RISE BROADBAND

Final DeliverableNovember 16, 2015

Chelsea McdougallKofi SaaheneJessie James

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Table of Contents

Executive Summary………………………………………………………………...3

Marketing Plan…….……………………………………………………………….4Situation Analysis……………………………………………………………..4Marketing Avenue Analysis………………………………………………….15Marketing Budget…………………………………………………………….26Sales Forecast………………………………………………………………...30Our Recommendations……………………………………………………….30

Data Analysis………..……………………………………………………………31Business Understanding………………………………………………………31Data Understanding…………………………………………………………...31Data Preparation………………………………………………………………40Modeling………………………………………………………………………41Evaluation……………………………………………………………………..44Appendix A……………………………………………………………………45

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Executive Summary

Rise Broadband, previously known as “Digis,” and currently the largest fixed wireless broadband internet provider in the nation, was incorporated in 2005 through parent company JAB, and recently underwent a rebranding effort in 2015. The company provides internet services to unserved and underserved areas of the US. They now want to expand their operations to Mackay and Arco, Idaho, and have contracted the services of a capstone team of MBA students at Idaho State University to research how to increase brand recognition in both towns. The major components of this report will consist of a marketing plan and supporting research, and a section on data analytics. Marketing Plan: The marketing plan focuses on what Rise should do to enter the Mackay/Arco area and is broken down into five sections as follows:

1. Situation Analysis: This section contains market demographics, a SWOT analysis, best practices analysis, and an analysis of competitors. Some key findings are:

a. Mackay/Arco is a rural area with a target market of older, mostly childless heads of households.

b. Rise Broadband’s major strength is being the only fixed wireless broadband provider, and the two biggest competitors in the area are ATC and Frontier Communications.

c. Rise Broadband’s major weakness is not being well-known in Mackay and Arco, and our research shows that participating in community events is key to building trust in rural areas.

2. Marketing Avenue Analysis : This section contains a description, strengths, and weaknesses, and research about the effectiveness of all potential marketing avenues. Some key findings are as follows:

a. Newspaper Advertisements, billboards, door to door sales, Facebook, mass mailing, sports marketing, and participating in local events are all beneficial marketing avenues.

b. In our specific case, we believe newspaper, mass mailing, participating in local events, and sponsoring high school sporting events would be most effective.

3. Marketing Budget : This section contains a breakeven analysis and three potential budgets for review. Some key findings are:

a. Billboards are probably not economically feasible in the areab. Local events have low conversion rates needed to turn a profit

4. Forecasting : Contains potential revenue and profit based on realistic market penetration rates and profit percentages. Some key findings are:

a. Potential revenue of up to $120,000 per year in the area based on 30% market penetration

b. Potential profit of up to $60,000 assuming 50% profit and 30% market penetration

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5. Our Recommendations Based on our analysis, we recommend Rise Broadband implement the large budget marketing plan, which includes newspaper, direct mail, high school sporting event sponsorship, and participation in four local events in Arco and Mackay.

6. Data Analytics : This section includes the entire data analysis process:a. Business Understanding : Need to find a better understanding of the customers

they are losing (churn rate)b. Data Understanding : Weekends have far fewer sales and churn, some cities and

management areas have a lot more churn than others, the churn rate is higher than the new sales rate.

c. Data Preparation : There is enough data to have three sets of data: a train, validate, and test set to help avoid over-fitting the model, re-coded distance from management area, and combine variables into the sales or churn.

d. Modeling : The appropriate models are a logistic regression and a classification tree

e. Evaluation : The models only explain 11% of the variation in the data.

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I. Marketing Plan

Situation AnalysisTarget MarketAccording to Nielson’s Prizm, the common theme with the market segments in the area is that they are all mostly older with no children.1 These are the segments you would expect to see in a rural area that is dependent on farming. It is not surprising that the segments seem to enjoy the great outdoors, country music, and the simpler things in life. A strong sense of community involvement with not much disposable cash is another characteristic of this group. In fact, the median household income is only $44,000 for Mackay and $38,000 for Arco.2

HouseholdsThere are approximately 583 households in Arco and 506 households in Mackay.3 While there are that many households in each zip code for the area, the actual cities have far fewer households as seen in Figure 1. The heads of these households are mostly between the ages of 45 and 74. These household heads are our target market. We believe these are the people who are actually making the decisions for internet service providers. Figure 1

1 "Prizm MyBestSegments." Nielsen MyBestSegments. Web. 20 Oct. 2015.2 U.S. Census Bureau; generated by Chelsea McDougall; using American FactFinder; <http://factfinder2.census.gov>; (20 October 2015).3 U.S. Census Bureau; generated by Chelsea McDougall; using American FactFinder; <http://factfinder2.census.gov>; (20 October 2015).

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Potential Revenue Based on the projected numbers for only inside the cities of Arco, Mackay, and Moore, we performed a basic analysis of the revenue they can expect to bring in from these three towns each year. This analysis can be seen in Figure 2. This analysis relies on several different assumptions and is more than likely on the low side. The first assumption is that these numbers are strictly for the cities and not the surrounding areas; while we realize that Rise covers a much larger area, it is difficult to pin-point exact census data for the surrounding areas. The second assumption is that customers are not dropping their service during the first year, and the third assumption is that each customer purchases the most basic plan at $39.95 a month. The last assumption is that Darlington is included in Mackay numbers. There was no available census data for Darlington as a city.

Figure 2

Figure 3 below is the projected numbers for Arco City as well as Mackay and the surrounding area. These numbers are more likely to be realistic as they include the whole 83251 zip code that Rise covers. This analysis relies on the same assumptions as above.

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Figure 3

SWOT AnalysisTable 1 shows a SWOT analysis of Rise Broadband:

Table 1

Strengths

● Radio towers: don’t have to dig up the ground

● Not as susceptible to weather outages● Leader in market of unserved and

underserved

Weaknesses

● Bad customer service ratings● Not well known in the area● No local branch in the area

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Opportunities

● Lots of upside potential: have 10% of market share in the area with no marketing

● Upgrading equipment in the area, which will lead to better service and may lead to better customer service

Threats

● Competitors better established● ATC is really part of the community● Fiber will become more popular as

infrastructure in the area improves● Raising prices soon

Best Practices AnalysisThis segment of our findings seeks to find what other industry players are doing that makes them stand out in the market. Our research revealed that, although the telecommunication market in the United States seems to be very saturated with a lot of industry players, there is still a huge portion of the consumer market that remains untapped by these industry players. According to the American Consumer Satisfaction Index (ACSI) website, about 61% of US households still have one or no high-speed internet service provider in their region.4

Therefore, in order for Rise Broadband to make higher improvement in its area of operations, the team saw the need to critically study the industry as a whole to identify areas that are likely to provide opportune grounds for Rise Broadband and also to make it a leading brand in the rural markets. We therefore asked some major questions that would help us identify these opportunities. These questions are:

1. What are other companies doing to market to rural or underserved areas?2. What works in rural marketing plans?3. What doesn’t work in rural marketing plans?

What are other companies doing to market to rural or underserved areas? According to our findings, customers are basically dissatisfied with their services due to the basic lack of choice. It should be noted that most of the competitors in the industry, unlike Rise Broadband, provide other services like television and phone services. These services actually give them a competitive advantage over their competitors who provide only internet services. Among these competitors that provide multiple services are Frontier Communications, AT&T (U-verse) and Verizon Communications (FIOS) who operate in the Arco/Mackay market. These three competitors pose a very strong threat to Rise Broadband due to their market strength and extent of their coverage. The ACSI adds them to the nation’s top 10 internet service providers.

These companies are able to provide cheaper but valuable services to their clients. For instance, for as low as $19.99, Frontier Communications provides its consumers with a high speed internet plus a phone service. AT&T and Verizon provide these rural customers with almost

4 The American Consumer Satisfaction Index http://www.theacsi.org/industries/telecommunications-and-information/internet-service-provider

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uninterrupted phone service and internet service to go about their duties. Since most rural customers work from dawn till dusk outside of their homes, our research revealed to us that, getting fixed internet service in the homes did not seem a good idea to them. AT&T and Verizon therefore provide mobile internet services for their clients to use anywhere they find themselves.

Per the results of the ACSI survey, the major standards that consumers today use to define a good company in the industry include but are not limited to the following: ease of understanding bill, ability to keep service interruption and outages to a minimum, consistent speed and service, service performance during speed hours, data transfer speed, quality video streaming, website satisfaction, variety of internet plans, call center satisfaction, quality of other services such as email, data storage, internet security and so on. One major area that clients really seek to see in their providers is how clear the providers present their bills. Customers do not want to be forced into service contracts, unreliable service, slow internet speed and high subscription prices. Research has shown that the above mentioned customer concerns are areas that most competitors like AT&T, Verizon and Frontier Communications have made tremendous efforts to address, thereby placing them among the nation’s top 10 internet service providers.

Concentrating on Arco/Mackay area, the team found out that one major competitor commanding a greater market share is ATC Communications. From the conversation we had with one Mackay local, the team gathered that ATC Communications has won the loyalty of many users in Mackay. From our studies we found out that there are several reasons that actually make ATC Communications stand out in Mackay. These reasons include:

● How consumers believe the company to be part of them because it started in Albion, ID● The $1000 scholarship awarded to 5 people every year ● ATC’s willingness to sponsor local community events5 ● Community services such as the recycle project, 911 presentation to school children in

kindergarten and first grade, adoption of 3 highways in Malad, Albion and Arco etc.6

The above reasons contribute to ATC’s popularity among clients in the Arco, Mackay and all its areas of operations.

What works and what doesn’t work in rural marketing plans?A good marketing plan, as it’s understood, is a summary of what the marketer has, over a period of time, studied the marketplace and shows how the marketer plans to achieve his/her marketing objectives. Per our research, we found out that there are certain marketing practices that are very peculiar to certain markets.7 Some of these practices are based on demographics, geography,

5 ATC Communications’ Sponsored events. < http://www.atcnet.net/about-atc/community-involvement>6 ATC Communications’ Community service. < http://www.atcnet.net/about-atc/scholarships>7 Strain, M. (2015). Demand Media.. http://smallbusiness.chron.com/difference-between-rural-marketing-urban-marketing-23162.html

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consumer tastes and preferences, opportunities etc.8 This implies that there are some marketing plans that work best in rural markets and those that are not applicable in these markets.

The team decided to focus on what works and doesn’t work well in rural markets because Rise Broadband primarily operates in these markets.

● Demographics From our research, we found out that most rural folks are into blue collar jobs and this

implies they are mostly below on average income when compared to people who live in the cities. Therefore, a good rural marketing plan will focus more on how affordable its products may be. This means that rural dwellers mostly do not seek products that are very luxurious and expensive.

● Geography Since most rural dwellers live very far from city centers, they mostly rely on the internet

sales or a partnership with stores that mostly serve these rural areas. We identified that online sales might not always work to sell services to people that may not have internet access in the first place. However, online sales may work for consumers that are dissatisfied with their current provider. Our research revealed that most successful rural businesses have stores or agents that attend to the needs of their clients. Also from our discussion with a Mackay local, it may be beneficial for Rise to open up a customer service store in the Arco/Mackay communities to help solve the needs of their customers locally. According to him, this will help build trust and loyalty among Rise’s customers, but more research needs to be done to determine feasibility.

● Tastes and Preferences Tastes and preferences differ from consumer to consumer and this may be due to how

exposed a consumer may be. Our findings revealed that there are certain advertising words that resonate well with rural dwellers while other words may not work as well. Words that resonate well in rural marketing plans include “traditional, dependable, values” etc. On the other hand, words like “innovative, new, fresh, technology” etc. may not achieve the best results in rural ads.

● Marketing Methods From the discussion we had with the Mackay local and from our own research, we

realized that there are certain marketing methods that can be used to make inroads in the rural markets. We found out that rural consumers are more likely to respond to one-on-one marketing such as the door-to-door sales done by sales personnel who take their time to solve all the needs of these rural folks.

Competitor AnalysisThe competitor analysis defines who the competitors are, their plan pricing, how they price their plans, the marketing avenues they utilize, and what customers believe differentiates competitors.

8 http://www.nationalaffairs.com/doclib/20120320_LeeGalley_Indiv.pdf10

Table 2 summarizes the type of service, pricing base, differentiation, and marketing avenues used by each competitor. Tables 3 and 4 show plan pricing for each competitor.

Table 2

Competitor Type of Service

Pricing Differentiation Marketing Avenues

ATC DSL and fiber

Company costs Local service and support

Direct mail and newspaper, but also utilizes social media and billboards

Frontier Satellite Profitability and competitiveness

Value: Decent speed for a reasonable price

Direct mail, newspaper, TV & radio, website, digital advertising, search engine marketing

Exede Satellite Competitors Speed, availability, and price

TV, radio, print, pay-per-click, public relations, website, social media

Blaze Wifi & Hughesnet

Wireless & satellite

Competitors and company costs

2 options in one,fastest & cheapest satellite among competitors

Website, social media, TV, radio

AT&T Mobile internet

Market trends & competitors

Fastest network TV, radio, website, direct mail, social media, internet ads

Verizon Mobile internet

Market trends & competitors

Largest network coverage

TV, radio, website, direct mail, social

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media, internet ads

Table 3

Providers 5-6 mbps 10-12 mbps

20-25 mbps

50 mbps 100 mbps

ATC (without phone line)

$56.45 $71.45 - - -

ATC (with phone line)

$77.21 $92.21 $112.21 $132.21 $232.21

Rise Broadband $39.95 $49.95 $69.95 - -

Frontier Communications

$29.99 $39.99 $49.99 - -

Frontier Communications and ATC are Rise Broadband’s biggest competitors; Frontier under prices Rise Broadband in almost every category, and ATC is well-known as a local company.

Table 4

Provider 10GB 20GB 30GB 50-55GB 60GB 65GB 70GB

Exede - $49.99 $79.99 $129.99

Hughesnet - - - $39.99 $49.99 $69.99 $119.99

Blaze Wifi - - $139.99 - $329.99 - -

AT&T $80.00 - - - - - -

Verizon $90.00 - - - - - - Among providers with data caps, the cheapest competitor is Exede, but Hughesnet may provide the best value for the money since a customer can purchase more data for less money.

Our methodology in researching competitors consisted of contacting marketing directors (or someone in the marketing department from each company), as well as searching their websites to find information about how they differentiate themselves, their value propositions, how they price their services, and marketing avenues they each utilize.

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FrontierThe Marketing Manager of Frontier whom we contacted is named Brendan Kelly. He asserted that Frontier prices their services by taking into account several factors: profitability and competitiveness. Frontier prices their services just above installation costs, but also in line with what competitors are charging, so they are not too high or too low. Brendan believes that Frontier’s internet service is “…a ‘value’ product; decent speed for a reasonable price.” In terms of how they market their services, Frontier uses a variety of methods: direct mail, newspaper inserts, TV ads, radio ads, their website, and placing messages within current customers’ billing statements. More and more, they are using digital advertising and search engine marketing to reach new customers, however. The basic message behind their marketing is price; according to Brendan they really push the price of their high-speed internet, rather than showcasing the brand. In terms of what sets Frontier apart from competitors, there are several factors, but price is the main one, as Brendan believes Frontier costs less than most competitors. Other factors that set the company apart are modem lease and the company’s belief in “value.” All new customers receive a free wireless modem rather than being required to rent one. Frontier may not have the fastest internet, but for the price, Brendan believes it is a good value, and it is this value that the company promotes. Along the same lines, the company proudly claims to be 100% US-based and is one of the top 100 companies in America to hire service personnel, which further bolsters the company’s belief in “value”. According to Brendan, “All in all, we want to convey that we’re a good value.” Also, the fact that service is not offered based on a contract sets the company apart from competitors who offer their services based on 1-3 year contracts. ExedeThe next competitor we contacted is Exede Internet, whose Content & Social Media Editor is Alex Miller. According to Alex, Exede prices its services based on what competitors are charging, what they believe customers can afford to pay, and what will allow for some amount of profitability. Their services are a bit more expensive because the company must install special equipment on customers’ homes, and must build and maintain a fleet of satellites, only one of which costs the company about $500 million just to launch. Exede markets their services via TV ads, pay-per-click, radio, print, public relations, their website, and social media. Marketing is tricky, however, because although they are available nationally, they are a satellite provider and their beams do not all have the same plans and capacity, so they must adjust their marketing in order to avoid overselling. Alex stated that in terms of differentiation, Exede focuses on speed, availability, and price. He claims their download speed of 12 Mbps is faster, especially in rural areas where the larger phone and cable companies don’t provide their best service. Exede’s internet, on the other hand, is available anywhere as long as the customer has a satellite dish that can receive their signal. Another benefit is that the company offers a three-year price-lock guarantee so customers’ rates can’t randomly increase. Exede Internet’s value proposition is “To provide high speed internet to anyone who needs it, particularly those who are unserved or underserved by terrestrial broadband providers.

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ATCThe next marketing manager we spoke with is Kyle Bradshaw, from ATC Communications. Kyle stated that because there are not many competitors, ATC bases pricing on their company costs. The company markets their services to consumers mostly through direct mail and newspaper, but also utilizes social media and billboards. According to Kyle what differentiates them from competitors is capitalizing on service and support; ATC is really the only local company that’s close by and can arrive on site in a few hours if your internet is down. ATC may not be the price leader because it’s always cheaper to be wireless than to put cables and wires in the ground, but they make up for it through good service. In terms of a value proposition, Kyle stated “We realize our customer base has made a choice to live in rural Idaho, and we feel like our goal is just because you’re a rancher out in the middle of nowhere and you don’t have neighbors, that doesn’t mean you shouldn’t have access to the rest of the world. This is what drives us, knowing that we’re there to take care of customers who have chosen to live out in Rural Idaho.” Blaze Wifi & HughesnetBlaze Wifi and Hughesnet are the next competitors in the Mackay/Arco area. Hughesnet is a satellite provider that is sold through Blaze Wifi, which sells wireless internet service. Both are provided under Viasat, however. According to a representative we spoke with, the company prices based on competitors and their own costs. They market their service to customers via the Blaze Wifi website, social media, and TV & radio ads. Blaze Wifi differs from competitors in that it offers two options (satellite and wireless) through the same overall company; data caps are required by federal law for satellite providers, but if a consumer wants unlimited data, they have the option of switching to Blaze Wifi without switching to a completely different company for their internet. Blaze Wifi also differentiates itself from competitors by advertising that Hughesnet is the fastest and cheapest satellite internet choice among competitors, with prices starting as low as $39.99 per month. AT&T and VerizonAT&T and Verizon are the last two competitors who offer service in the Mackay/Arco area; because of the size and breadth of both companies, we were unable to speak to someone in the marketing department, and tried to find as much information as we could about them from their websites. Both are the only mobile internet providers in the area and market their services through TV & radio ads, website, direct mail, social media, and internet advertisement. We could not find any information about how the two companies price their services, but based on the fact that both companies are nationwide and probably have a corporate marketing strategy, we believe their pricing would be based on market trends and competitors’ pricing. In terms of value propositions, AT&T claims to offer the fastest network, and Verizon claims to have the largest coverage area. Consumer Ratings

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We next attempted to determine what consumers believe differentiates ISP’s in the area by looking at customer reviews, and the short answer is nothing. A search of customer reviews for each provider led us to the conclusion that many customers are generally unhappy with internet providers in the area, and there were no advantages to any one provider over another. ATC communications had an A+ rating on the Better Business Bureau’s website, but we could find no consumer reviews for or against the company. The provider of Hughesnet and Blaze Wifi (called “Viasat”) had a BBB rating of B. AT&T and Verizon both had BBB ratings of A+. Neither Frontier nor Exede had BBB rankings. Despite the seemingly good ratings, however, all of the providers except for ATC Communications had horrible written customer reviews. Rise Broadband is no exception to this, as the company has an “F” rating on the BBB website, even though it claims to offer a better customer experience than competitors. Across the board, customers complained of very slow speeds, terrible customer service, technicians who have no idea what they are doing, getting locked into several year contracts because they were lied to about the service, and billing & collection problems. Overall, according to reviews, consumers don’t believe anything differentiates internet service providers in the area, because none of them are doing a satisfactory job providing their services.

Marketing Avenue AnalysisThe marketing avenues we looked into for the Mackay/Arco area are Newspaper, Door to door sales, billboards, Facebook ads, Mass mailing, and Sponsorship of local events. This section will provide research about the advantages, disadvantages, and effectiveness of each method. Tables 5-7 list pros and cons of all avenues, costs, and contact information.

Table 5Advertising Method Advantages Disadvantages

Newspaper ● Personal ● Works well in rural

communities ● Only targets the

community we are interested in

● Can lead to increases in product trials, sales, and market share

● Can be expensive depending on the ad

● Not as popular as digital methods

Door to Door Sales ● Personal & builds trust among community members

● Expensive (must pay worker to go door to door)

● Time consuming● May not be able to reach all

areas depending on geographic size of target market.

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Billboard ● Guaranteed exposure for 2 years

● Good for top of mind awareness

● Short, simple message● Repeated exposure

● Targets mostly people from out of town

● Expensive in comparison with the low level of local exposure

● Only one location

Mass Mailing ● Very wide reach● Good for getting brand

name out

● Often thrown away/ignored● Doesn’t feel personal● Not necessarily targeted

Facebook Ads ● Very targeted● Can positively affect brand

image and equity

● May target people outside of our service area (50 mile radius)

● Not personal● Visibility of ads based on

bidding higher than competitors

Sponsoring local events ● Lots of exposure, especially in small communities

● Very personal: Builds brand recognition, and trust in community

● Can be cheap depending on the event

● Attendees more receptive to marketing messages and images in connection with the event

● Actively engages customers

● Can be expensive depending on event

● Can be time-consuming

Sports Marketing ● Shows social responsibility

● People tend to remember sponsors they see at sporting events

● Can be time consuming

Table 6

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Advertising Method

Cost Contact (if applicable)

Newspaper $5.50/ column inch$22 for business card size$693 full page ad

Arco Advertiser146 S Front St, Arco, ID 83213(208) 527-3038

Door to Door Sales

Training time, salary for a sales person, and travel expenses

Billboard Advertising

$325/ month plus printing costs8' x 24'Location 43http://www.meadowoutdoor.com/locations/43

Kathleen Seussksuess@meadowoutdoor.com (800)-221-4114meadow@meadowoutdoor.com

Facebook Ads

Based on bids www.facebook.com/ads/manager

Mass Mailing $110 Mackay$130 Arcoplus printing costs

https://eddm.usps.com/eddm/customer/routeSearch.action

Table 7

Event Pros Cons Dates/ Cost Contact

Fireworks at the Dam

Brand recognition Local

Only once per year

July 4th

Biggest donor is matching $1500

Ron Brown(208) 541- 6989ORSouth Custer Rural Fire District(208) 588-3361

Mackay Farmer’s Market

Reach female customers Local events

Not where people go to find ISP

Every Saturday$25 per booth

Arrow Durfee 208-932-1842arrowwind09@yahoo.com

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Mackay Rodeo

Big event Lots of people from out of town Heavily sponsored by Budweiser

June

(208) 588-3027West End of Capitol AvenueMackay, ID83251

Free BBQ Local eventSponsored by Business community Good way to become involved

Must be on site No specific signs/ etc.

SeptemberDonation basis

City of Mackay203 South Main StreetP.O. Box 509Mackay, Idaho 83251208-588-2274

Atomic Days

Local Event One of the only events in Arco Lots of people

Lots of people from out of town

July 10’ X 10’ Vendor Booth: $35 w/o electricity.$55 with electricity

Jaci Hill208-403-9011hilljaci@butteschools.org

Butte High School Game Sponsorship

Good brand recognition via community involvement

Date depends on game

Need to contact athletic director

Judy Coburn (Athletic Director)Cell: 208-589-7346cobujody@butteschools.org

Mackay Jr-Sr. High Game Sponsorship

Good brand recognition via community involvement

Date depends on game sponsored

Need to

Jack McKelvie (Athletic Directorjackmcke@mackayschools.org

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contact athletic director

Descriptions of Marketing AvenuesPotential marketing avenues we looked into are mass mailings, Facebook ads, newspaper ads, door to door sales, billboard advertising, and local events.

Mass MailingsDirect-to-door mailings are advertisements mailed directly to every address in a specific area. This can be done through the United States Postal Office. The cost of this for Arco would be $131 and Mackay would be about $110. There are two ways of accomplishing this. One way would be to have a technician drop the mailings off at the local post office, or if necessary, the mailers can be mailed in one large box to the Arco post office addressed to the postmaster.9

Facebook AdsWhile Facebook advertising may not be the most effective advertising for this type of market segment, the percentage of rural users is a bit surprising. Depending on what source you are looking at, the percentage of rural users that are using Facebook is almost 70%.10

Facebook ads also have another major benefit: businesses can choose exactly how much money should be spent in a specific area before they stop showing the ads. The way it works is the business selects four things: either cost per click or cost per impression, daily limits for spending or lifetime limits for spending, an objective, and their target consumer.11 This would allow Rise Broadband to spend only what they want to spend on ads directly to consumers in the Mackay/Arco area with the ability to pause ads that aren’t working or change them on the fly.

Newspaper AdvertisementThe cost of running an ad in the local newspaper is dependent on the size of the ad. According to the Arco Advertiser, cost varies from $22 for a business card size advertisement all the way up to $693 for a full page ad. The cost per column inch is $5.50 for any size in between that. Advertising this way is only a fraction of the cost of a billboard advertisement, and has similar benefits. Most people in the town like to know about the most local news, and the newspaper is their main source of this local news.

Door-to-Door Sales

9 "Advertise with Every Door Direct Mail®." Every Door Direct Mail. Web. 20 Oct. 2015.10 "Facebook Demographics." Pew Research Center Internet Science Tech RSS. 17 Aug. 2015. Web. 20 Oct. 2015.11 "Facebook Ads Manager." Facebook. Web. 20 Oct. 2015.

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While this may be an outdated way of advertising to urban areas, this strategy seems to be something that would work well in the Mackay/Arco area. It may be expensive, but would probably have a large return on investment from a day’s worth of work for a technician.

Billboard AdvertisingThere is one billboard available in the Mackay/Arco area. According to Kathleen Suess, an employee from Meadow Outdoor, this billboard is $325/month with a traffic count of 1159. This is incredibly expensive comparatively. For comparison, there is a lighted billboard in the Idaho Falls area for $300/month.12 While this billboard will definitely increase awareness, it may not be cost effective.

Local EventsWhile there are many events in the Mackay/Arco area, there are a few that are more important to really becoming part of the community. These select events are really the heart and soul of these small towns. There are a few bigger events, but they aren’t as integral to the lives of the people that live in the community.

The first event that is important to Mackay is the free BBQ that is organized by local businesses in the area. There are a couple advantages to this event as opposed to others. First, the event is donation based, meaning that whatever amount Rise has to donate is appreciated. Second, this event specifically attracts the locals, so there will not be many attendees from outside of the Lost River Valley area. This means time won’t be wasted on event goers from out of town. The free BBQ event happens in September every year in the Mackay Tourist Park.

The second event that may be extremely important for Rise to participate in is the Fireworks at the Dam. This is a Fourth of July celebration that is funded entirely by donations. Last year, they were short about $1500 as of June and had collection cans out around the town trying to finish raising enough money to make the event happen. Being a major sponsor of the fireworks would increase brand recognition almost overnight. This is a large event for the area, and all the locals attend.

Arco is bigger than Mackay, but there aren’t as many local events as in Mackay. However, Atomic Days happens once per year. This is a large event in late July that celebrates the first use of nuclear power in peacetime. This events attracts people from all over, however, it attracts all the locals. Atomic Days is a huge part of the community in Arco.

The following is a more complete list of larger events in the Mackay/Arco area:

Fireworks at the Dam13

12 "Billboards for Rent in 83401 (Idaho Falls, ID)." Billboard for Rent in Idaho Falls, ID: (ID:279780). Web. 20 Oct. 2015.13 "Fireworks at the Dam." Mackay, Idaho 4th of July Fireworks at the Dam. Web. 20 Oct. 2015.

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Every year Mackay has Fireworks at the Dam put on by the South Custer RFD (Mackay Fire Department). The entire event costs $2,500, and they were short $1,500 in donations. The community had collection containers up around the city. While this may be a lot to put forth all at once, any form of donation would look good to the community. It could be a very good way to establish a connection with the community in a positive fun way. Farmers Market14

There is also a farmers market every Saturday morning in Mackay. While it may not be possible to have a booth every Saturday 10AM-1PM, it may be a good event to go to once in a while. Spruce StreetMackay, ID 83251(208) 932-1842arrowwind09@yahoo.comhttps://www.facebook.com/MackayFarmersMarket Mackay Rodeo15

The rodeo happens once per year around June 20th (give or take a couple of days). The event looks to be heavily sponsored by Budweiser. It may not be as valuable of an event because of the sponsorship domination by Budweiser, but there are commercial vendors at the event.

Mackay Rodeo GroundsCapitol Ave and Vadan StMackay, ID 83251

Free BBQ16

Every September the businesses in Mackay host a free BBQ for the community that happens in the Mackay Tourist Park. This would also be a good opportunity to show the local community that Rise really cares about being a local company. It also has a reach outside of the immediate community to the surrounding communities.

Atomic Days17 Atomic Days is a celebration held in July to celebrate the first use of a nuclear reactor for power in peacetime. This event has a rodeo, food, and tons of events. The whole community comes out to support the events, and it draws people from all over.

Marketing Avenue Research

14 "Mackay Farmer's Market." Mackay Community Farmer's Market. Web. 20 Oct. 2015.15 "Mackay Rodeo." Facebook. Web. 20 Oct. 2015.16 "Free BBQ." Mackay, Idaho. Web. 20 Oct. 2015.17 "Atomic Days." Atomic Days. Web. 20 Oct. 2015.

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NewspaperNewspaper advertisement is the first area we researched. The September/October 1993 issue of the Journal of Advertising Research published a study that addressed the effectiveness of newspaper advertisements. In the study, four one-third page color ads were run in the Richmond Times Dispatch and News Leader. The brands behind the ads were Nabisco Fruit Newtons, Meow Mix, V8 Light n’ Tangy, and Kraft Macaroni & Cheese. The city of Richmond, Virginia was divided into a northern and southern half; residents of the north side received the first two ads, while residents of the southern half received the other two ads. The ads ran in the mid-week food section once a week for four insertions. Households were taken from a database of households that hold Ukrops Shopper Value cards (purchases made with these cards accounted for about 80% of Ukrops sales); those with data that was not of research quality were removed, leaving a total of 28,486 households that participated in the study.18 Data about household sales (purchases) was collected and measured for fourteen weeks before the ads ran, the four weeks when the ads ran, and for seven weeks after the ads ran. Findings of the study were as follows:

● Sales and shares were up: Three of the four ads significantly increased sales and share of the market for the firms.

● Brand trials increased: Among households who received the test ads, but had never tried the test brand, sales increased 20% in comparison with people who did not receive the ads.

● For Nabisco specifically, one additional ad dollar was followed by $4.40 in additional sales.

● Coordinating the timing of promotion and image ads makes a difference.19

Door to Door SalesWe could not find any particular research studies that had been done to examine the effectiveness of door to door sales, but did find an article about a company who found the tactic very beneficial. American Solar Direct, a seller of solar panel installations in California utilized door to door sales as part of its marketing strategy. Before salesmen hit the streets, however, they were trained for a month, shadowed more experienced salespeople, learned about the solar industry, and visited distribution centers and job sites.20 According to the article, this method helped the company grow to $52.1 million in sales in 2013. Brennan Mulcahy, the creator of the company, stated that the use of three tactics made door to door selling effective for his company:

1. Find the right hook. In other words, talk to customers about things they will care about. In the case of selling solar panels, customers cared more about their finances than being environmentally friendly, so salesman switched from talking about the environment to discussing the cost savings of installing solar panels.

18 Tolley, B.S. (1993). A STUDY OF NATIONAL ADVERTISING’S PAYOUT: IMAGE ADS IN NEWSPAPER ROP. (cover story). Journal of Advertising Research, 33(5), 11-20.19 Tolley, B.S. (1993). A STUDY OF NATIONAL ADVERTISING’S PAYOUT: IMAGE ADS IN NEWSPAPER ROP. (cover story). Journal of Advertising Research, 33(5), 11-20.20 ALSEVER, J. (2015). Using Old-School Tactics to Sell New Solar Tech. Inc, 37(5), 32.

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2. Keep it local. The company actually did not do any other advertising and instead relied on door to door selling. All distribution centers were located in a densely-populated area, which shortened the purchase-to-installation process. Branches of the company were staffed with employees who knew the community’s permit processes and standards, which further sped up the process from purchase to installation.

3. Teach, don’t sell. Rather than relying on selling the product, salesmen and women instead educated customers; this enabled the product to sell itself. 21

Billboard AdvertisingBillboard advertising is another marketing avenue for which we found research. One report called the Arbitron 2009 National In-Car Study examined the in-car media audience, their exposure to outdoor advertising, radio, and audio technologies, and consumers’ shopping and purchase decisions based on their exposure to these forms of advertising. For the sake of our research, we focused only on the results related to billboards. The study consisted of 1,858 respondents who were interviewed via phone about their travel habits and use of different types of media. Some key findings of the report are as follows:

● People notice billboard advertisements: 71% of travelers 18 or older responded that they noticed billboard advertisements sometimes, most of the time, or every time they passed one.

● People learn from billboard advertisements: over half of respondents reported learning from a billboard about a an event they were interested in attending, a restaurant or store they later visited, or saw something funny that they later talked about with someone else.

● Billboard advertising is one of the last messages a consumer receives before making a purchasing decision.

● Billboards drive store traffic: almost 25% of respondents said that they were motivated that day to go to a store they saw advertised on a billboard, and 32% visited that store sometime that week. (In the case of Rise Broadband, instead of being driven to a store, consumers could be driven to the website instead if they remember the Rise Broadband name.)22

According to this research, billboards that effectively convey a message (i.e. are clear, concise, and attention-grabbing), and are placed in a high-traffic location could be a potentially beneficial component of a marketing strategy.

Facebook Facebook ads are another method we initially looked into for Rise Broadband. Although Facebook ads are very targeted, they may not be the best option for Rise Broadband due to two factors. First, the Mackay/Arco area is very rural, and the smallest area Facebook would cover a 50-mile radius, some of which Rise Broadband does not service. Second, although the two

21 ALSEVER, J. (2015). Using Old-School Tactics to Sell New Solar Tech. Inc, 37(5), 32.22 Williams, D. (n.d.). The Arbitron National In-Car Study. Retrieved November 13, 2015, from http://www.arbitron.com/downloads/InCarStudy2009.pdf

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methods of paying for ads are straightforward (one lump sum over a specified period of time, or a daily budget), the visibility of said ads depends on how much a company bids. Ads by Rise Broadband would be seen less if competitors bid higher, and there is no way to know how much other companies in the area are bidding.

Rather than looking at research specifically about Facebook advertisements, we found a study about the effectiveness of Facebook advertising (maintaining a Facebook page) on enhancing purchase intention of customers. The hypotheses of the study are as follows:

● Consumers’ opinion on Facebook advertising will positively affect the firm’s brand image.

● Consumers’ opinion on Facebook advertising will positively affect firm’s brand equity.● Firm’s brand image on Facebook advertising will significantly affect the firm’s brand

equity.● Firm’s brand image on Facebook advertising will significantly affect purchase intention

by consumers.● Firm’s brand equity on Facebook advertising will significantly affect purchase intention

by consumers.23

An 11-item questionnaire was distributed to 100 college students to test these hypotheses. The results were as follows:

● Consumers’ opinions on a firm’s Facebook page do affect the firm’s brand image and equity.

● A firm’s brand image on Facebook significantly affects the firm’s brand equity.● A firm’s brand image on Facebook significantly affects consumers’ purchasing intention.● A company’s brand image and brand equity on Facebook significantly affects consumers’

purchasing intention.

Due to the above mentioned reasons Rise Broadband may not want to create Facebook ads, the company may want to focus on increasing brand image and equity its Facebook page instead, especially in terms of customer reviews and complaints. According to the study, consumers’ opinions of a company are influenced by the company’s presence on Facebook. If reviews of the company don’t look good, this influences consumers’ opinion of the company negatively. Mass MailingWe were unable to find studies strictly on the effectiveness of mass mailings, so instead focused on the uses of mass mailing and what makes it an effective technique. Mass mailing is an inexpensive way to reach a wide area of potential customers; in the case of a company that is new to an area, it is a perfect way to get a brand name out among the masses. The key to mass

23 Dehghani, M., & Tumer, M. (2015) A research on effectiveness of Facebook advertising on enhancing purchase intention of consumers. Computers In Human Behavior, 49597-600. doi: 10.1016/j.chb.2015.03.051

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mailing, however, is keeping customers engaged. Postcards and junk mail are often tossed in the trash without a second thought. In order for mass mailing to be effective, it must be seen often enough for customers to remember the company, but not so often that it becomes a nuisance. It must also continue to capture customers’ attention. If the same (or a very similar-looking) promotional flyer or postcard is sent out each time a mass mailing is done, customers may eventually lose interest and feel that “If I’ve seen one, I’ve seen them all.”

One way to ensure that customers stay engaged is to use mass mailing for a variety of other purposes, as well, including informing customers, building customer loyalty, and fostering goodwill.24 Informational flyers can be sent out to educate customers about the company, its involvement in the community, and products & services. Special offers are one way to let customers know you appreciate doing business with them and can help build customer loyalty, while generating sales as well. Finally, greetings and holiday cards can show consumers that the company is thoughtful and cares about its customers.

Local and Sport Event SponsorshipOne new marketing avenue we looked into, is sponsorship of games at Butte High School and Mackay Jr-Sr High School. We contacted the athletic directors at both schools, and according to them, business sponsorship does not happen often, but they are open to the idea. In the past, businesses who have sponsored games have handed out flyers, snacks, T-shirts, and even held a fun competition at halftime. Jody Coburn, athletic director of Butte High School, also mentioned that they desperately need score boards in the school gym and on the football field. We attempted to find out the process (any necessary fees or paperwork, etc.) of signing up to sponsor an event, and both athletic directors said the business would just need to contact them and discuss what they are interested in doing at the event.

In terms of the effectiveness of event sponsorship, we found a 2006 study that examines the relationship between event attendees, sponsorship, community involvement, and consumers’ perceptions of the sponsors, and their intentions of purchasing the sponsor’s product. The aim of the study was to prove or disprove the following five hypotheses:

● “An event attendee who is more knowledgeable about a sponsor’s products (i.e. automobiles) is more likely to appreciate a sponsor’s community involvement.

● An event attendee who is more active in the area of the event (i.e. spots) is more likely to appreciate a sponsor’s community involvement.

● An event attendee who is more enthusiastic in the area of the event (i.e. sports) is more likely to have an appreciation for a sponsor’s community involvement.

● An event attendee who has more of an appreciation for a sponsor’s community involvement is more inclined to have a positive opinion of the sponsor’s brand.

24 Five Good Reasons to Do a Mass Mailing. (n.d.). Retrieved November 16, 2015, from http://www.allbusiness.com/five-good-reasons-to-do-a-mass-mailing-1083-1.html

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● An event attendee who has a more positive opinion of the sponsor’s brand is more intent on purchasing the sponsor’s branded product(s).”25

The event was the Fourth Annual Tour de Georgia cycling event, which is a six-day race consisting of six stages across two states. The event sponsor was a major car company. Participants were recruited to participate in the survey while attending the event; data was gathered through in-depth interviews and a survey. A total of 1,741 participants completed the survey. The following were findings of the study:

1. Participants agreed they liked that the company demonstrated community involvement, and that companies care to do more than just buy and sell products.

2. Being a major sponsor in the community showed community involvement.3. Many agreed (23.6%) or strongly agreed (25.1%) that the opinion of the sponsor changed

positively as a result of the sponsorship.4. Participants agreed that the event created more intentions to buy the sponsor’s products.5. Many agreed (20.3%) or strongly agreed (18.2%) that their purchase intentions changed

positively in response to the event.26

The data and analysis suggested that consumers who are aware, knowledgeable, and active in terms of a sponsor’s product are more likely to appreciate a company’s involvement in the community than their counterparts who are less aware, knowledgeable, and active. More appreciation of a company’s community involvement led to more positive perceptions of the sponsor’s brand. Lastly, results suggested that when people’s opinions about a sponsor are changed in a positive way, they are more likely to purchase the sponsor’s products. It can be concluded from these results that sponsoring local events is crucial to raising awareness about a company’s brand, establishing trust in the community, and incentivizing customers to purchase the company’s products.

Marketing BudgetBefore creating a budget, we first conducted a breakeven analysis to examine how many household conversions would be necessary to make up for the money spent on each marketing avenue. This analysis allowed us to see which avenues were most feasible in terms of cost vs. how many households we reasonably thought it would be possible to convert. Unfortunately, we were not able to factor in any company costs other than the marketing avenues themselves due to our client being unable to provide us with this information. Rise Broadband offers $39.95,

25 Close, A., Finney, R., Lacey, R., & Sneath, J. (2012). Engaging the Consumer through Event Marketing: Linking Attendees with the Sponsor, Community, and Brand. J. Adv. Res. Journal of Advertising Research, 26(4), 420-433. Retrieved November 12, 2015, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=198580126 Close, A., Finney, R., Lacey, R., & Sneath, J. (2012). Engaging the Consumer through Event Marketing: Linking Attendees with the Sponsor, Community, and Brand. J. Adv. Res. Journal of Advertising Research, 26(4), 420-433. Retrieved November 12, 2015, from http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1985801

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$49.95, and $69.95 plans and we made assumptions of 30%, 40%, 50%, and 60% of each plan being profit. We calculated the breakeven using the following formula:

Cost of marketing avenue¿¿

For example, to arrive at 27.12 household conversions necessary to make up for the cost of the billboard assuming 30% profit, we divided the cost of the billboard ($325) by the product of $39.95 and 30%. In order to keep the units of measure the same across all marketing avenues, we assumed a time frame of one month; for example, the farmer’s market occurs four times a month, so we multiplied the $25 fee by four to arrive at a total cost of $100. Table 8 below shows the breakeven analysis.

Table 8Percentage of plan that is profit 30% 40% 50% 60%Conversions needed for $39.95 PlanBillboard 27.12 20.34 16.27 13.56Newspaper Ad (twice a month) 7.34 5.51 4.41 3.67Mass Mailing 20.11 15.08 12.07 10.05Door-to-door 66.75 50.06 40.05 33.38Facebook* 8.34 6.26 5.01 4.17Farmer's Market Booth 8.34 6.26 5.01 4.17Fireworks at the Dam (once a year) 41.72 31.29 25.03 20.86Atomic days 4.59 3.44 2.75 2.29Free BBQ ($500 Hypothetical) 41.72 31.29 25.03 20.86

Conversions needed for $49.95 PlanBillboard Conversions needed 21.69 16.27 13.01 10.84Newspaper Ad (twice a month) 5.87 4.40 3.52 2.94Mass Mailing 16.08 12.06 9.65 8.04Door-to-door 53.39 40.04 32.03 26.69Facebook 6.67 5.01 4.00 3.34Market Booth ($25x4) 6.67 5.01 4.00 3.34Fireworks at the Dam (once a year) 33.37 25.03 20.02 16.68Atomic days 3.67 2.75 2.20 1.84Free BBQ ($500 Hypothetical) 33.37 25.03 20.02 16.68

Conversions needed for $69.95 PlanBillboard Conversions needed 15.49 11.62 9.29 7.74

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Newspaper Ad (twice a month) 4.19 3.15 2.52 2.10Mass Mailing 11.48 8.61 6.89 5.74Door-to-door 38.12 28.59 22.87 19.06Facebook 4.77 3.57 2.86 2.38Market Booth ($25x4) 4.77 3.57 2.86 2.38Fireworks at the Dam (once a year) 23.83 17.87 14.30 11.91Atomic days 2.62 1.97 1.57 1.31Free BBQ ($500 Hypothetical) 23.83 17.87 14.30 11.91

Rise Broadband Plan Prices 39.95 49.95 69.95

Marketing Avenue CostsBillboard per month 325 325 325Newspaper Ad (twice a month) 88 88 88Mass Mailing 241 241 241Door-to-door (20hrs/week, $10/hr, 4 wks) 800 800 800Facebook (monthly) 100 100 100Market Booth ($25x4 times per month) 100 100 100Fireworks at the Dam (once a year) 500 500 500Atomic days (once a year) 55 55 55Free BBQ ($500 Hypothetical) 500 500 500

Based on the breakeven analysis and pros and cons of each marketing avenue, we arrived at three potential budgets. We provided three budgets because we felt it would be helpful to offer several options based on cost and effectiveness. The small budget is based on an estimated market penetration of 25% and includes what we believe would be the most beneficial avenues for the least money. We estimated the market penetration for the medium budget to be 27% and believe it to be more effective, but slightly more expensive than the small budget. Finally, the large budget includes all avenues we believe Rise Broadband should invest in to be most successful in the area; it is the most expensive of the three, but we estimate could provide 30% market penetration and produce the most profit.

SMALL BUDGET LEVEL (25% penetration)

Potential Revenue $102,711.45

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Marketing Avenue and Associated Expense

Atomic Days $55.00

Mass Mailing $964.00

Game Sponsorship** $375.00

Total Anticipated Expense ($1,394.00)

Total Profit $101,317.45

MEDIUM BUDGET LEVEL (27% penetration)

Potential Revenue $110,928.37

Marketing Avenue and Associated Expense

Atomic Days $55.00

Mass Mailing $964.00

Game Sponsorship** $375.00

Fireworks at the Dam $500.00

Farmer’s Market Booth $150.00

Total Anticipated Expense ($2,044.00)

Total Profit $108,884.37

LARGE BUDGET LEVEL (30% penetration)

Potential Revenue $123,253.74

Marketing Avenue and Associated Expense

Atomic Days $55.00

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Mass Mailing $964.00

Game Sponsorship** $375.00

Fireworks at the Dam $500.00

Farmer’s Market Booth $150.00

Newspaper $1056

Free BBQ $500

Total Anticipated Expense ($3,600.00)

Total Profit $119,653.74

Sales ForecastWe made some specific assumptions for this forecast. The numbers are based on a 25%, 27%, and 30% market penetration and 30% profit, 40% profit, and 50% profit based on the $39.95 plan for consumers.

Figure 4

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Our RecommendationsWe recommend Rise Broadband implement the large budget, which includes running a newspaper ad, doing a mass mailing, participating in the farmer’s market, free barbeque, Atomic Days, Fireworks at the Dam, and sponsoring a high school football game. We suggest this budget first because we believe 30% is a reasonable penetration rate that can be reached using all of these marketing avenues. Second, potential revenue for 30% is $12,000 more than for the medium plan. Lastly, this budget fits well within the spending limit of our client’s marketing budget.

Newspaper is important because a majority of residents in small towns such as Arco and Mackay read the newspaper; for them, it is an important part of the community, so implementing it in Rise Broadband’s marketing is a good way to get into the community. A newspaper ad twice the size of a business card would be run twice a month. An ad of this size is large enough to be seen, but much less expensive than a full-page ad. Rise Broadband should also look into writing a column in the newspaper every so often; as earlier stated, people read the newspaper very frequently, so a column would be read by a large portion of the community. This is also a good way to get involved in the community without actually attending an event. Mass mailings are great for reaching the masses, and also provide a tangible piece of information for customers. We recommend doing a mass mailing four times a year; doing this only four times a year will increase brand awareness among consumers, but not annoy them with getting the same/a similar piece of mail from the same company too often. According to our research, participating in local events is vital to increasing brand awareness, especially in small towns where there is an even tighter-knit community. This is the major reason we recommend Rise Broadband participate in the major community events of Arco and Mackay.

Although we researched door to door sales, billboard ads, and facebook ads, we did not recommend any of these options. We do not believe door-to-door sales will be economically feasible in terms of the number of conversions required to equal the amount of money necessary to pay a door-to-door employee. Billboard ads were ruled out because we also do not believe they are economically feasible: there is only one location, which is next to a freeway, so mostly through-traffic would see the ad. There is a two-year contract of $325/month for the billboard, and a number of people from the area may see it and sign up, but the number of conversions would taper off after a while; over the two-year time span, this form of advertising would probably become ineffective.

II. Data Analysis

Data Process

1. Business Understanding

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The main goal of examining this data set was to be able to predict churn or sale for Rise Broadband. Churn is all customers that discontinue their service, and sales is any time they have a new customer or connection. The data understanding of their current customers can help them make better educated forecasts for these areas. Better understanding churn rates can help them make real time changes to their strategy.

A more flexible approach to marketing strategies can help give Rise a superior position in the rural markets as they will be able to more quickly adapt to changes in market conditions.

2. Data Understanding

The original data set we were provided had the following variables:

Table 10Variable MeaningDate Mm/dd/yyyyType Five types of actions included:

NP- Non pay (churn)VD- Voluntary Disconnect (churn)RS- Restart (sales)RC- Reconnect (sales)NC- New connection (sales)

Day of Week Day of the week that the action occurred

Day of the month Day of the month that the action occurredMonth Month that the action occurredCity The city that customer resides inManagement Area The city the management area is located in Sales/Churn Sales or churn according to typeState State that the management area is in

The second step of data understanding is to look at the descriptive statistics for the whole data set. All descriptive statistics can be seen in Appendix A. There were some outliers in the distance set, but they were necessary data points.

As can be seen in Figure 5, there was a problem with the number of data points in November and December. Since this is year-to-date data for the past 3 years, it seems like there are significantly less data points in November and December. To alleviate this problem, we excluded data for November and December altogether. The data is much more representative using this method.

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Figure 5

As seen in Figure 6, there was slightly more churn (53%) than sales (46%). This is concerning because a business with more churn than sales will eventually go out of business, so Rise Broadband should try to determine the cause behind why churn is higher than sales. The summer months (June to September) seem to have more of both sales and churn. Some management areas seem to have many more customers than others (Pahrump and Idaho Falls). Nevada and Idaho also seem to have more churn and sales. The day of the month actually seems fairly stable, while the day of the week seems to have more data points during the weekdays than the weekend.

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The average distance in miles from the management area to the city is just over 9 miles. This isn’t as far of a distance as we imagined it would be.

The next portion of data understanding is using the graph builder to explore some relationships between the variables. The following figures show the interesting graphs built from this analysis.

Figure 6

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Figure 7 allows you to see that most days of the month have about an even split, but there are a few exceptions. It appears that on the first few days of the month and the last few days of the month there are slightly more customers churning.

Figure 7

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Figure 8 below allows us to see the churn/sales by state. This graph can be somewhat deceptive as it looks like every single person in Montana is churning. However, upon closer inspection it is clear there is only one data point in Montana that happens to be a churn. Ignoring this issue, Figure 8 shows that Nevada is the only state experiencing more sales than churn. It also shows that Wyoming and Utah are the states with the most amount of churn. It does not show us if this difference is statistically significant, but it does signal that this could be an important variable for evaluation in the models.

Figure 836

Figure 9 also shows some interesting things going on in the data. Recall that CitySize is coded as 0 for a city larger than 200,000 people, 1 for cities between 50,000 and 200,000 and 2 for smaller cities. It would appear that there is more churn in smaller cities and very large cities, but medium cities seem to have more sales.

Figure 9

Figure 10 shows the different types of churn codes. It is interesting to see that the vast majority of churn is due to voluntary disconnections. This could signal some very different challenges

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than if the majority of churn was non pays. It is also interesting that a lot of sales are new connections rather than returning customers.

Figure 10

Figure 11 shows the different types by management area. This graph reveals some interesting information. For example, Las Vegas and Malad both have unusually high numbers of voluntary disconnects vs. Pahrump or Sandy Valley. Pahrump (along with Mountain Home) seem to have higher percentages of new sales.

Figure 11

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Figure 12 shows that the day of the month does not have a huge effect on the major categories (voluntary disconnects and new connections). It does have an effect on the smaller categories, but it may not have a large impact in the modeling due to the effect being on categories that are much smaller in comparison.

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Figure 12

Figure 13 shows Type by Day of Week. This chart also showed some interesting patterns. Mondays have the highest level of voluntary disconnects. The middle of the week (Wednesday, Thursday, and Friday) seem to have the highest number of new connections. It is obvious from this chart that business dramatically slows on the weekends.

Figure 13

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3. Data Preparation (cleaning) The data set was originally 99,215 rows. After excluding the two months for which we don’t have data, and eliminating all rows that don’t pertain to churn or sales, the data set was down to 34,308 rows. The rows we eliminated had to do with other call types such as equipment pick up or fixing equipment.

The next step in the data cleaning process was re-coding “Type” into “CorS” which became a 1 for all variables that are sales, and a 0 for all churn.

The next variable to be recoded was the city. We made a new column for distance from management office and then manually recoded all the city names to a driving distance in miles from the city to the management office city in miles. All distances were recorded from Google Maps. This variable is one that we thought could possibly be causing disconnects due to longer wait times for service, and in rural areas, we suspected that having to drive a long way to talk to a person face to face could have a major impact on people disconnecting their service.

We also recoded city size into small (2), medium (1), and large (0). However, this variable turned out to be insignificant in all models run.

The next task was to make a validation column. We achieved this by making a new column labeled TVT (train, validate, test) that was then randomly assigned a 0, 1, or 2. Sixty percent was assigned to the training set, 20% to the validation set, and 20% to the testing set. The training set is used to build the models. The validation set is used to determine when to stop modeling, and the testing set is used to determine how well the model works on real data. Using this type of validation helps to eliminate over fitting of the model.

4. Modeling 41

Since CorS (Churn or Sales) is a binary variable, the appropriate models are a classification tree and logistic regression. If the variable of interest was a continuous variable the appropriate models would be a multiple regression and a regression tree.

We then selected variables that would not be predictive of each other. For example, distance from management area and city could not be in the same model. We then ran the classification tree.

Figure 14 (Classification tree)

According to Figure 14, the most informative attributes from the classification tree were the city, followed by the day of the week, month, management area, and day of the month.

The interesting thing about this column contribution report is that distance is not something that factors into the analysis much.

The first split of the tree is shown in Figure 15 (first split)

Figure 15

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Every other city is in the other side of the tree. Since this was the most informative attribute, we found it important to be able to see the cities where there is a difference. All other cities not listed in this first split are on the other side.

The most extreme leaves were: 1. Firth group city, March-June & August & October and Sunday with 97% of calls within this leaf being Churn. 2. The same as above except for Saturday with 89% churn3. Adrian group city, January-March & August to October, Distance less than 26 miles, and the day of the week is Saturday, Wednesday, or Thursday with 73% being sales4. Same as above with day of the week being Thursday or Friday with 67% being sales

The r-square and number of splits is shown in figure 16 below. 43

Figure 16 (classification tree and number of splits)

The next model that we ran was the logistic regression. In order to set up the logistic regression, we ran a step wise to eliminate variables. Figure 19 in the appendix shows this process.

The intercepts are useful in some of the instances. For example, the first grouping of days of the week is Saturday-Monday and it is 1.66 times more likely to be churn if it is in these days of the week vs. the rest of the weekdays. It is also 2 times as likely to be churn if the day is Sunday than if it is Monday or Saturday.

Figure 17 below shows the R-square and RMSE for the logistic regression.

Figure 17

The informative variables from the logistic regression were: city, day of the week, month, and day of the month.

The first group of cities can be found in Appendix A, Table 11. If the city is one of those 129 cities, then the customer is 1.79 times more likely to be churn than if they had been in the other cities on the list.

If the action is Sunday, Monday, or Saturday it is 1.65 times as likely to be churn than if the action happened during the week.

If the month is April- July, then the action is 1.14 times as likely to be churn than if the month was August-October or January-March. Please see attached data table for all other intercepts.

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Using this particular training and validation set, this model explains approximately 11% of the variation found in the data.

5. Evaluation

Although there were many data points, the highest r-square achieved after many iterations of the data analysis cycle was just over 11%. While that is better than some models, it still does not explain a lot of what is going on in this particular data set. This really means that these variables are not very predictive of whether or not a customer will churn.

This particular dataset showed that distance from the management area and city size classified as small, medium, and large are not important to predicting churn for their customers.

In the future, the data cycle can be started again to continue to build a better model. Some variables that could be tracked in future data analytics cycles are: how many competitors there are in the area, if the customer had a trouble call in the month prior to disconnecting, the median salary in the area, how long the person had been a customer, marketing dollars spent in the area, speed the customer was promised vs. the speed they actually received, and how many towers are in the area.

After collecting more variables, Rise can continue to improve upon the models built to better explain the variation within the data. The areas they should focus on are the areas that seem like interesting patterns from examining the bivariate patterns seen in the pie charts. Particular attention should be paid to the management areas where churn is higher and perhaps better classifications of city size such as population density.

Overall, the most informative and interesting patterns can be seen in the city data. Further analysis of what makes those cities similar in context of Rise Broadband would be a very likely bet for improving the performance of the models.

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Appendix A

Figure 18- Descriptive Statistics

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Figure 19

Table 11

Cities

WEST YELLOWSTONE DRIGGS NEWDALE REXBURG

ALBION VICTOR CLIFTON ARIMO

LETHA MUD LAKE HOWE IRWIN

MONTEVIEW BLISS DOWNEY SHELLEY

MOORELAND PARKER THATCHER INKOM

MOOSE IDAHO FALLS AMMON DRUMMOND

ROCKLAND SAINT ANTHONY SWAN VALLEY HOLLISTER

PILOT VALLEY CHESTER KIMBERLY OVID

MOSCOW FORT HALL SODA SPRINGS MACKS INN

NOTUS AMERICAN FALLS BASALT GARDEN CITY

NORTH LAS VEGAS LAVA HOT SPRINGS STAR VALLEY RANCH ONTARIO

OSINO EAGLE JACKSON MARYSVILLE

HENDERSON TETONIA AFTON SPRINGFIELD

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THAYNE ABERDEEN WEST WENDOVER NEW PLYMOUTH

HANSEN KUNA HOMEDALE FAIRVIEW

BUHL NAMPA WILSON BURLEY

WENDELL PARIS MERIDIAN IONA

HAMER HEYBURN RYNDON ALPINE

SHOSHONE FELT TERRETON MARSING

FILER WILDER ARCO NYSSA

SWEET BLACKFOOT BOISE POCATELLO

DARLINGTON WELLS HAGERMAN MCCAMMON

SOUTH FORK GRACE LEWISVILLE CARLIN

MORELAND CHUBBUCK RIGBY MALAD

MACKAY RUPERT HAZELTON SUGAR CITY

DIETRICH SPRING CREEK DECLO GOODING

MALAD CITY ELKO TETON MENAN

JEROME RIRIE WENDOVER MOORE

LAS VEGAS ETNA MELBA OAKLEY

EMMETT DINGLE FIRTH TWIN FALLS

FREEDOM PAUL VALE ALTA

MURTAUGH

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