The Value of Persistence

One of the most common questions I am asked by those getting ready to build a fiber network is “How can we know that we will get enough customers to make this work?”. They are always hoping there is some magic pill that will let them gain a huge market share to assure their success. Over the years of watching clients launch fiber into hundreds of markets I can assure you there are no magic pills. I’ve come to the conclusion that the two biggest hurdles in the business are first, getting the new network financed, and second, selling to customers.

But there are traits of successful fiber overbuilders that can be duplicated.

Pre-sales campaign. Fiber overbuilders need to take advantage of the one-time buzz that happens when you first bring fiber to a neighborhood. Somewhere between 3 and 6 months before network launch you need to blitz neighborhoods to let them know fiber is on the way. Ideally you will touch every potential customer, and this means a personalized sales approach. This means throwing neighborhood events like ice cream socials or cook-outs. It means distributing door-hangers followed by knocking on every door to let customers know that fiber is on the way.

There is a well-understood maxim that any fiber overbuilder can get 30% of a market just by showing up. There are always customers that either are hungry for better broadband or who simply hate the incumbent providers. An aggressive pre-sales campaign will attract these customers by letting them know you are coming. But pre-sales will also attract another 10% or more of the market, meaning an initial penetration on day-one of 40% or even much higher.

It’s easy to forget that the easiest thing for any potential customer is to do is nothing. If your sales approach is passive – mailers and newspaper ads, you won’t overcome customer inertia that will make it easy for many potential customers to do nothing and to keep the ISP they are already using.

Knowledge Sells. The most successful fiber overbuilders send out knowledgeable salespeople to knock on doors and talk to potential customers. The key word there is knowledgeable. I’ve seen numerous companies hire temporary salespeople, give them a few hours of training and then wonder why they aren’t selling. Successful companies retain permanent salespeople or even send out their own staff to sell door-to-door. When you engage a customer in person it’s essential that the salesperson can comfortably answer all questions about products, prices, the technology and can clearly talk about why a potential customer should switch service.

So don’t take the cheap and easy path of sending out college kids in the summer to sell your network. A knowledgeable sales team will be two or three times more effective at closing sales -so if you are going to make the effort to send out salespeople, send out the right ones.

Persistence. The number one key to long-term success is persistence. Too many fiber builders will blitz a neighborhood one time when it’s first built. They move on to blitz the next new neighborhood and revert to using passive sales techniques in the older market. Such neighborhoods might slowly gain customers over time, though growth often comes as much from word-of-mouth from existing customers as it does from passive sales techniques.

Smart ISPs are persistent. I have clients who knock on doors every year. They have realistic expectation of adding perhaps 2% or 3% per year from a door-knocking campaign in a mature market – but over a decade that translates into a 20% to 30% higher market penetration than they might have had using passive sales techniques. Persistence can pay off for any kind of ISP – I know both commercial and municipal ISPs who have grown to customer penetration rates north of 75% by plugging away at sales year after year.

I know many fiber overbuilders languishing with 40% to 50% penetration rates while having a superior network, better prices and better customer service. They are suffering from what I’ve always called the ‘build-it-and-they-will-come’ mentality and they think their obvious advantages will somehow draw customers to them. What they haven’t done is make the effort to look each potential customer in the eye and explain those advantages. I highly recommend that the general manager and top executives of every ISP take a few days every year to knock on doors. They will quickly learn that a lot of households never heard of their company even though they have had fiber in a neighborhood for years. It’s a humbling experience that quickly demonstrates the value of talking to prospective customers in person.

When Marketing Plans Fail

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.