Beyond Price-Based Selling

By Tamra Burgwardt
President, TJB Telecom Consultants, Inc.

As the telecommunications industry has grown in the last three years, the focus on selling has been, predictably, lower price.  After all, that's what people automatically respond to when the choice is between two commodity items.  Dial tone is dial tone, right?

This, of course, has led to fierce competition among competing dial tone providers as dozens of facilities-based CLECs, both regional and national, have entered the market mayhem. These CLECs have crawled all over the “cherry customers” who spend a lot on telecom in central business district locations.  Prices of  ILEC services have even decreased significantly in the face of so many alternative providers.

This is the classic supply-and-demand curve at work with additional suppliers increasing the supply and forcing prices down.  What a benefit for those cherry customers! But is it a benefit for CLECs?  Where does it end?

Getting Past Price
Price erosion can only go on so long, so CLEC marketers have long since turned to other methods to differentiate themselves.  One of the first areas they turned to was providing a complete line of products.  But even that tactic is running out of momentum.

For instance, it is becoming difficult to find a CLEC or ILEC without an in-house Internet service.   Dial tone services offered by CLECs look more and more like ILECs offerings.  And in the face of CLECs offering xDSL, ILECs have jumped on the broadband bandwagon, too.  Integrated local and long distance bills are the norm, since selling the convenience of a single local and long distance bill was the original impetus for CLEC growth next to lower price.

So what differentiates carriers now?

In the case of xDSL, a “Me First” supplier gains a great deal of market recognition as the first and best in the minds of savvy buyers of cutting edge technologies.  But the “first” marketer in a technology is not always the overall winner if service levels decline, growth exceeds the company’s ability to effectively live up to their reputation, or aggressive competitors better the pioneer’s systems.

Another reason customers switch away from ILECs is their distaste for monopoly treatment from big companies.  These customers will accept a few initial service problems in the interest of helping to kill the “beast ILEC” for the good of mankind.  But that attitude can only go so far in explaining outages and other problems after they switch.

So CLECs must strive diligently to offer superior customer service to their customers.  Additionally, strategies for providing fully integrated service offerings proliferate among CLECs looking to be the sole provider to any one customer for anything data, telecom, or wireless.

Serving Niches
Last month we spoke about finding niche markets to serve.  This is another good approach to avoiding pure price selling.  But there are others. 

Becoming the “Wal-Mart of Telephony” for your customers is one approach.  To do that, you likely will have to obtain services you can't provide with your own equipment.  Some CLECs build their entire marketing plan on outsourced services united on a single end user bill.  But if obtaining multiple services isn't profitable, you could turn the tables and become one of those “outsourced” vendors for your strongest services and adopt a “sell through others” strategy.

Surviving in the mixed market of the new millennium will be an interesting challenge.  We see  polarity between providers with a relatively small number of strengths and the mega-providers of all things for all customers.  The majority of current CLECs will fall somewhere in between and will be forced to creatively define their market as a niche or series of niches.

But beware: Those lost in the maze of trying to become a mega-provider on a niche marketing budget will fall away or be absorbed by others with clearer views of their market objectives.

Tamra Burgwardt is President of TJB Telecom Consultants, a firm dedicated to creating new CLECs from certification and tariffing through account set-up, interconnection project management and beta testing of first end user lines.  She can be reached at 770-805-0800