NEW YORK-As the 1996 campaign season gets into high gear, wireless providers might do well to consider this profile when looking for loyal customers most likely to vote early and often for communications services: they are young, religious, affluent, well-read and tuned-in.
These characteristics represent snippets of information from an elaborate set of desirable-customer characteristics, which Technology Trends of Sausalito, Calif., has developed entirely for cellular and personal communications services companies.
Technology Trends launched its business in 1992 with “economic modeling research to help PCS bidders in the A- and B-block auctions determine the value of licenses,” said Hunt C. Eggleston, company founder and president.
An alumnus of AT&T and U S West, Eggleston said he spent much of his earlier career helping identify likely early adopters of emerging technologies like video text, picture phones, cellular phones and CD-ROM. Other than lowering the cost of capital, the two key contributors to improving the bottom line are reducing customer churn and acquisition costs, he said.
Technology Trends counts among its customers Cox Communications Inc., GTE Corp. and U S West Cellular, as well as a half-dozen companies signed on under non-disclosure agreements, Eggleston said. In exchange for remaining anonymous, these clients permit Technology Trends ongoing access to their customer databases for continual updating of its research, he said. Some clients also have signed exclusivity agreements, paying a premium to guarantee that Technology Trends won’t sell its services to wireless competitors in the same customer territory, he said.
“They took a large wireless sampling and turned it into a productive model for what kinds of people will buy, so that you can market to individuals, not a whole market segment,” said Hunt Lambert, president of Lambert & Co., a Denver-based telecommunications consulting firm involved in strategies development for senior management. Lambert said he was in charge of U S West’s strategic marketing, including planning for wireless and PCS, when it contracted with Technology Trends.
Given an industry average churn rate of 2 percent to 3 percent monthly, a company’s customer base changes completely every two to three years, according to Rolf Banning, vice president of sales and marketing for Technology Trends. “It costs $350 to $500 to acquire each customer, and it takes six to eight months to get back that investment,” Banning said. “After the one-to-two-year customer contract ends, the (sales) agent can go to a competitor, but the agent keeps a great deal of customer data gathered at the point of sale.”
As Banning explained it, Technology Trends began its groundwork by striking a deal with one cellular company. In exchange for access to actual participants in a marketing survey-most of whom were not cellular customers-Technology Trends analyzed the service territory for the cellular provider. Technology Trends identified “a dozen distinct target groups containing 15-20 attributes (each) that define a high potential to be a PCS wireless customer and stay loyal.
“To validate those results, we went to an additional 2,000 current cellular users in six cities and developed eight profiles of target groups for cellular that are distinct from PCS. To validate these results, we asked one of the cellular providers in each of the six markets to compare their billing data with our information. Our analysis was 90 percent accurate.”
Among other key things in general, cellular customers tend to be business users willing to tolerate dropped calls and static. Personal communications services users, on the other hand, are just that. They want their wireless services for personal use and are therefore unwilling to pay for incoming calls or to tolerate poor reception and connection.
Technology Trends charges more for its services than generic marketing segmentation companies-in the range of $25,000 versus $8,000 to $10,000, according to Banning.
In exchange, he and Eggleston said, their clients get customized research-with specific information on disk and hard copy-that can be tweaked and updated to aid in marketing programs for specific programs or services to potential customers in various zip codes, area codes and telephone exchange groups.
