Market Segmentation

Allow us to beat the drum again: Only two weeks until the SCTE’s Commercial Services Symposium in Charlotte, N.C. To whet your appetite, herewith an excerpt from a breakfast roundtable discussion held at Cable-Tec Expo on the strategy and tactics of commercial services deployment. Participants in this Accenture-sponsored event included John Dickinson, senior director of network operations, Bright House Networks, Tampa Bay; Tim Doran, director of product development, Rogers Cable; and Keith Grunberg, sales engineer, Charter Business Services. (A more complete transcript will appear in the October issue of Communications Technology.) CT: You’re an engineer, John, so let me ask you a marketing question. What’s the story in Tampa? Have you been shooting at everything that moves, or have you followed a more targeted strategy? Dickinson: When we started out, we shot at everything that moved. We learned real quick that we can’t be everything to everyone. So we backed off and we came up with a product guide, and we segmented the market. We have small customers that basically take a cable modem. And to charge on top, for a value-add, what we did was ask, "What else do you want in terms of branded services and managed care?" We also looked into doing direct connect with fiber as a technology, and we really advanced it selling it to hospitals. A lot of that technology was available. We had the backbones in place. We convinced senior management there was business and that we can make a go of this. In 1998-99, we really started to hone in and refine our product guide. I think what is key is this: to keep a simple plan and to define those services up front and to set expectations with customers—and make sure expectations are met. What you are offering them is also driven by your competition. You always have to look at that. Make sure your score sheet is comparative with theirs. CT: Are the larger companies more difficult to tackle? Dickinson: They are difficult to tackle, but they are a breath of fresh air once you win them because they are self-sufficient. What we find is that one of the largest challenges with the smaller guys, is that they are more dependent on the service providers to assist them with their LAN (local area network) and IT needs on the network. So the larger guys are a tougher sales cycle, maybe a six-month win, but once you win them, they are pretty much hands-off. CT: Keith, what can you tell us about the approach that Charter takes? Grunberg: Our thinking is more, "We can win the big RFPs (requests for proposal), but let’s go out for all of that low-hanging fruit because it is there and ripe for the picking." Going out and meeting with the telecommunications consortium groups is a very key component for us, especially in the Northwest. We get in and find out what the communities and municipalities and school districts need. Those are great low-hanging fruit areas because these folks have strapped budgets. We can walk in and give them a proposal that is basically the cost-plus model and then work with them on their budgeting, which may take up to 12 months. CT: Tim, what customers you are serving, which segments might those be, and what are they are looking for? Doran: Rogers Cable has only been addressing the commercial space since 2002. We started at the small business level. It is probably a difficult segment to reach and serve economically and effectively, but we built our revenue business there. In 2003, we brought in some former telco people to help us build the plant and a team to address the enterprise. That plan really first addressed what we are calling distributed enterprises, typically retail, but also branch offices. It is not a flashy business, but it combines our strength, which is broadband, and it gives us an opportunity to build a managed service around that. CT: What sort of businesses are these? Doran: A typical enterprise in Canada would be a giant chain of coffee shops that is just getting into supply-chain integration and has never been able to afford an always-on connection to all of their stores. So we will come in and fulfill many thousands—in a lot of cases—of broadband connections nationwide using our plant, other MSOs’ plants and DSL—God help us—when it comes to that. And we will run a managed IP VPN (virtual private network) for them. We are very cost competitive vs. our competition, and we find our competition is not paying a lot of attention to this space. In the bigger business arena, we have won a number of large metro Ethernet deals in the MUSH (municipality, university, school and hospital) sector. It’s not easy to get these folks, but often we have an open door for an RFP. We have worked very hard on a small number of RFPs, and we try to control our folks to make sure we focus our efforts. And we have won a number of them.