Using Information to Drive Marketing: Packaging, Product Development and Promotional Offers

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Using Information toDrive Marketing
Packaging, Product Development and Promotional
Offers

• Jim Weigert
• Vice President, Marketing Product Development
• FairPoint Communications

August 2006
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Outline

• Brief company profile
• Information
• Sources
• Reports
• Packaging
• Illustration Long Distance
• Product Development
• Illustration Full House triple play
• Promotion
• Illustration High Speed Data offers

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FairPoint Profile

• A leading provider of communications services in
  rural communities
• Established in 1991 to acquire Rural Local
  Exchange Carriers (RLECs)
• A leading acquirer of RLEC properties, with 33
  acquisitions completed since 1993. Recent
  acquisitions include
• Cass County Telephone closed July 2006
• 8,600 Access Line Equivalents
• No Cable
• Unite Communications will close August 2006
• 4,200 Access Lines
• CLEC voice, video and data
• Currently operate 29 incumbent RLECs in 18 states
• Average density - approximately 13 access lines
  per square mile
• Our most rural areas approximately one line per
  square mile

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FairPoint on the Map

• Operates 29 RLECs in 18 states
• NYSE (FRP)
• Wholesale division FairPoint Carrier Services

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Information

• Sources
• Front line feedback
• Customer comment cards
• Operations teams
• Reports
• Billing system reports
• Disconnect reasons codes
• Front line tally marks

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Tracking and Response Systems

• Cable competition report
• Updated and published quarterly
• Competitive response team
• Two employees from variety of locations who
  subscribe to cable competition
• Additional employees who have other competitors,
  i.e. Vonage, Time Warner, Comcast
• Reports
• Access Line and HSD disconnect reports
• Quarterly summary reports
• Response systems

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Cable Competition Report

• Elements of report
• Location
• AL affected
• Estimated HHP affected
• Actual cable provider
• HHP covered by cable TV/percentage
• HHP covered by cable modem/percentage
• HHP covered by cable VOIP/percentage

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Disconnect by reason code

• Elements of report
• Reason code and reason
• Week or month quantity
• Total and breakdown by percentage for each reason
• Requires close monitoring
• Weekly report, analysis and conference call with
  Customer Sales Service leaders
• Checking for accuracy in reason code disposition
• Looking for trends
• Watch for changes over time

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Reason Codes - examples

• Involuntary
• Non-payment/Reconnection
• Misc. Billing Update
• Permanent Non-Payment
• Temporary Non-Payment Disconnect
• Moved out of service area
• Seasonal/Student relocation
• Resale disconnect
• Usage-didnt use enough
• Death
• Voluntary
• Price switched to competitor
• Service switched to competitor
• Too expensive financial
• Removed service for cellular
• Removed service for VOIP
• Service never connected
• Service poor service
• Promotional end of promotion

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Weekly product sales report

• Elements of report
• Gross adds
• Gross disconnects
• Net adds
• Ending customer base
• Goals weekly and monthly
• Churn
• Average trending YTD and 4 week
• Penetration to AL

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Disconnect trend summary

• Elements of report
• Reason
• Total for each time period
• Percentage breakdown
• Net change in period comparisons
• Percentage change in period comparisons
• Weekly information turned into monthly and
  quarterly comparison
• Review and compare to previous quarter and same
  quarter, previous year
• Watch net losses not just gross losses

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Response to reports

• Reports generate
• Refresher training
• Marketing bulletins
• New training programs
• Trouble ticket survey
• Customer installation survey
• Promotional task force
• All affected parties schedule call and refresher
  training or update to marketing tactics and
  promotions

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Packaging

• Using information to create new packages/plans
• Illustration Long Distance

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Context

• Long distance penetration stagnant
• In locations with high penetration, had low
  actual usage per customer
• Product line was seeing no real growth
• VOIP and Cable offers promoting unlimited local
  and LD packages creating noise and awareness in
  the marketplace
• Needed to create urgency and attention to access
  line, long distance and calling features and
  increase relevancy of marketing message with
  respect to the products

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Strategy

• Build packages of access lines
• Bundle access line with popular features and long
  distance packages
• Introduce simple, easy to understand packages
• Present LD elements similar to cellular approach
• Launch and monitor unlimited LD option to
  understand real customer usage patterns

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Test

• Selected 2 markets
• YCom in Western Washington
• GTCom in Northwestern Florida
• Introduce sets of packages
• Limit/qualify usage to residential and voice only
  to minimize risk

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Initial launch

• Focus on unlimited plan
• Manual process to look for abusers
• Notice from supplier if customer went over
  certain daily LD threshold
• High usage customers contacted before bill gets
  too high
• Simplify for sales channels

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Packages

• Initial analysis, pricing and element definition
• Summary
• 4 AL packages each with a small and large
  version
• BTM plan
• 150 Minutes LD
• 300 Minutes LD
• Unlimited local and LD
• Features
• CW, Caller ID and Voice Mail small
• Plus 5 or 6 more CF large
• Total of 8 choices built to allow rep to sell
  up and/or across

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Initial launch creative

• Very focused on Unlimited Package

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Initial results

• Some regions grew MOU 100
• Up to 60 new LD customers
• Penetration to Access Lines increased 10
• Adding new block of time package
• Provided MOU distribution detail actual
  customer performance

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Post launch analysis reports

• Significant drop in margins
• Need for capping highlighted

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Conclusions

• Cap unlimited plans _at_ 1500 minutes
• Re-position low-cost price per minute
• Evaluate 600 minute package
• Introduce ala carte MRC
• 1.99
• Increase value for packages

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Evolved creative execution
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Product Development

• Using information to create new products
• Illustration Full House

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Context

• Public opinion/research points to customers want
  one bill and one provider
• In most cases, high speed internet service from
  the cable company was much more expensive than
  our standard pricing IF the customer did not have
  video
• Goal displace the video product from the home
• Customers already understood discounts with AL
  packages early success
• Customers expect discounts if they spend more
• Pre-emptive approach to cable companies offering
  voice
• Research pointed to stickiness with bundles

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Strategy

• Bundle voice, video and data together
• Simplify the approach to make purchasing easy
• Use video product where we have it, partner with
  DirecTV where we dont have our own video
• Create mini-brand to build awareness that
  FairPoint can cover your whole household
  communication needs
• Drive revenue per customer up with more products

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Test

• Selected 1 market
• Columbus Grove
• FairPoint has all three products, but competes
  directly with Time Warner for HSD and Video
• Time Warner had announced to public the launch of
  digital phone service
• Introduce Full House concept
• All three services for one low price
• Target promotional price at under 100
• You save more when you buy more
• Watch effect on revenue, churn and budget goals

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Initial launch

• Focus on promotional offer and price point
• Increase awareness of all three products as one
  bundle
• Use key messages
• Save more when you buy more
• One bill, one stop, one convenience
• Stress quality of products from home town team

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Initial launch creative

• Very focused on Talk, Surf, Watch
• Savings and choice called out

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Initial results during test period

• Market exceeded budgeted objectives in all three
  product lines
• 21 above budget on HSD customers
• Churn on HSD is approximately 2/3 lower
• GM variance in HSD 12 above budget
• GM variance in video 8 above budget
• XX of customers bought Full House
• 36 of HSD customers
• 14 of video customers
• 6 of phone customers
• TW has still not launched phone
• CSSRs see less promo hopping

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Creative evolved

• Double and triple play
• full house is the introduction of our new bundles
  as well as product specific color schemes
• These new colors will be implemented into new
  literature, web site, etc

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DIRECTV
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Product and offer focused
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Promotion

• Using information to direct promotions
• Illustration High Speed Data Offers

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Context

• Disconnect reports HSD disconnects
• 2 reason Usage didnt use enough
• 3 reason Financial too expensive
• Both point to value perception issues
• Challenge How do you address value perception?

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Strategy

• Provide an environment that builds customer value
  perception
• Improved new customer communication
• Longer promotional periods
• Reduce sticker shock through increased
  communication and step promotions
• Use multiple contacts in new customer life cycle
  to increase value perception
• Pre-install
• Post-install
• 60 days past install
• Prior to promotional offer expiration
• Introduce value add features and enhanced product

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Test

• Phased approach
• Promotional offer selected all markets
• Eliminate first month free
• Reduce discount to be able to extend for a longer
  period of time
• Revise new customer communication
• Develop system to alert new customer calls
• Introduce customer comment cards
• Introduce follow-up calls after install
• Develop campaigns for customers whose promotional
  offers are ending

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Initial results early

• HSD churn starting to stabilize and decline
• Ahead of HSD unit goals by 5 in 1Q and 2Q of
  this year
• More results TBD

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Information

• Variety of sources
• Variety of reports continue to evolve, change,
  delete and add
• Allow data/information to drive you actions
• Packaging
• Product development
• Promotional offers
• More

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• Thank you