Tom Manley
Bell Global Solutions, Canada
The industry we represent is in the midst of a crisis--a crisis of opportunity. Large company or small, mass marketer or niche player, every one of us is facing enormous risks and rewards as the Internet sweeps away old notions of how people work, play, and communicate with each other.
But let's come back to earth for a moment. What is the reality of the Internet for most people?
It is, in fact, a lot like teenage sex:
My task today is a challenging one. I am going to walk you through some of the insights that the Sympatico team has gained in entering the mass market for Internet services. We began as a value-added Internet service and evolved into a provider of full interactive solutions and commercial applications. I hope our experience will benefit other telecommunications and telephone companies that are considering launching mass-market Internet services in their own countries.
Let me tell you briefly about Sympatico, the Internet Service for Everyone.
Sympatico is offered by MediaLinx Interactive and the Stentor Alliance of Canadian telecommunications companies and their affiliates. First introduced in November 1995 by Bell Global Solutions and MediaLinx Interactive Inc. in Ontario and Quebec, Sympatico quickly expanded to Nova Scotia through MT&T Advanced Communications and to British Columbia through BC Tel Interactive. It is now available in hundreds of communities from coast to coast in Canada.
We now have more than 50,000 members. About half were inherited from alliance members who previously offered Internet under another brand. The other half are new members brought on board in this highly competitive market since our November launch. Sympatico is the largest public dial-up Internet service in Canada and the second-largest online service, behind CompuServe.
Our advertising slogan, "The Internet Service for Everyone," reflects both our view of the market's growth potential and our vision of Sympatico's place in it.
We believe that the individual's journey on the Internet begins with the discovery and exploration of the medium's global reach and its power to cut across political, economic, and language barriers. But once the honeymoon is over, people want services that relate directly to their own lives and their own communities. Our name--Sympatico--personifies the personal, intimate, and humane aspect of the Internet, rather than the technological hype that surrounds it.
Our goal is to expand the Internet market in Canada by attracting people who may have been interested in joining the information highway but don't really know how to get connected. They include families, professionals, small businesses, and home businesses who have low-to-medium technical knowledge. We estimate that the Internet has penetrated less than 10 percent of this market, but that will soon change.
Household computing in Canada is now at 35 percent penetration or more and growing fast. People are buying their first personal computer, upgrading or replacing the old one, and buying bundled services as the cost continually drops. As schoolchildren come home talking about the Internet at school or at their friend's house, parents are scrambling to get on board.
Sympatico's marketing strategy is to create a viable and stable electronic lifestyle by overcoming the following barriers to participation:
Our market positioning strategy is to differentiate ourselves from competitors on the basis of our size, our national scope, and our distinctive approach to serving our customers.
In short, Sympatico's vision is to become the premiere Canadian electronic community. We will realize this vision by bringing the Internet into people's lives--at home, at work, or at play--on friendly and comfortable terms.
Now that I've described Sympatico and given you a brief glimpse of the domestic market we operate in, let me share some of the lessons we learned in pioneering the mass market in Canada.
I've narrowed them down to a half dozen.
Expectations in the mass market must be based on realistic goals that take into account the degree of overall market growth, consumer acceptance, long-term revenue potential, and new and emerging services.
This is perhaps the hardest lesson of all. We work in an environment that is so fast-paced that we sometimes forget a basic truth: Customers move at their own chosen speed. The pace of activity is partly the result of a red-hot stock market in Internet companies. Stocks daily move up and down by great leaps. With all the initial public offerings lately, new players rely on short-term flash such as acquisitions to impress potential investors. Daily news stories read like reports from a battlefront: new territories seized, troop strength, and, of course, casualties.
Sympatico's original projections for market share were influenced by the fact that we have delivered a century of excellence to Canadians in telephone and telecommunications service. But we, too, were caught up in the hype of massive Internet growth and in the wave of formidable new competitors, mostly from the United States.
We are also sensitive, but to a lesser extent, to the movements of the stock market and needed short-term profits and revenues.
The net result was that our expectations of market acceptance were high for a company with a legacy of traditional marketing methods and a dominant market share. Despite our fondest wishes, we weren't going to meet our growth targets in the first six months. We, along with others in the industry, had to remind ourselves that the Internet is an entirely new business and that it requires a whole new set of marketing objectives and strategies.
However, we are holding steady on our longer-term projections for the growth of this business. In the months to come, we will witness a new momentum in mass-marketing initiatives--and Sympatico will be right out in front.
My advice, then, to new market entrants would be as follows:
This one may sound like the chapter title from an introductory marketing textbook, but it is worth repeating when entering new territory.
The Internet market in Canada falls into two categories: those who have already signed up with Internet Service Providers and those who have not. We'll call them early adapters and late bloomers.
Early adapters are looking for cheap access--good bandwidth for a good price. They are technologically sophisticated. They are risk-takers. They are hands-on. They are pioneers.
And one more thing: They are only 7 percent of the marketing universe for Internet services. So it is time for mass marketers to stop thinking in their terms.
The other 93 percent are the late bloomers. Many have never used the Internet before and are looking for full service. They're technologically challenged. They put their postal address as their e-mail return address.
Mostly, they are risk-averse. They consume on average 10 hours per month, call the help desk at least once per month, and usually want to speak to the president of the company if they are not satisfied.
For marketing purposes, Sympatico has subdivided late bloomers into four main segments:
Each segment is unique in its behavior, use of interactive services and applications, and buying patterns.
What they have in common is that they don't want technology for technology's sake. They want the ability to communicate with each other in new ways--to form bonds with other people based on work, kinship, friendship, and shared values and beliefs. They see the Internet as an experience that will enrich their lives, not take them over.
Let me put it this way. On the information highway, the early adapters are the Mario Andrettis. But the rest of us--the late bloomers--are just looking for a good, mid-range economy car that makes us feel a bit like Mario Andretti.
At Sympatico, we decided that our future is with the 93 percent of Canadians who aren't yet signed up and who are willing to pay a small premium for more value-added service beyond connectivity.
Believe me, it was quite traumatic for us to come to this conclusion. Sympatico's startup team was mostly composed of information highway Mario Andrettis. But we broadened the team's background and did a lot of soul searching. We realized that to understand the mass market, we needed a new mind-set, a different service description, different marketing and communications messages, and a different price list. We realized that, more and more, the game is all one or the other, with nothing in between.
Pick your game and play it well.
For mass-market providers, the game is access, content, software, and service--in other words, an integrated personal communications solution. Access for our customers has to be a fait accompli--it simply must work and work well. The mass marketer's real value added then becomes content and the support service. This is a very different business from the average Internet service provider's.
This is especially true when you are targeting the mass market, the computer-illiterate. There is nothing more deadly to your business than a busy signal when a frustrated and confused customer is trying to reach your help desk. Yet too often in our industry, we assume that once customers are connected, they will know what they are doing from that point on. The fact is that, nine times out of ten, new customers are late bloomers, not early adopters.
They are going to call you.
They are going to call you often.
And they are not going to ask straightforward questions.
In short, the calls will take longer to process than you might have anticipated. It is important to plan your resources carefully--staffing, number of phone lines, and so on.
When we launched Sympatico, we quickly found that 10 percent of our customers were calling us every day. The nature of their calls varied, but they were roughly 50 percent technical and 50 percent administrative. Today, we have the Sympatico Member Services Desk. It offers free, bilingual, 24-hour service, seven days a week, including holidays, through a toll-free phone number. Our objective is to have members wait no more than five minutes in the queue for assistance 90 percent of the time.
Let me quickly summarize the secrets of the "Happy Help Desk":
If you think that dial-up Internet service is plug and play, you are mistaken. The truth is that the PC hardware and software environments are in a terrible mess. New software is bug-prone, and the software developers are usually late with upgrades. There are dozens of modems and even more drivers on the market that are incompatible with each other. RPI modems are cheap and lure unwary customers. Finally, IP stack conflicts are common and users often don't know what they are doing.
It may be a jungle out there for providers, but for customers, it should always be a walk in the park. As providers, our success lies in making these problems invisible to the customer.
On the plus side, strong customer support leads to customer retention and helps to promote word of mouth about your company. This is a brand-new market and there is, quite naturally, considerable confusion and anxiety out there. A strong brand presence coupled with solid customer support is a winning combination.
If you have a value-added product with a premium price, you need a distribution partner with a value-added distribution channel. Mass-market discount electronics and consumer goods don't work. Brand-name channels, value-added resellers, and in-bound telemarketing work well.
The mass market does not yet understand the Internet and all its technical pitfalls. People are not yet aware of the fact that they will need lots of support--and that support costs money.
To make a profit as a mass-market provider, you must charge a premium for this support. But you then run the risk of appearing expensive to consumers who are unaware of their own support requirements. So you need a value-added sales channel that will present a face-to-face rationale for premium pricing and will faithfully represent your brand and sales proposition.
There are really only three areas of excellence for an Internet service provider: operations, innovation, and relationship building. For the mass-market service provider, the choice is narrower still: operational excellence. Why? First, there are just too many people to maintain personal relationships. Second, in our industry, small companies tend to be more innovative than large ones.
That leaves operational excellence. Even if mass-market providers can't know each customer personally, and even if you can't support every new feature that comes off the drawing board, you can still deliver an optimal level of service for the best price.
Integrate new features for which there is significant demand when you have the time to do it well. Most important, you need time to automate the procedures to handle new features. With 50,000 mass-market customers, you don't have the luxury of customizing every feature for individuals or small customer groups. If you can satisfy, on average, 90 percent of your customers, you are doing very well.
Those are the key lessons learned by the Sympatico team as we launched our mass-market service in Canada. We faced a number of challenges that appeared overwhelming at first, but were in fact quite surmountable with the right tools and knowledge.
We've gained important insights into our customers' expectations, needs, and profiles.
We've learned to anticipate and plan for their support requirements--and then add another 10 percent on top of that.
We've carefully planned our distribution channels to make sure they were appropriate to the full-service package we were selling.
But most important, we've learned to throw out old assumptions about our market and our customers, and to see them for who they really are: Canadians who are exploring their country and their world through a new, exciting, and sometimes intimidating medium.
In a process that will remake our world as surely as the Gutenberg press did, people are reaching tentatively for a new way of communicating with each other and learning from one another. It is a wonderful time to be alive and an even better time to be in this business!
I wish you all the best of luck in your business endeavors back home and look forward to celebrating our future successes together.
