A Buyer Loyalty Test: AT&T vs. Verizon
1/26/2011 6:09 AM
One of the least kept secrets that came out this January was the Verizon announcement about acquiring Apple’s iPhone for their users. Of course AT&T quickly countered with a question about Verizon’s ability to match AT&T’s 4G speed. Many of the nations press outlets were quick to glob onto the press release(s) and posted or gave airtime to this. Many opinions, more options for us users. Our objective here is to examine just why this is news, and to explore, examine and harvest any nuggets that could be applied to our own brands.
A quick and dirty history observation here is that Apple chose CES as the launch venue in 2007, following up with their quirky commercials that first ran on the 79th Academy Awards, ABC February 25th. The ad features clips from several notable films and television shows over the last seventy years, showing iconic characters answering telephones and saying "hello" or a similar greeting. The iPhone is shown at the end with the caption "Hello. Coming in June."
When launched that summer millions of devoted Apple evangelists/enthusiasts ran out and placed four to five hundred bucks down on the phone. The product was extremely well thought out, ergonomically hyper-cool, great looking, and of course so feature rich; adoption rates went through the stratosphere. The product rocks.
Chinked Armor: Of course those of us who have them now very much love the product, the problem we all encounter every day is the flawed AT&T network – and here is the crux of this discussion today. If any generalizations could be made two would be that “Most or at least many iPhone users are frustrated with AT&Ts inability to offer credible interconnectivity”. Or more to the point ”I consider myself more a customer of the iPhone than that of AT&T”. I spoke to two other industry iPhone users back from CES and all three of us were beyond the issue, AT&T could not handle the pressure that CES attendees placed on their system, and all three of us solved the issue the same way -- we borrowed someone else’s phone. A recent survey of just over 4,000 AT&T iPhone users, this January, showed that 42 percent had connectivity (data services) problems and 27 percent had excessive dropped call experiences. WOW! That represents a target rich market, for a realistic competitor.
So in this post we have made a credible argument that the product was successfully launched, got absorbed, and has a seriously flawed partner in AT&T. Is this a new issue for AT&T? Did they just discover our challenges to use their system? For the investors in the company, they should ask some very real, very hard questions. First is that the iPhone user is an exceedingly attractive target, we use more technology, and we influence many others. Will we defect?
“As an iPhone user I feel that I have been more loyal to AT&T than AT&T has been to me.”
The strategic question is why do we feel this way? The answer is that AT&T has not invested in their network like the other carriers. In fact for the last few years the Consumer Report organization has placed Verizon as the best cell carrier, and AT&T as the worst among the national brands. What percentage of AT&T iPhone users will defect? Will you? For the last several months AT&T has exerted energy in “locking up” iPhone users into long term contracts, so in some opinions that just means that the bleeding will last for the next 18 -24 months.
How Loyal Are Your Buyers?
If some third party were to interview your organizations habitual buyers the following question:
Do you feel that (your brand) is more loyal to you, than you are to them?
How would your buyer audience respond? In most cases we have some ideas, and certainly some have some hopes on what the responses would be - but for most organizations, these questions will not be asked, this work will go undone.
What the CEDIA Professional Services team suggests:
Start by doing an “audit” of your brand. In order to do this successfully define just what your “brand” means. Our definition of brand, so to speak, is to replace the word brand with the word “promise”. So first define just what your promise is to your most loyal buyers. For suppliers it could be “our promises to the integrators that purchase our products include”:
1) Technologically accurate products
2) Safe and secure profit harbor (selling our stuff is profitable)
3) Reactive to dealer input, with new innovative equipment
4) Envelope pushers when it comes to performance.
5) Other great supplier stuff here.
For dealers the promise could include:
1) We will be the best contractor you will ever encounter.
2) Our service exceeds your expectation.
3) We get all your interconnectivity and electronics to work easily for you.
4) Other great contractor stuff here.
So the first thing in a Loyalty Audit is to define your promise.
Next comes the hard part -- you must honestly rate yourself and your team. Go into the field and analyze how a cross section of your best customers rate you on each of those points. One quickly will observe how and what your best customer think about you versus how you see yourself. To go further, ask them what they think your brand means to them. Then to really finish this out, find good customers of your greatest competitor and ask them how the competition stacks up. "One of the worst positions you want to be in would be that your customers are only buying from you to have access to a specific or exclusive product…then like many of the iPhone faithful, will defect when a realistic competitor arises."
From my perspective AT&T has “hidden” its character flaws behind product exclusivity; are you doing the same?
In most organizations this kind of strategic activity does not get done. This is not a lengthy process but could prove vital for your future growth, and your ultimate sustainability. One of the great things about CEDIA is the union of the different groups involved. The CEDIA Professional Service Providers could be a great place to get started on your Loyalty Audit, then the work could be fully flushed with a competitive activity report for your team. Questions that get answered in the competitive report could include, “When dealers fully understand the features and benefits or our products, why do they continue to purchase from our competitors?”
AT&T will survive, and they might even thrive. But my guess is that more of their best subscribers will defect over to Verizon, which provides a lesson for us all. No matter that they have many quality phone options and service offerings, but they missed on one of the most foundational issues -- no matter how great or intelligent a “smart phone” is, the fact is that we buy them and contract for the service under the assumption that the network AT&T has built will be there when we desire to use all those smart features and services. AT&T falls short when compared to the competitors in their most basic service fundamentals.
Some of the best lessons can be learned from the failure of someone else.
Frank White has 25 years of sales and marketing experience in the electronic & technology industry (mainly in the custom integration channel). He is the senior principle of StayTuned, which is a sales, marketing, and business development consultancy in Southern California. White has assisted many of our industry’s best brands grow and develop sound market and product approaches. For more information on CEDIA Professional Services Members, like Frank White, can help you and your business, please visit www.cedia.org/psat.