JustDesserts

For service providers, selling the basic telecom services isn't that much of a challenge, if the price is less than that of competitors, and quality and reliability are as good or better. What creates a challenge for service providers is building relationships with customers and developing packages of enhanced services that the customers realize are not just luxuries, but absolute necessities.

The definition for what constitutes an "enhanced service" is somewhat like defining beauty ... it is in the eye of the beholder.

In some cases, "enhanced services" is another way for a company to say it's jumping on the bandwagon with a cutting edge technology simply because it's there.

"Time and time again, companies fall into the trap of being enamored of technology," says Debrah Schnackenberg, senior director of product marketing for voice and transport services at Time Warner Telecom Inc. (www.twtelecom.com). "That's a dangerous trap for companies to fall into. They're not truly clear about what the customers want, and they let the glitz of the product overshadow what the customers want or can afford."

For example, a service provider might provide 16 extra local calling features in a product bundle, but its business customers may only use three of those things, such as call forwarding, conferencing and caller ID, on a regular basis.

Enhanced services, according to many CLECs and ICPs that have had marketing success, are ones that they can build on top of their basic offering and use to strengthen their bond with the customer.

"What we might term as 'enhanced services' revolve around two themes: productivity and revenue generation," says Ted Gilmore, senior vice president of marketing for Allegiance Telecom Inc. (www.allegiancetelecom.com). These include services "we can offer to our customers to drive their core business better, from expanding market reach to dealing with customers on an easier basis, and how they can make employees more productive."

Creating ties that bind through less costly or unique offerings is a way for CLECs to attract customers. But there's more to it than that.

"It's not enough for a CLEC today to do the same thing that everyone else is doing. It's not all about price; it's about service," says Deborah Brown, senior director for corporate/ e-business in the telecom/ wireless practice of PepperCom Inc. (www.peppercom.com), a public relations and marketing firm specializing in e-business and technology markets. "They want to establish a trust with the customer."

Building that relationship and developing the necessary trust is exactly what companies like Allegiance, McLeodUSA Inc. (www.mcleodusa.com) and Time Warner are trying to do.

"The personal approach in servicing accounts has been a strong differentiator," says Steve Shirar, group vice president and chief sales officer for McLeodUSA. "We don't go looking for a quick hit, or to sell a particular product or push a particular agenda. We want to win those customers over."

McLeod has taken a "beat cop" approach, in which each salesperson is assigned his own geographic territory with approximately 1,000 prospects. The sales rep is required to visit each prospect at least four times per year.

"We cover the market like the morning dew," says Shirar, noting that McLeodUSA currently has about 1,650 salespeople, and it expects to add another 350 by the end of this year.

McLeodUSA also publishes telephone directories in many of the markets in which it provides service. This cross-marketing plays a big part in the company's branding strategy," Shirar notes.

The combination of salespeople on their beats and branding via the directories serves McLeodUSA well. The company typically experiences less than 0.5 percent churn, according to Shirar.

"From overall effectiveness and market receptiveness, we've found our approach to be accepted and replicable everywhere we go," he adds. "What's been powerful for us is the track record of low churn and high customer satisfaction."

The face-to-face approach is one with which other competitive service providers are finding success, whether they target large enterprises or the small to medium-sized business (SMB) market.

For Allegiance, which primarily serves the small business market, the primary marketing vehicle is the company's direct sales team. "The opportunity is tremendous because no one has consulted with these folks before," says Gilmore.

He says that Allegiance gets in the door to its customers with the basic telephony services, but then builds on top of those enhanced services to provide the functionality the customers need to improve their communications. These would include services such as website design, hosting, e-commerce and domain name service.

"When you're down at this end of the market, you're not dealing with early adopters of technology," he adds. "You're dealing with folks that have a business to run, but not a lot of help running that business."

Similarly, Time Warner Telecom relies totally on a direct sales force to sell its basic connectivity solutions, as well as add-ons that are in the planning stages. The company, which has historically focused on large enterprises, has started to move down market to medium-sized businesses. The company now offers Integrated Business Line, a product that combines Internet access, voice telephony and long distance onto a single DS-1.

Schnackenberg says that Time Warner Telecom is developing a unified messaging service to bundle with the Integrated Business Line and trunk products.

"What's so difficult about enhanced services is that there are a lot of bells and whistles ... there are a lot of solutions for unified messaging," she says. "While some of the technology is out there to provide glamorous services, the actual usage by those customers is always confined to what the customers think is valuable to their business."

On the Inside

Determining what products customers would find valuable and how to best market them to the appropriate audience is always a concern. But in these cash-tight times, getting the most bang for the marketing buck is even more critical.

Many CLECs use their own custom-built internal systems to organize their marketing programs. For instance, McLeodUSA relies on MAX, its core back-office system, to profile the market and model the company's strategy. Allegiance and Time Warner also have their own internal systems that help identify customer service needs and aid in the development of their marketing strategies.

Some companies now specialize in developing software and web-based resources that will help telecom providers and enterprises organize their marketing programs, gain speed to market with new offerings and save some dough here and there.

One such company is Impresse Corp. (www. impresse.com), a provider of enterprise collaboration tools. Earlier this year, the company launched its Marketing Resource Management (MRM) solution, which provides a platform through which telecom providers and other large enterprises can control all aspects of their marketing efforts.

"The reason we're targeting telecom companies is that they're trying to figure out how to develop marketing plans. Branding is a huge issue, including bundling and direct mail ... and these are pretty compelling ways for them to acquire and retain customers," says Avanish Sahai, Impresse's vice president and general manager. "As markets get tighter, they need to be more selective how they spend money, and find out who are the most profitable customers and what campaigns work for them."

The Impresse MRM is browser-based and allows for easy control of all phases of the marketing process from creative execution, which includes creating a budget and timeline, to collaboration, to reporting and analysis of results.

Measuring the results of a marketing plan is key, but it's often something that is difficult to do and often overlooked, says Sahai. MRM ties in with companies' customer relationship management (CRM) systems, and "we can show them how much they've spent per lead," he adds. "This is critical as budgets are getting tighter."

Impresse MRM makes marketing more efficient, thus saving companies time and money. Because communication among everyone involved in the marketing efforts is facilitated with MRM, companies can expect to shave 20 to 30 percent off the time it takes to implement and complete a marketing campaign. And companies can save up to 40 percent of the costs of those campaigns as well, says Sahai.

For example, Sahai notes that as a result of efficiencies related to using the Impress solution, General Motors Corp. (www.gm.com) cut about 12 percent--or $72 million--out of its $600 million annual marketing budget.

Impresse MRM is sold on a software licensing basis, with pricing based on a company's marketing spending and number of active users. The typical configuration runs between $800,000 and a few million dollars, says Sahai.

Whether plans to market the service are developed and managed in-house or with a solution such as Impresse's, or whether the enhanced services include unified messaging or some fancy data application, what ultimately is most important is gaining the customers' attention with good service and a reliable offering.

"It really comes down to positioning the company to rise above the fray," says PepperCom's Brown. "It doesn't matter what the service is today. Getting that loyal customer base and gaining trust [is what matters]. And you know that customers will come back to you all the time because they know they can rely on you."