What if you invested in a company that risked $23 billion on a flagship product and plans to have it available to 20 million homes by 2010? Would you be concerned if the company couldn’t execute on its most important task—completing the sale? This is how one company’s brilliant media plan for fiber-optic service (FiOS) ended with a customer enrollment fiasco. I happened to be the customer.
Even though I wasn’t particularly interested, I couldn’t avoid Verizon’s incessant communications about FiOS. Over several months, I was blanketed with emails, direct mail, fliers, print and web advertising. A Verizon representative even canvassed my neighborhood, leaving a personalized tag about FiOS on my door. More and more people I knew began talking about how FiOS bundled phone, cable TV and Internet services into one neat high-speed fiber-optic package. With fervent enthusiasm, they told me they switched to FiOS because it offers lots of entertainment and service for a low monthly price.
I did the math: a $100-per-month savings over the combined bills of multiple vendors that provided my unbundled services. Armed with a full-page newspaper ad describing a limited-time FiOS promotional offer for $109.99 per month, I called Verizon to enroll. Here’s where my tale of woe begins.
‘Without explaining why, she told me that she could not handle my call.’
I placed my first call to Verizon FiOS. After patiently navigating the automated attendant responses and waiting on hold, I finally heard a real voice requesting my phone number, which I provided. Without explaining why, she told me that she could not handle my call and that FiOS could be set up only through Verizon’s “local business office” She gave me a local phone number. I contacted that office, went through another automated phone attendant and waited again on hold before being switched to a recorded message telling me to call again later because of “heavy call volume.” I was ready to place an order. Verizon was not ready to accept it. Late for an appointment, I postponed my third Verizon call until the next day.
Day 2
I began again, calling the original Verizon number. But this time, I gave the rep the phone number for my second line and, bingo, everything progressed uneventfully for about 10 minutes—until I asked how I could include my second phone line. “You cannot have a second line under this promotion,” I was curtly told.
Now I knew what caused the initial troubles. Verizon FiOS representatives didn’t have even the most basic knowledge about the services its customers required because their CRM system considered a single telephone number as its primary way to identify a customer. A second phone line essentially meant starting an independent enrollment process and would cost an additional $49.95 per month—almost half the cost of the entire FiOS bundle! And, the rep told me, she couldn’t enroll me. I had to call the Virginia office that had been too busy to serve me the day before.
“Why didn’t you ask how many phone lines I needed earlier in our conversation? I could have saved all this time!” I asked in exasperation. A call center manager was promptly mustered. He sheepishly admitted that the paltry information in Verizon’s ads was creating difficulties for his staff. The problem was compounded because Verizon’s call center failed to properly organize and prioritize its questions. Caveat emptor.
As I continued through the enrollment process, the Verizon representative methodically solicited my acceptance of billable add-on services. How many non-High Definition television sets did I want to connect (at an additional $4.99 per month each)? Did I have any High Definition TVs (at $9.99 per set per month)? Did I want “DVR with HD” ($15.99)? Home Media DVR (add $19.99)? Premium HBO/Cinemax Package? Sports Package? Movie Package? The list went on. In fact, if I wanted two non-high definition set-top boxes and the available English-language premium channel packages, I would pay almost $70 more per month. And we hadn’t even covered the Internet options. When we got into those, I realized the representative was under-equipped to answer my basic questions.
I signed up for the advertised package, anyway.
And afterward, Verizon sent me a succession of “important information” about my TV and Internet service (or so it said on the envelopes).
The first offer read: “Get Verizon FiOS Triple Freedom for $104.99 a month. And get 3 months of FREE HBO service.”
The second one: “Get Verizon FiOS Triple Freedom for $114.99 a month. And get a $100 Circuit City gift card.”
And then this one: “Get three great services for $104.99 a month, plus our Movie and Sports Package for FREE.”
Do Verizon’s marketers really believe that consumers won’t put pencil to paper and perform the math?
Clearly, Verizon’s marketing and sales tactics are driven by the economics of covering the high fixed costs associated with providing FiOS to a large number of homes. But could Verizon have better achieved its enrollment objectives without its self-inflicted quagmires? I believe so. There would have been a much better outcome for me—and Verizon—if …
- My enrollment could have been completed quickly with one call
- The company’s technology had enabled contact center reps to view customers as distinct from their phone lines
- The enrollment representatives had access to information that better enabled them to understand existing communications needs
- The representatives opened with questions that established which services were best for my needs—instead of forcing them to recite a litany of unwanted add-ons
- The FiOS package offering enabled not just entertainment flexibility but also voice communications flexibility
- Customers could set up a profile similar to online commerce so they could avoid repetitive responses, such as whether they prefer a conversation in English or Spanish
- Verizon had integrated its data to avoid peppering installed customers with come-ons to try the service they just purchased
Why did I persevere through Verizon’s gauntlet? Simply because I kept reminding myself that the outcome would be worth the frustration. I wonder if Verizon keeps statistics about how many potential subscribers are less resolute?
So interesting you bring this up, because I’m certain that many of us–sadly my own company included–may have done this to clients in the past by failing to prepare.
I imagine a number of poorly planned service implementations go something along these lines as well. For example:
Pitch: CRM software increases long term customer value for a small monthly fee!
Reality: Sure, as long as you account for the additional cost of network bandwidth and hardware.
Pitch: This new automation system will save you hundreds/thousands each month!
Reality: Sure, as long as you completely redesign your existing input and distribution, which will probably cost you more than the automation system is going to save.
Hopefully most of us are responsible and ethical enough to give our customers the true picture.
-Steve
See the MIT research study that demonstrates the value of Web leads decreases 1000 percent in the first 24 hours.
InsideSales.com
Steve: As you point out, many marketers start with a low base price and add upcharges. Professional negotiators have even coined a term for this, called “nibbling.” The add on services by themselves are not prohibitively expensive, but in aggregate, they can result in significant increases in revenue.
This is the approach that Verizon takes with FiOS. A new book, “Predictably Irrational,” by Dan Ariely addresses pricing psychology, suggesting that “anchor prices” have significant meaning for how consumers make decisions. My “anchor price” was based on the $109.99 ad that I read. Once Verizon attempted to pile on the services, trust began to erode, and I recognized what the company was really doing.
Overall, I think it’s a much, much happier discussion when a vendor says “We started at [price 1], but if we subtract these services that you really don’t need, your actual price is [x% less].
I’d come away feeling like I had found money!