It’s really easy for ISPs to assume that customers want what we are selling. I have clients that march into a market and assume that the majority of customers in the market will gladly change to a fiber network if they are using an older technology today. But sometimes we find that customers don’t want our products.
I have a number of examples of this. Many years ago I helped a client who was building traditional HFC cable TV networks and one of the markets had a substantially lower customer penetration rate than he expected. It didn’t take much digging to find out that a substantial portion of the community were conservative Mennonites who just weren’t interested in cable. He might still have built the town anyway, but he had to pare back his earnings expectations for that particular portion of his buildout.
I have another client who was building fiber in small towns and also experienced low take rates. He had guessed on his likely take rate by counting the homes with a satellite dish and he assumed that a reasonable percentage of these would want fiber broadband since the town had almost non-functional DSL. But it turns out that this particular little town was full of folks who considered themselves as political outsiders and they didn’t trust any ISP in their homes.
Those two examples are the extremes, but I see this phenomenon even more when clients introduce new products. New Product launches often are not the success that an ISP is hoping for. Consider some of the following examples:
- I had a rural client who got almost no takers for a new burglar alarm and security product. Turns out most of the people in this market didn’t even lock their doors and weren’t worried about security.
- I had a new client roll-out the triple play in a college town. He expected a lower-than-average take rate of telephone and cable TV because of the students, but was shocked when he sold less than half of those products compared to his expectations.
- I have a number of clients who are getting almost no takers for smart home products, while they know neighboring ISPs who are doing well with the products.
All of these situations could have been made better with some market research. We’ve always found that a survey, if done correctly is an accurate predictor of residential penetration rates. A valid survey must be administered randomly and also given to enough people to be valid. I’ve seen many clients rely on non-random surveys, such as sending out post cards – and then being surprised by the results of their new roll-out.
So asking customers is always a good idea. But sometimes it’s not particularly cost effective. It can easily cost $7,000 – $10,000 to do a proper survey and that might not make sense when just introducing a new product line into a small market.
But there are other techniques. One is to pre-sell with a campaign that says you’ll roll out a product if enough people in the market show interest. If the new product is something that people want badly enough you’ll find neighbors talking to neighbors about the campaign.
One interesting marketing I saw recently involved giving temporary upgrades for free to customers. I had a client who improved the network and could now offer faster broadband speeds. But after a round of marketing, nobody was upgrading so the ISP started offering a free upgrade for three months, with the provision that customers could go back to the slower speeds if they didn’t want the new product. Virtually every customer kept the faster product and paid the higher price after the trial.
Finally, you can never discount customer education. For example, I have a client selling smart home product that gives folks a free assessment of the ways it can help their home. They walk through the home and talk about all of the ways that it might make the customer’s life easier. They don’t use any hard sell techniques – it’s done by technicians and is strictly a factual listing of what might or might not work for each customer depending upon their home. Price is only brought up if the customer shows interest. This has resulted in significant sales of the new product line, which the client believes is because the customer has gained an understanding of the real-life benefits of the product.
All too many times I’ve seen traditional marketing programs fail. Many customers have grown immune to mailers and don’t even open mail. And people generally will not call for a new product when they don’t understand the immediate relevancy to them. When you find yourself running into ineffective marketing it’s time to get create and try something new and different.