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Improving Your Business The Industry

Public Private Partnership Financing

Wipe our Debt
Wipe our Debt (Photo credit: Images_of_Money)

Yesterday’s blog talked about finding partners for telecom ventures. Today I want to talk about a specific kind financing. Commercial companies have often complained that municipal telecom ventures get an advantage because they can borrow with bonds instead of normal commercial loans. And this makes me laugh because having worked with a lot of ventures financed in both ways I can’t see any particular advantages to bonds over commercial loans.

It has always been generally assumed that because bonds normally carry a lower interest rate that they are a far better deal than a bank loan. But let’s look at the realities of bonds used for telecom projects:

  • Bonds do generally have lower interest rates. But looking back over the history of commercial versus bond financing, the spread between the two interest rates in has usually not been very big. Certainly when we hit market conditions where there is a big benefit for tax-free bond interest rates then bonds can be a really great deal, but this has generally not been the case.
  • Bonds require that you borrow all of the money up front, meaning that everything you borrow goes into escrow and you begin paying interest on the money from the day you close on the bond. Commercial loans generally start projects with construction financing, meaning that you only take the cash as needed by construction and only pay interest on the money that has been borrowed.
  • It generally takes around three years for a new telecom venture to get a positive margin, and so a normal aspect of bonds financed for this purpose is capitalized interest. This means that the borrowing must include the funds required to make the interest payments, and often principle too, for the first three years of the project.
  • Many bonds have required the borrower to have a debt service reserve fund. This is essentially self-insurance to hedge against a default and normally this would mean doing something like borrowing an extra amount of money equal to a year’s principle and interest and keeping it in escrow against a time when there might be a full or partial default on bond repayment. And this money accrues interest expense for the entire term of the bond.
  • Depending upon the bond credit rate of the borrower, some bonds also require bond insurance. This is similar to the debt service reserve fund and has the borrower taking out an insurance policy that will guarantee one year’s payment on the bond in case of default. These policies are paid in full upfront at the beginning of the bond. I have seen bond issues that have both a debt service reserve fund and bond insurance.
  • Bonds have longer terms. It is not unusual for bonds to have terms of at least twenty years and I have seen bonds as long as thirty years. This is a mixed blessing. While having a longer term lowers the payments a little each year, the new business is saddled with debt for decades. In the long run this keeps the pressure on a bond-funded venture to always perform to a pretty high level. However, once any business is debt free they can perform at a lower level and still be quite successful without having to cover debt payments.
  • There are significant fees to be paid up front to sell bonds. There are bond sellers who specialize in finding buyers for bonds, but they charge a significant fee up front. The legal expenses requires to issue bonds are generally also much higher than the costs needed to borrow commercial debt.
  • When taken as a whole, these various items add costs to a bond issue and it’s not unusual to see the size of a bond issue be 20% to 25% higher than an equivalent commercial loan. That extra borrowing generally more than offsets the savings from interest rates and in reality I think that bond financing is generally more expensive than commercial financing.

Because of this there is a big opportunity for public private financing. If a venture can get funds from both sources through a public private partnerships then you can benefit by the best of both worlds. Consider, for instance a financing that is 1/3 bonds and 2/3 commercial. It would have the following advantages:

  • The bond money could act as equity and mean that no other equity is required for the project.
  • The smaller bond size means relatively small capitalized interest and other bond costs.
  • Some of the project is spread long-term with the bulk being medium-term, making it easier to make debt payments in the early years.
  • The bond can be used to cover the early debt payments on the commercial loan, eliminating the need for capitalized interest.
  • Construction can be done using normal construction debt financing.

I recently looked at a structure like this for a client and this public private financing looked to be superior to both normal bond and normal commercial financing. So there is a strong financial incentive for telecom partnerships between commercial and public entities.

In my next blog I will talk about what it takes to be good partners. It’s not always easy.

Categories
Improving Your Business The Industry

Finding a Broadband Partner

Logo of the United States National Telecommunications and Information Administration, an agency in the Department of Commerce. (Photo credit: Wikipedia)

The NTIA issued a notice last week that asks if they should continue the BroadbandMatch website tool. This tool was created during the stimulus grant process and the original goal was to connect partners for applying or implementing the broadband grants. And the process worked. One of the components of the grants was the requirement for matching funds and there were many grant applicants with a great idea who had to find a partner to supply the matching funds. A significant percentage of the stimulus grants involved multiple parties and many of them found their partners using this tool.

On the NTIA tool a company would describe what they were trying to do and would describe the kind of partner they were looking for. And the main reason this worked was that the government was giving away billions of dollars for fiber construction, and so a lot of companies were looking for a way to get in on the action. Many of the companies involved in the grant process were new companies formed just go get the grants. The NTIA tool gave companies who were not historically in the telecom business a way to find potential partners

The NTIA asks if they should keep this service going, and if so how it ought to work. I will be the first to say that I was surprised that the tool was even still around since it was clearly designed to put together people to make stimulus grants work. The only way a tool like this can work now is if everybody in the industry knows about it and thinks to look there when they are interested in making an investment.

But I am going to guess that if I didn’t know that this tool was still active that hardly anybody else does as well. It was great for the purpose it was designed for, but one has to ask if this is going to be a place where companies look when they are seeking a partner. It has been my experience that outside that grant process, which was very public, that most people want to keep the process of forming new ventures as quiet as possible to avoid tipping the competition too early. And so, without the billions of public dollars that made the grants attractive I can’t see this tool being of much interest.

But this leads me to ask how a company can find a partner for a new telecom venture? The most normal type of partnership I see is one made between people with technical expertise looking for investors and people with cash looking for opportunities. So how do these kinds of partners find each other?

At CCG we have helped numerous carriers find partners and the following, in our experience, is what has worked and not worked:

  • Put out a formal request for a partner. This may mean issuing an RFP or an RFI or advertising somewhere to find interested parties. I have not found this process to be particularly fruitful, because it normally doesn’t uncover any potential partners that you didn’t already know.
  • Get to know your neighbors better. I have found that most partnerships end up being made by people in the same geographic area. It is not uncommon for the parties to not know each other well before the partnership, and sometimes they are even competitors. But there is a lot more chance that people in your region will best understand the potential for local opportunities.
  • Don’t be afraid to cross the line. Commercial CLECs and independent telephone companies are usually dismayed by municipalities that get into the telecom business. But generally those cities are just hungry for broadband and in almost every case they would prefer that a commercial provider come and build the infrastructure in their community. So crossing the line and talking to municipalities might uncover the best local partnership opportunities. If a town wants broadband badly enough (and many of them do) then they might be willing to provide concessions and cash to make it work.

Of course, this doesn’t even begin to answer the question of how to make a partnership work, which I will address in later blogs this week.

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Guest Blog Improving Your Business

Branding your Company and Products

Just FYI, no blogs last week due to flu bug. Funny how you can’t write when you can’t sit up.

Today’s guest blog is written by Mindy Jeffries of Stealth Marketing. She will be writing a series of blogs that will appear here occasionally. If you want to contact Mindy you can call her at 314 880-5570. Tell her you saw her here!

In my last blog, I talked about branding things – things with which your customers interact! “Things” is a little vague, so let’s clarify – your branded assets include things like: your office, trucks, people (uniforms), website.  What about branding your product?  What are the stepping-stones of branding your service that you’ll be delivering to your customers?  This gets complicated really quickly, so how can we simplify it?

Let’s begin with the strategic analysis of the brand.

The first step is a customer analysis.

Here are questions you have to ask yourself:  what are the current trends in the telecommunications industry? What is affecting your business?  We all know some of those major trends; landline disconnections, and streaming TV, for example. But now let’s add motivation questions.  Which customers are motivated to use cell phones in which parts your geographic footprint?  What are the unmet needs of your customers?   Brainstorm these questions with your team and figure out answers relevant to your brand. In the end you’re shooting for stellar customer service, making each customer happy beyond expectations.

The second step: Competitor analysis.

What are your strengths compared to all competitors including these new Internet competitors?  What are your answers to the “cell phone problem”?  What are the strategies to attack the segments we have previously identified? And last but not least, what are your vulnerabilities?  Examining your vulnerabilities is hard, you have to strip away your bias, take a step back and look at the big picture. Be honest with yourself. Analyze yourself like you would your competitors. Which leads nicely into…

The third step: Self-analysis. 

Ask yourselves and your customers: what is the current image of the brand?  What is the brand’s heritage?  What does your product provide? What are its strengths?

The last step: Determine your organizational values.  

What are the positive attributes of your leader or leadership team? It might be something as simple as: “we always go the extra mile!” or “We’ll make sure the customer is always satisfied.”

Still not sure what organizational values look like?

Here are the Stealth values to give you an idea!  We exist to help others, we are passionate about what we believe in, we are perpetual students, we love challenge, we like to stretch boundaries and evolve to the next level of everything.  We are driven by relationships because relationships drive communication and good communication drives success.  We work to achieve success.

Categories
Improving Your Business What Customers Want

How Good Should Your Customer Service Be?

This is the hardest question I have asked as a blog title, because there just is no easy answer. Before I try to answer the question at all, let me set some parameters. I am talking about smaller companies and not those that operate large call centers. There are dozens of consultants who specialize in software and metrics for large call centers. But most of my clients do not operate call centers and they have a more intimate relationship with customers. So let’s look at this question in terms of smaller companies.

One glib answer I could offer is that your customer service has to be at least good enough to make your customers happy. And there is certainly some truth in that, but that sounds a bit like consultant speak. So let me dig a little deeper and ask: what ought to be the goals for a smaller customer service group? Here are some of the traits a small customer service group needs to have to produce the best results. I have learned these over the years by having worked with literally hundreds of small customer service groups:

  • Friendliness. One of the advantages that small companies have over large ones is that your employees can get to know your customers and form bonds with many of them. This should be encouraged because when somebody knows the person they are talking to on the phone the whole transaction is more likely to go well. So encourage your customer service reps to get to know your customers.
  • Accuracy. Accuracy means just what it says. It means making sure every order you take is accurate so that the customer gets what they asked for. It means giving customers the right answer when they ask a question. It means perfect directory listings. And to be accurate requires training, but more importantly it requires that your reps are graded for paying attention to details.
  • Prompt Responses. Customers love it when a customer service rep has the information they are looking for right at their fingertips. If they call with a billing question they don’t want to be put on hold for five minutes while your rep tries to find the answer to their question. The way to make this happen is to have a good OSS/BSS system. If you want your reps to do a great job you must have great tools. Companies often get very comfortable with a software system and never consider changing. I visit many clients and see them using outdated systems that make it hard for their employees to do a great job. There is no excuse for that these days. There are a number of quality vendors and you should not be afraid to change if your current software is not doing what you need. I always ask the question – who is more important to you, your customers or your vendor? Do not get wedded to a vendor just because you have used them for many years. If they can’t and won’t keep their software current to fit your needs, look for somebody that will.
  • Knowledge. Your customer service reps ought to be able to answer most questions about your products and prices without having to look up basic facts each time. Make knowledge a priority in how you grade their performance each year. They ought to know how your most common features work and should be able to walk a customer through using them. They ought to know the basic troubleshooting steps needed to fix basic problems when they get a trouble call. If they can take care of a problem without having to refer it to a technician, then you will have saved money and have a happier customer.
  • Empowerment. Your customer service reps should be empowered to fix customer’s problems on the spot. Some companies have policies like always requiring higher approval before giving a credit to a customer. Empower your employees to make decisions and take care of customer problems on the spot. You can always review credits that are given out and if you don’t like the way they were done you have a teaching opportunity to do it better the next time. But don’t be afraid to empower your employees to take care of customers so that the customer can get a problem resolved on one phone call, talking to one person.
  • Not Scripted. I don’t know of a person who doesn’t feel marginalized and unimportant when a customer service rep is clearly reading something to them off of a screen instead of talking to them person-to-person. This is something that many large call centers foster, and sometimes calling customer service feels like talking to a robot. I don’t think this works well for large companies and is one of the reasons that people hate large telco and cable company customer service. So don’t fall into this trap and try to put pre-packaged words into your reps mouths. Make sure they know what they need to know and then just let them talk to customers like a person.
  • The Right Policies. Your reps need to be working with policies that are customer friendly, and this is all up to you. I often find policies that make me shake my head. For example, I have one client who required a money order or cash for a customer to reconnect service for non-pay. Of course, this leads to customers just deciding to not come back. The policies you have in place in dealing with customers need to all have the same underlying premise – they must be customer-friendly and they must make it easy for customers to use you as their vendor.
Categories
Improving Your Business The Industry

Branding and How a Customer Views Your Company

Etsy engineers and customer service at work (Photo credit: Wikipedia)

Today’s guest blog is written by Mindy Jeffries of Stealth Marketing. She will be writing a series of blogs that will appear here occasionally. If you want to contact Mindy you can call her at 314 880-5570. Tell her you saw her here!

I watch a lot of old movies and sometimes I find myself thinking back to the 1940’s and 1950’s. The world was not only pretty straight forward; it was also black and white. Have you ever thought that?  Be honest!  Think of where we are now. How different our marketing world has become in the past few years.

Marketing has become so multi-dimensional!

This marketing evolution is good for everyone.  Good for businesses, good for marketers and very, very good for customers.

So my question is: how is your business looking in this multi-dimensional world? Let’s start by listing a few of the places you are seen and then I will explain the importance of each one:

  1. Your office or headquarters
  2. Online
    1. Website
    2. Social media outlets
  3. Your customer service efforts
  4. Your employees – on and off the job
  5. Public Relations

These are the questions I ask myself as I walk into an office for the first time:

  1. How would this office look to a customer? Is it exciting or cluttered?
  2. How does it match or build on my advertising?  Is it an extension?  It should be. Are we saying we are a high-tech company?  The office should reflect that.
  3. Is the office clean?
  4. Is there adequate parking?
  5. Is it efficient at handling lines?
  6. Are the marketing/promotional materials current?

Does/Is the Website:

  1. Reflect the brand well?
  2. Organized?
  3. Optimized?
  4. User-friendly, with obvious access to information?
  5. Allow a user to find the pricing for the services offered?
  6. Modern? An archaic web presence is a poor reflection on your business.

On Social Media, are you:

  1. Transparent? Are you answering critical posts quickly and resolving the problem publicly? Do people trust the information you’re providing? Are you resolving problems publicly and respectfully?
  2. Using it for customer service? If yes: are you answering customers’ questions and concerns quickly?
  3. Creating a useful environment for the entertainment industry?

Customer Service, do you:

  1. Train and empower customer service representatives?
  2. Offer transparency in customer service?
  3. Be sure the customer service reps have all information about offers and promotions before the customer does?
  4. Remember customer service employees are an extension of your company?

Other (company branded vehicles, employees, community efforts or in the customer’s home):

  1. What happens when an employee is at the grocery store and a question comes up? Do they respond in a positive manner? What do they do when no one is looking?
  2. How do the trucks look? Banged up?  Well branded and identified? The cable companies whom you compete against never seem to get this right. The trucks have stickers on the side or are branded from the last acquisition.  This is an opportunity to look clean, neat and high-tech.
  3. What is the process as employees enter customer’s homes? Do they track mud or wear clean booties over their work boots? Do they leave each area a little bit better than they found it?

For Public Relations, you should:

  1. Find places to speak and then get out on the circuit!  Tell your story.  What is new in your business? Your story is anything from hiring a new person to launching a new platform.
  2. Join business clubs such as: Rotary or Kiwanis and tell your story and meet other business people, figure out if they need your service.
  3. Send the stories of significance to the local paper.  Many papers love the extra content.
  4. Identify key employees to help you in community ambassador roles.

The items discussed above go to branding. Branding helps your company build loyalty and confidence with customers and potential customers. Remember, each time a customer comes in contact with your company it is either a positive contact or a negative one. Therefore, examine each touch point carefully.

Categories
Improving Your Business

Sometimes You Need Sales

Customers (Photo credit: Vinqui)

Most clients I talk to have a marketing plan of some type. Some of them have a really great one and others just do the same thing year after year. But often when they talk to me about the issues they are having, it turns out that what they really need is a sales plan.

Sales is when you go out, look the customer in the eye, and explain to them why they should buy from you. There certainly can be some marketing aspect of sales, such as having door hangers to let people know you are coming, but there are some times in the life of a company when you don’t need marketing and you need sales.

So when is it appropriate to do direct selling and when should you use marketing? Here are some of the times when direct selling is going to give you better results:

  • When you extend your network into a new neighborhood. This might be new houses built in your existing service area or somewhere you have extended your network. In these circumstances you need to knock on the doors and make your pitch.
  • When you introduce a major new product and you want to get a lot of customers. If you are launching cable TV for the first time or getting into the cellular business, then knocking on every door in your service area is going to get you the most new customers the fastest.
  • When you haven’t talked face-to-face with your customers in a long time. I talk to clients all of the time who have never knocked on a door and talked to a customer in a cold calling situation. A company who doesn’t know what their customers won’t be selling the right thing. So if you have never had a door-knocking campaign or haven’t done one for a long time, then get out and talk to your customers. You will get some up-sales, but you will also get a lot of feedback on what customers would like to buy from you.
  • Any time you sell to a business. You should never use passive marketing campaigns to sell to business customers. It just doesn’t work. Every business thinks they are unique and the way to make them a loyal customers is to learn about their business and their communications needs and to then find them a solution.

So who in your company should sell? If this is something that is going to be needed only periodically, then you and your existing staff should be the salespeople. Nobody knows your company better than the people who work there. Remember that it doesn’t take a slick sales person or polished sales presentation to sell something that people want. It takes knowledge. And when I say you, I am talking directly to the owners and general managers of smaller companies. Get out and go door-to-door. There is no faster way to find out what the public expects from you and to find out what you are doing wrong and doing right.

If you are always expanding your network, or are always selling to business customers, then you need a full-time salesperson. There is a long list of issues to consider when setting up a full-time sales position and I won’t try to cover them in this blog. But there is definitely a right and a wrong way to operate a sales staff.

And finally, here are a few sales tips.

  • Be organized. If you are going to knock on every door in an area, make sure you talk to somebody at every house. This means keeping notes on who was not at home and making multiple visits. It may mean calling to set up appointments with people who are hard to catch at home. Don’t make one sweep through a neighborhood on a weekday afternoon and think that you have done a good job.
  • Take good notes. These will come in valuable later. It’s just as important to make notes about why somebody is not buying your service as it is to note the ones who do. If you are going to sell a lot there are good sales tools on the market that make it easy to organize notes. But if this is an occasional effort, then takes notes in whatever way works best for you but then transcribe them into a spreadsheet or database for future reference.
Categories
Improving Your Business

Planning your Marketing Budget

market 1 (Photo credit: tim caynes)

Today’s guest blog is written by Mindy Jeffries of Stealth Marketing. She will be writing a series of blogs that will appear here occasionally for a while. If you want to contact Mindy you can call her at 314 880-5570. Tell her you saw her here!

It was much easier in the past to plan the marketing budget. But today there are many more choices of how and where to spend your budget.

From a bird’s eye view, let me show you how we do it at Stealth.

First we ask, what is the plan for next 12 months?  We chart or ‘brown paper’ the desired customer gain and then define the tactics needed to achieve that goal.

There are many levers to pull in order to achieve the desired customer acquisition goals. The first one is usually marketing spend.  As you spend more money, more people will hear your story and more will sign up (assuming the story is a good one).

But we marketers are always trying to be efficient.  So our next set of questions look something like:

  • “What kind of offer can I afford?”
  • “What is the best offer available to me?”
  • “How can I package that offer to look better than the competition and to get noticed?”
  • “Where can the offer be seen?”

This is a process that we go through freshly each year.

Next we build tracking methodologies behind each and every tactic.

Planning for Direct Mail

Many marketing tactics are extremely quantifiable, for example – direct mail is extremely easy to track.

While industry standards tell us to expect only a .5% to 1% response from direct mailings– we think an achievable goal is 2%.  This is achievable today, but takes focus, control groups and testing.  We call this, “Deploy, Measure, Adjust, Redeploy.”  It is a constant cycle that works hard to achieve success over time. If you pay attention to what works and doesn’t work your direct mail gradually elevates to good levels of pull.

Planning for Digital

Digital marketing is a great tactic to use in selling telecom products. It’s very targeted. You can deploy different messages to different customers and it’s cost-effective. And just like direct mail it gets more cost effective over time as you “Deploy, Measure, Adjust and Redeploy.”  Fortuitously, you can decide how much you want to spend and then you adjust the plan to fit.  As your efforts prove successful, you can add more money to a campaign. The challenge of digital marketing is finding a trusted advisor who really understands a complicated space that is changing daily.

Also, think of planning and executing tactics within social media. This still takes planning and dollars, but can change your marketing and even your customer service. Customers and potential customers can learn about you before they jump on board with your company.

Planning for Media

Media buying in telecom is another good tactic when and where it is available. But done poorly it can be a waste of budget. I once worked in Salt Lake City and there was a smaller operator in the suburbs. They couldn’t justify the media spend to buy the Salt Lake market, but our two firms together had a substantial piece of the market. They ended joining us as a partner to be able to afford the media buy. Ask yourself if there is a creative solution that makes sense in the media world.

At Stealth, we have algorithms to determine efficiency in the television medium. Don’t overlook your own channels for cross promotion.  How efficient can you tell your story with cross-channel advertising? There are still many ways to produce very good quality spots today.

Planning for Print

Small town papers can be a good medium to tell your story. They generally have loyal and devoted readership and you can creatively tell your story.

Have you ever thought of using movie posters? That’s a way you can put your information into the space in a creative manner. There are traditional and non-traditional places to buy or place movie posters. Also, in your local paper, buy a panel and tell your prospects what is on your service in a unique creative way.

Finally, we look at the budget last year. 

It’s always tempting to jut budget this year on what was spent last year. But you should always look to see if there are reasons to increase or decrease spending? More digital marketing might expand your spend for a few years, but start becoming more efficient over time. What is the competition doing? Are you expanding to new areas?

As you ask the right questions you can begin to plan your marketing spend and can design a marketing plan that fit your budget. But as you achieve success with  marketing you can have more confidence each year to spend more.

Categories
Improving Your Business The Industry

Telecommunications Enters a New Marketing Era!

Today’s guest blog is written by Mindy Jeffries the President of Stealth Marketing. She will be writing a series of blogs that will appear here on Fridays for a while. If you want to contact Mindy you can call her at 314 880-5570. Tell her you saw her here!

In this blog post, my intent is to examine the history of telecommunications marketing so we can all have an appreciation of the work we have today, the products and the marketing solutions in the fast paced environment we find ourselves. From the day I started in 1978 until today, one thing is certain and that is change. So this post will provide solutions and ideas on how to make that change fun and manageable.

Cable started as a technical product that solved a problem for people in places that could not get the new invention called ‘television’.  The cable industry solved a need. Today those needs are rarely present with products that telecommunications companies market. So, what started as a technical-needs-based product became more of an everyday consumer product, and a story had to be told in an effective and compelling manner which would help new consumers choose which product fit their needs the best. This is when it got a lot more fun for marketers.  But wait, telecom companies had no marketers!

Telecom began to get more competitive and a need emerged to tell the ‘how are we different?’ story in an increasingly compelling way. Competitors came in on the television side, on the phone side, and on the Internet side. All of a sudden, telecom companies had competitors emerging at every door.

In the early days of cable television we told the story through products. HBO, ESPN, and other similar companies would help pay for the marketing. Our competitors started marketing with those same brand names. Cruel. Products became ubiquitous, available through all competitors. Those premium product offerings were no longer a differentiator.

Of course, a few other things happened in the world of marketing in the last 30 years. A truckload of marketing options started to become available to us. The marketing industry was introduced to new technology, new research entities, new methods, new philosophies, etc. In the end, that yielded options, more than one way to skin a cat. More marketing options means more places to spend your money with a lot of variation in response rates to different audiences with different marketing methods.  Sophisticated, targeted, analytical marketing became very important.

The problem became: how do we effectively differentiate in a quickly emerging telecom world . . . how do we tell our story, what is the target market, who is the target demo and what is the best way to place that communication? How do we utilize all of these marketing innovations? Those are the questions we will answer over the next few weeks. Hopefully these blogs will explain the process behind the curtain and I hope to show you the processes and strategies behind effective marketing.

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Improving Your Business Technology

The Internet of Things is Here Today

Consider the following pricing chart from Vivint, one of the nationwide leaders in home security. This particular pricing chart happens to come from Fort Wayne, Indiana.

 

This may not look like it, but this is the beginning of the Internet of Things and I think the way that Vivint has packaged this is brilliant. Just a few years ago this company and every company in the security business would have been selling only the features in the first column. But now they have added on energy management and home automation which are the first steps into the Internet of Things. To make this work they will install a gateway in the home that is capable of monitoring or communicating with the devices in the home and also communicating back with the cloud.

This is just the beginning. As more home-ready services are created Vivint will certainly add some of them on as enhancements to the packages listed or will create new packages. The next big field is already hinted in the last item, the medical pendant. We are not too far away from the time when sensors will be able monitoring your health and keeping a constant record of your heart beat, blood pressure and other vital signs. And a few years after that, micro sensors will be in your blood looking at your blood chemistry, looking for cancer etc.

A company like Vivint will have to decide what things they will support because the scope of the Internet of Things will become immense. It’s been predicted that much of the Internet of things will be done with Apps. But households still need the gateway and will want an expert to make sure things like security and smoke alarms are connected properly. I see a prominent role for businesses willing to go into the home to make sure that everything works well together.

Since there will be so many options in the Internet of Things it’s likely that a carrier will choose a few standardized packages that will fit a large percentage of the population and will leave customized packages to somebody else. For example, even today there are a ton of other options available in the energy management field and Vivint has chosen a few common options. Today a household can also do things like control blinds for allowing or blocking sunlight, coordinate ceiling fans, change the hot water heater settings dynamically during day, and interface with external solar panels.

I believe a lot of homes are going to want these services. I also know that customers will choose somebody they know and trust if given a choice of vendors. The Internet of Things is going to grow over time while traditional services like voice and cable TV wane. If you are going to survive as a carrier selling to households, then selling the Internet of Things needs to be in your portfolio.

Categories
Improving Your Business What Customers Want

Why Aren’t You in the Security Business?

Security camera (Photo credit: Wikipedia)

The security business is booming. Both residents and businesses want security cameras and other monitoring devices to keep an eye on their property when they aren’t there. Everybody with a wireline network should be considering offering security services of some type. There are a number of different ways to approach the security business, as follows:

Security Cameras. Your customers are interested in security cameras. They may want them for the traditional purpose of watching their business. But they now want them for a whole lot of other reasons. Farmers want them to keep an eye on livestock and on expensive farm machinery. Residents want to keep an eye on the babysitter, the pets or the kids when they aren’t at home. People want to be able to see who is at the front door before they answer it.

Your customer can go to Walmart or Radio Shack and pick up a run-of-the-mill camera. But given a choice, your customers probably want a quality HD camera, professionally installed. There is a huge difference in the picture quality between an older analog security camera and the new HD cameras. It’s the difference between being able to see that there is somebody in your home and the ability to read the name tag on the pocket of their shirt.

Most of your customers are not going to be comfortable with or have the knowledge needed to install an HD camera properly. Ideally cameras ought to be installed on coaxial cable rather than using WiFi so that it will work if the WiFi gets knocked out. To be effective a camera also ought to be on some kind of backup power if the customer wants to be able to see what is happening if the power to the premise is cut. You will want to choose cameras that come with the ability to let the customer see what the camera sees using their cell phone.

Why is this a business opportunity? I have been advocating in this blog that telecom businesses need to decide if you are going to be a full-service provider or a dumb-pipe provider going into the future. If you are going to be a full-service provider then you should look for opportunities to go into customer’s homes and businesses. Services like installing security cameras are not going to drive a lot of revenue. Instead, it will pay for a few hours of your installer’s time, but it will give you a chance to get to know your customers better, to upsell them on other services and to create loyalty since you are the provider who will take the time to visit and listen to them.

Recording. While there isn’t a lot of money to be made in installing cameras, you can sell a monthly service to record what the cameras see. This requires you to establish a high-speed connection to the camera and to have recording devices capable of storing and retrieving video. Ideally you will only record a camera when there is something to record. This can be done by including a motion detector that will trigger the recording. Any recordings you save should also record a time stamp so that you know when the recording was made.

There are off-the-shelf systems for recording video in this manner and you don’t have to reinvent the wheel. But investing in this kind of product line means that you will need to do the math and figure how many customers you will need to justify getting into the business. The normal pricing for this service would consist of a monthly fee to record the images plus a fee when customers want to retrieve recordings over some set limit of times.

Monitoring. The next level of security involves monitoring and this gets into the area of more traditional burglar alarms. There are a number of well-known nationwide brands of security monitoring like Frontpoint, ADT, Vivint, Pinnacle and Life Shield.

How can you compete against the nationwide firms? The burglar alarm business has two components – selling / leasing the hardware and the monitoring function. You can buy the same security system hardware used by any of the nationwide firms. There is a wide array of different systems available. The nationwide companies make a lot of money on the hardware and the installation. They generally advertise a low price but then quickly try to upsell customers to get additional hardware. You should be able to compete and beat the pricing that these firms offer on hardware. And you can offer this without the somewhat sleazy sales tactics that many of them use. Tout yourself as the ‘honest’ firm and many people will be interested.

Second, you can now buy monitoring services on a wholesale basis. There are security monitoring centers that will act as your back office to monitor the alarms and dispatch fire and police as needed. You can easily mark-up their fees and still make a nice monthly margin for monitoring a customer.

Many customers have been through the mill with the nationwide firms since many of them deploy high-pressure sales tactics. Customers are going to prefer to go with somebody they know and trust and who gives them what they need for an affordable price without the high-pressure sales.

The Full Deal. There are also upper-end security systems available that come with the latest high-tech monitoring devices. There is a wide array of different sensors available today that let a business test for all kinds of events. The upper end systems typically are for businesses that want to do a better job of monitoring both security and safety at their premise.

Any carrier can obviously get into the high-end security businesses because anybody can buy the systems used. But my word of caution is that this business line requires a lot of research and the companies you will compete with know what they are doing.