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By Mavis Scanlon
Cable operators will have to use every marketing tactic at their disposal if they hope to strengthen their foothold in the $196 billion local and long-distance telephone markets while fending off new entrants such as Vonage. They will have to consider every strategy, including bygone sales techniques and, yes, maybe even aggressive pricing.
Time Warner Cable, for one, spent last year deploying VoIP service throughout its divisions. For each launch, the company started its marketing push with e-mail, followed by direct mail, telemarketing and door-to-door sales.
That's right--door-to-door sales.
Time Warner Cable's Charlotte division, for instance, put together a dedicated "sweep team" of seven or eight reps that sold voice service to current customers (of course, they sell other services as well). The result? A close rate of 30%.
"That's first knock, first contact," says Sam Howe, SVP, marketing voice, for Time Warner Cable. That brassy sales technique is just one reason for the company's swift growth in phone customers over an 18-month period. As markets ramped up, the company placed TV, radio and print ads with the message "Phone Made Simple."
But will aggressive sales techniques be enough? In the war for customers, battles will be fought over price, features and brand--not necessarily in that order.
"Cable will have to be hyper-aggressive," says Max Smetannikov, VP, analysis and business development, at Global Advertising Strategies, a consulting firm. "The cable industry first has to put some money into product development, and they have to be more aggressive on price."
Among cable operators providing VoIP, Smetannikov found Cablevision's was the strongest offering based on its pricing and features. In a study of the entire VoIP market, Global Advertising ranked Vonage No. 1 based on the attractiveness of its bundle, pricing and features.
Howe admits there will be pressure on price. Time Warner Cable is positioning its $39.95 package that includes in state, long distance and a core set of seven features as a better deal than customers can get from an incumbent.
"We don't plan on competing on price forever, because that kind of competition doesn't last you very long," he says. "But we won't be unaggressive about it if we need to be, and we want to move toward bringing in features that differentiate us."
Comcast, which is rolling out VoIP service to 20 markets this year and expects to launch in all its markets by the end of next year, says it is not going to compete with alternative providers such as Vonage on the basis of price alone. Comcast is pricing its phone service at $39.95/month when bundled with video and HSD; $54/month on its own.
"We are looking to provide value from a price perspective but also build in some enhanced differentiated feature functionality to give users more control over their communications experience," says Tom White, VP, marketing voice services group, for Comcast.
Comcast's strategy for its voice product will be similar to its high-speed data strategy: adding value by adding features. For its VoIP service, Comcast is adding better battery backup, higher-quality customer service and the choice of having all jacks in the home turned on for the service, White says.
Comcast is hopeful that VoIP service will boost high-speed data and video sales. Similarly, Howe at Time Warner Cable says that in Syracuse, N.Y., and Portland, Maine--the two markets where digital phone has been available longest--phone sales have given HSD sales a shot in the arm.
"It's a catalyst for resurging all products," Howe says. "You have a new story to tell. We've marketed Dish Winback to death--this is an opportunity to talk about something new, and then start talking about video again."
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