. 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.

5. 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

6. Marketing Strategies • Product development • Pricing • Branding • Segmentation • Database marketing, customer value and retention

7. Product Development:Revisiting the Diffusion of Innovation Curve After: Crossing the Chasm, Geoffrey A. Moore Sell to the end user (Main Street) Build Market Share (Tornado) Niche Marketing (bowling alley) Minimal Marketing Focus Market Strategies Product Leadership Customer Intimacy Value Disciplines Operational Excellence

8. Product Development:In-Stat findings

9. 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

10. 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

11. Price:Telephia research findings Price is the most important factor for customers selecting a bundle

12. Price:Aim for Sustainable Critical Mass • Create a profitable commodity service in price-driven segments • Practice price discrimination • Event-based pricing • Exploit customer initiative

13. 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.

14. Branding:Value Differentiates Service provider commands price premium Market Leader Bias towards a particular service provider Preferred Service provider’s reputation affects purchase Brand Purchase decision based on price alone Commodity

15. 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

16. Segmentation:Price/Service Systems Integrator Retail Turnkey Services Wholesale Price-driven segments Resellers Education, local government, not-for-profit Consumers, low-end Service-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 Opportunities for new entrants Offer ancillary services, information services, support Target a vertical or geographical submarket Target a demographic or geographical sub-segment After: Strouse, Karen, Marketing Telecommunications Services: New Approaches for a Changing Environment, Artech House, 1999

17. 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

18. 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

19. 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

20. 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

21. Value and Retention:Churning for Small Discounts Source: TNS Telecoms

22. Thank you! Karen Strouse www.karenstrouse.com