Open Access Marketing Pilot for Ftth Network Roll Out

A Marketing Pilot for FTTH Network Rollout

A Marketing Pilot for FTTH Network Rollout January, 2012

© Copyright by ECI Telecom, 2012. All rights reserved worldwide.

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CONTENTS

ECI Telecom Ltd. Proprietary iii

Contents

Introduction ........................................................................................................................... 5

Marketing Pilot as an Integrated Process ........................................................................... 6

Defining Criteria for Success ............................................................................................... 7

Defining Pilot Parameters .................................................................................................... 9

Geographical Area ........................................................................................................ 9

Potential First Market .................................................................................................. 9

Lifestyle Profile ............................................................................................................. 9

Opinion Leaders .......................................................................................................... 10

Analyzing Adoption Rate and Usage Patterns .......................................................... 10

Additional Pilot Activities .................................................................................................... 11

Customer Support Center ......................................................................................... 11

Communicating with Customers ............................................................ 11

Focused Marketing Activities ..................................................................................... 11

Summary ............................................................................................................................. 13

About ECI Telecom ............................................................................................................. 14

CONTENTS

iv ECI Telecom Ltd. Proprietary

INTRODUCTION

ECI Telecom Ltd. Proprietary 5

Introduction

To some extent, replacing a legacy network with optic fibers could be perceived as a technical process, requiring greater operational than business changes. But this is not the case.

Replacing infrastructure at end customer premises requires the end customer’s approval and time. Most customers would agree to wait at home for a technician and have their communications hardware connect differently if they see the direct benefit of the change. At this point marketing has the greatest impact.

Our experience shows that operators who plan ahead to provide new service offerings in parallel with new fiber infrastructure implementation and involve their customers in their plans and vision, appealing to their emotions by presenting the new service as an innovative and exciting experience, succeed in turning their investment to revenues much faster. The key to implementing such an approach is successful marketing pilots. Operators who invest in marketing pilots before making a significant network change are better able to plan the service packages and define the target audience. This knowledge enables a better penetration ratio and demonstrates faster ROI. In some cases we even see the direct impact on increased ARPU, with faster implementation of a new variety of services.

Performing a marketing pilot is a significant part of forward planning for a new network. The marketing pilot examines the business impact of the new network on a small scale. It is, in fact, a small scale introduction of service packages, based on gradual and specific new network implementation. During the pilot period, specific data parameters are collected, and by the end of the pilot term all metrics are used to re-evaluate the business plan and ROI and assess potential revenue generation from the new service.

This white paper presents ECI Telecom’s proposed approach to marketing pilots, their possible components, and expected results.

MARKETING PILOT AS AN INTEGRATED PROCESS

6 ECI Telecom Ltd. Proprietary

Marketing Pilot as an Integrated Process

The marketing pilot should be a synchronized process between business requirements, marketing activities, and technical implementation. Set up the pilot to include the following steps, carried out in this order:

1. Identifying the market and the areas for the pilot.

2. Defining new services packages, pricing, and the initial marketing campaign.

3. Defining the technical implementation plan and budget.

4. Defining pilot success criteria and the way to collect results.

5. Defining marketing and selling methods.

6. Identifying CRM activities and flowcharts for all customer engagement processes.

7. Executing the pilot: implementing infrastructures and launching focused marketing campaign.

8. Collecting and analyzing the results.

DEFINING CRITERIA FOR SUCCESS


Defining Criteria for Success

Ultimately, the purpose of both marketing and technical activities is to increase the customer’s take-up rate and satisfaction level, generate more revenues, and so improve the new network’s profitability. It is therefore important to define in advance the business and marketing success criteria you want to measure. These parameters should be reflected in the project business plan and indicate the potential of the new network and new services.

The following table lists some of the marketing and business parameters to be analyzed.

Parameter What to measure Impact on business plan

Services adoption Overall acceptance of service packages. Measured as a percentage of acceptances (“Home Passed”) out of total potential customer.

Identify penetration ratio and services acceptance in each geographical area in scope.

Bundles adoption Percentage of preferred services packages out of base services offered.

Define anchor services. Define basic package

services. Analyze Value Added

Services pricing.

Price sensitivity Percentage of services/packages rejected due to pricing strategy. Collect rejection ratio for each package offered

Define pricing models. Update business plan and

ROI. Update adoption of basic

package. Consumption ratio of

Value Added Services.

Overall customer satisfaction

Perform customer satisfaction survey to measure: Satisfaction with consumed

services and packages. Satisfaction with pricing. Satisfaction with selling process

Update services package composition, pricing, and contents.

Back-office support

Perform customer satisfaction survey to measure: Satisfaction with customer

service. Satisfaction with installation and

delivery.

Recommendation for CRM improvement processes.

Total adoption rate Combined installation rate: Percentage of installation acceptance out of the total offered.

Ready for the deployment rate.

Matching the mass deployment rate to the predicted demand rate.

New offerings consciousness

Perform market survey to measure new services awareness.

Indicators of marketing campaign efficiency.

DEFINING CRITERIA FOR SUCCESS


The analysis of a marketing pilot results is a highly significant process. It is possible that the technical implementation was executed as planned according to budget and provided high quality of service, but the business case indicated that the target audience did not accept the new services as planned. When performing a pilot, one must take into consideration that its outcome could be to reject the new infrastructure, or at least change the terms in which it is being implemented and offered.

DEFINING PILOT PARAMETERS


Defining Pilot Parameters

Geographical Area Unlike technical and engineering targets, limited focused activity within a neighborhood or group of buildings does not represent an actual demonstration of the market business potential. For marketing purposes, the target area and audience for the pilot should represent a typical population that adopts the proposed changes. So what are the criteria for choosing such a group?

Potential First Market Several factors influence the selection of the first launch areas, including: Customer Profile: Market research and segmentation processes facilitate

building a Potential Customer Profile for new services. It is advisable to choose areas where potential customers suiting this profile can easily be reached.

Homogeneous Population: Choosing areas characterized by a homogeneous population allows rapid penetration. Selecting an easy-to-adopt building/neighborhood might sometimes be easier to penetrate, but will not predict the expected progress in other neighborhoods/houses.

Population Size: The first area chosen for the pilot should be sufficiently small and peripheral not to affect the essential business of the company in case of failures, but large enough to allow conclusive implications.

Favorable Initial Approach: The first area selected for the pilot should be characterized by undisputed favorable company positioning clearly differentiated from the competitors. A region that is characterized by a militant approach against, for example, the Telco or a religious approach against technological innovation should be left to the end of the rollout process.

Local Regulations: Easily obtainable approvals and the support of the local authorities ease the penetration process in the first regions and contribute to the main target of gaining the market share as quickly as possible.

Lifestyle Profile Innovative services are first adopted by those who are used to using innovations and gadgets. The first segment should include an agreed percentage of the "early adopters" population. Later on, while calculating the total adoption rate, the agreed percentage should be taken into consideration in assessing the penetration potential. Early adopters are identified by using segmentation according to a consumer lifestyle profile, which may include the following parameters: Tendency to adopt innovations Current use of other technological services High usage of other services offered by the company Socioeconomic profile – demographics of the household (education, income,

age, number of children and their ages, etc.) Leadership position in the community

DEFINING PILOT PARAMETERS


Various data sources can be useful in identifying potential customers fitting the desired profile: internal data of the company, regional statistics, search ads in local newspapers or websites, recruiting a local source who knows the nature of the local population, and others.

Identifying the proper market segment according to the characteristics of the first customers to adopt the new network contributes greatly to building the brand's attributes and the correct messages to be used during the nationwide launch of the network.

Opinion Leaders

At a local level, the opinion leaders may be political leaders, educational and commercial personalities in the community, or the journalists and press who cover the technological services and gadgets in the local media.

Early identification of opinion leaders within the local arena and rewarding them when they connect and use the new services can create the required buzz in the community and increase the penetration rate.

Rewards offered to opinion leaders vary from free usage to additional gadgets or premium and new services offerings.

Analyzing Adoption Rate and Usage Patterns

During the marketing pilot, it is advisable to collect all the customer usage data for analysis. Knowing the usage patterns helps build attractive price packages suited to the different population segments.

Possible price packages might be a weekend or midweek package, a triple play package at a flat fee, pay as you go, or other pricing models.

The data analysis is also important for bandwidth analysis, Quality of Service allocation, and services over-subscription, in order to provide the necessary SLA in the future to maximize BW utilization and subsequently services revenues.

ADDITIONAL PILOT ACTIVITIES


Additional Pilot Activities

Customer Support Center

Preparing the Customer Support Center for the new services launch process is an important aspect of the pilot project. The Support Center should be ready to respond to new customers from day one of the launch. This is for two main reasons. Firstly, to maintain quality of service and customer relationships, solve problems as quickly as possible, and uphold the operator brand.

The second reason relates to the launch of the new services. Barriers, problems, and issues should be identified and resolved as quickly as possible, in order to optimize the launch plan of the wide range of services later on.

The Customer Support Center must be trained in advance and provided with all necessary means to receive service calls regarding the new services offered. The CRM system should be updated accordingly. It is important to provide the Support Center with proper training and develop dedicated work processes and procedures for the pilot period.

Communicating with Customers

The marketing team can learn a lot from the "early adopters" using the network by exploring their additional needs. The Support Center plays an important role in identifying these additional needs.

The Customer Support Center can proactively contact customers in order to investigate their satisfaction from services received and encourage them to raise additional needs, uses, or other ideas.

Focused Marketing Activities

Gradual progress initiated by a marketing pilot targeted at achieving a regional market share is substantially different from running a nationwide launching campaign.

Telcos are used to building maximum demand for their services through national distribution channels and marketing methods using "push" techniques – large television campaigns, advertisements in the national press, and so on.

The regional progress uses a "pull" targeted approach to marketing and selling. Many options are available – door-to-door sales, local media advertising, building "kiosks" as temporary regional activity centers serving as points of sale, online marketing activities, social networking activities targeting potential audiences (students, youth, small businesses), and even "advertising on wheels", using branded cars moving around the particular areas.

In order to gain awareness of the marketing activities in the area, it is advisable to connect the new services to local issues. For example: deployment of a fiber network is relevant to environmental activities and education issues; supporting a local football team can easily be connected to launching IPTV services.

ADDITIONAL PILOT ACTIVITIES


Installation crews play a key role in creating awareness in the targeted areas – by guiding the connected users, offering in-house demonstrations, identifying additional potential customers in the connected buildings, and offering promotional brochures.

These activities should be followed by visits from door-to-door sales teams, deepening the penetration rate in the already connected buildings.

Effective promotions in the initial rollout may include a trail period at no charge, bandwidth upgrades, free value added services included in the bundle, end-user equipment bundled with the services, and free installation.

SUMMARY


Summary

Experience gained from launching new fiber-based networks has shown that the initial penetration rate of attached services can predict the market growth rate during the first years.

The marketing aspects of deploying new FTTH network services are no less of a challenge than the engineering ones.

A marketing pilot, while striving to achieve a significant market share in each specific area, enables the Service Provider to prepare better for a full commercial launch, to have more precise predictions, and to be ready for different scenarios.

The marketing activities described in this white paper will achieve rapid market share in each region while keeping control on the costs and conserving the main marketing budget for the full commercial launch.

The key factors leading to the success of a gradual geographic rollout can be summarized as follows:

1. Full cooperation between the marketing and engineering functions in order to allow controlled progress of the rollout.

2. Well-defined success criteria for the pilot.

3. A "pull" approach for distribution and sales.

4. A Customer Support Center from day one to obtain valuable information from the customers.

5. Use of marketing tools, opinion leaders, and local interests to help build the local buzz.

ABOUT ECI TELECOM


About ECI Telecom

ECI Telecom is a leading global provider of intelligent infrastructure, offering platforms and solutions tailored to meet the escalating demands of tomorrow's services. Our comprehensive 1Net approach defines ECI’s total focus on optimal transition to Next Generation Networks, through the unique combination of innovative and multi-functional network equipment, fully integrated solutions and all-around services.

For more information, please visit http://www.ecitele.com.

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Copyright ©

2010 ECI Telecom

. All rights reserved. Inform

ation in this document is subject to change w

ithout notice. ECI Telecom

assumes no responsibility for any errors that m

ay appear in this document.

1Net defines ECI’s focus on facilitating our customers' optimal transition to

Next-Generation Networks, through the unique combination of innovative and

multi-functional network equipment, fully integrated solutions and all-around services

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Open Access Marketing Pilot for Ftth Network Roll Out