Staying Focused

Competition is a reality, and with it comes a new impetus for you to look in the view finder and focus on your markets in new ways. But you must first determine which segment of the market -- mobile professionals, locally oriented consumers or both -- you want to go after.

"The current market fundamentals are disintegrating," said Andrew Cole, who heads the wireless practice at Renaissance Worldwide. After the regulatory shock of 1994 and the subsequent lag in development, Cole predicted the current upsurge in wireless service offerings would spiral, bringing about continued plummeting prices and setting a new paradigm that begs for differentiation.

"All of these companies are saying, 'We are the best. We have the best quality.' But the truth of the matter is they all look the same to customers, " Cole said.

Tim O'Neil, Soundview Financial Group wireless telecom services analyst, cited price, coverage, technology and LNP issues as the primary reasons wireless services in the United States have only a 24% penetration mark compared with some European countries that sit near 50%.

"In this extremely competitive market, differentiating features is critical, " he said. "Lack of features and functionality of a handset is a more sustainable barrier to entry than a given sales channel."

O'Neil cited Nextel's addition of a speakerphone with a mute button to its handset as an attraction for business customers.

SALES TACTICS For the business market, use of a direct sales force is emerging as a strong technique, as demonstrated by Nextel's successful wooing of professionals with its 1,800-strong direct sales team. For the consumer market, calling cards and cross-promotions with fast food chains and convenience stores is an effective route.

Cole noted that another way to reach both business and consumer customers may involve partnering with software and hardware companies. Partnering with other service providers also is a good idea, he said.

"Direct sales channels are nice to have, but they are also expensive to maintain. The companies that are going after that (business) market have to have a professional direct sales force, and also customer service to back it up. The two go hand in hand," O'Neil said. "Otherwise, carriers can take the European approach and go after deep penetration into the mass market with prepaid calling cards, which have a very low cost of acquisition, and the actual return-per-subscriber is much higher. At the end of the day, it's the company with a balanced approach that understands which market it is going to go after that designs a strategy specific to that market that will succeed."

SIMPLICITY Homing in on consumers in Southeastern U.S. markets has been a key to Powertel's success. Powertel's subscriber base has catapulted to 228,000 in two years, and the company has built a business by thinking regionally and acting locally, downplaying technology and fancy pricing schemes in favor of simple plans. Along with value, Powertel also promises customers company values in a corporate statement that embraces its entire modus operandi.

"Our strategy from the beginning has been to keep it simple and focused on the consumer, and because of that it has been easier for our advertising to cut through what's out there," said Rod Dir, executive vice president of Powertel's Atlanta MTA.

In keeping with its streamlined approach, Powertel never has run a rate-plan promotion.

"We have never discounted our rate plans or minutes or offered free minutes in any promotion. It is not necessary," Dir said. Additionally, although Powertel has flexible service offerings and is about to roll out a suite of data services, Dir said, "We don't try to wow customers with technology. The everyday consumer doesn't care about it."

Dir said Powertel also goes to pains to dig in to the markets it is launching.

"A lot of companies will build out a market and have their engineers located somewhere else. We always think: 'Where do people live, work and play?'" Dir said.

The Powertel method is to cultivate on-site management teams that have autonomy regarding network operations, sales, customer service and finance. Dir said a second phase of operations is just getting started that will see the consolidation of customer-service operations into two locales to achieve better cost efficiencies.

Dir said Powertel's Corporate Values statement has made it easier for the company to conduct business.

"Because of the system, clients and employees are putting 100% effort into everything they do," he said, noting that a few employees who were not glowing with the virtues of honesty, courtesy and responsibility have been "moved out." "We talk about it in the interview process, and we look for people not only in the wireless industry but in other businesses that have had similar ways of doing things," he said.

SEGMENTATION "When the wireless industry first started, the overall challenge was helping customers overcome indifference about the service," said Lisa Bowersock, AirTouch spokesperson. "Customers today understand the value of wireless, so our goal today is not only to answer the question why wireless, but why AirTouch?"

A key part of AirTouch's answer has been to focus on segments of the population.

"We completely reorganized our call center around customer segments, such as the general consumer market, small business, large business and heavy users, " Bowersock said. "This is fairly revolutionary in the wireless market to talk about developing products and services for individual segments."

For the general consumer market, AirTouch began making prepaid calling cards available last year at selected 7-Eleven locations and has expanded the initiative to include Circle K and AM/PM Mini Mart locations.

"We are developing new products to fit under the prepaid umbrella as well as new channels of distribution," Bowersock said.

The company also has developed a kiosk program that brings AirTouch marketing and sales information into grocery and drug stores, and an off-the-shelf, phone-in-a-box solution designed for large warehouses.

Bowersock said AirTouch's deployment of full digital service has been the largest draw for the business segment, where the company also is focusing heavily on customer retention.

"In the old days it was all about gaining new customers; today it also is about keeping current customers satisfied by communicating with them on a regular basis," she said. AirTouch representatives call existing business customers at regular intervals to discuss their service and let them know about the new "no regrets" policy that enables them to move from one price plan to another without a fee.

No matter which route a carrier elects to take, Renaissance's Cole advised companies both large and small to get their cost structures in sync with the market. Quickly.

"A number of carriers have inefficient internal processes, and there is a need for radical cost cutting so they can survive," he said. Cole said financial considerations will become salient as the explosive growth in the wireless market begins to slow. "In business, growth hides inefficiencies, but when the market is slow, those inefficiencies start becoming obvious."