Calling All Small Businesses
By Irene Cherkassky
BellSouth leverages database precision and creative finesse to connect with the small business market.
As the southeast market leader in its category, it's no surprise that communications services provider BellSouth prides itself on keeping open the lines of communication with its customers. "Listening. Answering," not only is the motto for the Atlanta-based marketer, it also offers insight into the company's top priority and the key to its success: its dedication to understanding, and then meeting, customers' needs. With this priority in mind, the company recently retooled its new customer program for its small business customers. The result is a campaign shaped by a deep awareness of customers' needs and executed via a disciplined contact strategy.
The Big Deal of Small Business
Small business is one of four major customer bases that make up the company's core Communications Group segment—the other three include consumer, large business and interconnection services. Last year, the earnings from the small business market made up 12 percent of the revenue of the BellSouth Communications Group, which itself generated 90 percent of the company's estimated $28 billion in revenue in 2004. It's no surprise then that the Fortune 100 company has placed a premium on nurturing its small business customers. That nurturing becomes even more important given the fiercely competitive nature of the communications services provider category and as the range of service options available to customers grows more complex. New small business customers presently make up approximately 5 percent of BellSouth Small Business Services' total revenue.
"It's also a really significant part of that revenue from the standpoint that [new business customers are] very vulnerable to competitors and general churn," says Tim Barnes, director of customer segmentation for small business marketing, BellSouth. "We have to pay special attention to it to maximize that percentage."
Bill Rogers, creative director with direct marketing services provider Harte-Hanks, adds, "Heavy competition from other telecoms, especially offers to bundle phone services for a low combined rate, was certainly an impetus" for the new customer campaign redesign. Harte-Hanks' working relationship with BellSouth stretches back 14 years. It partners with BellSouth on the creative development and production of the new customer initiative as well as the company's retention and reacquisition programs. It also manages the database for the marketer's Small Business Services.
Developed over the past year, and phased in beginning in January 2005, the new customer program aims to lay the groundwork for a positive relationship between BellSouth and its small business customers. "We began to rebuild our program because we realized new customers are the lifeblood of our operation," says Marci Raible, senior director for small business advertising. "It's a critical time. For us, if somebody comes into the relationship with BellSouth, we want to make sure that it's a smooth transition. This program is really designed to build that partnership. It's about listening and understanding our customers and creating a program that eases them into BellSouth."
Although still in the process of rollout, early indicators point to this redesigned program's success, according to BellSouth. The company has seen a reduction in churn, an increase in revenue and sales, as well as higher response rates following the launch of the new customer program. This is the latest BellSouth initiative to help grow its return on investment in direct mail campaigns, which has doubled over the past five years.
Although successful, the previous new customer program—now in the process of being phased out—was more focused on BellSouth.
"We knew that we had siloed communications streams that were coming from how BellSouth was organized versus how the customer saw us," Raible says. Even though that first touch also was about welcoming the customer, "it was very offer-driven, as opposed to answering needs," she explains. Touchpoints, according to BellSouth, were more regulatory and budget-driven, rather than customer-driven. "The relationship aspect and the educational aspect were lacking in the older package," Raible says.
For example, the first communication a new customer received was its customer information distribution (CID) mailing, primarily an informational and legal document to confirm the order. The actual Welcome to BellSouth package did not reach customers until approximately three months after signing up for service.
Ahead of the program redesign, BellSouth conducted focus groups with customers and non-customers in the fall of 2004. The purpose was to understand the kinds of issues small business owners experienced when they came onboard as new customers in the telecommunications field, as well as to learn about how they wished to be treated as a new customer. Issues customers wished to see addressed included: Having the provider proactively answer questions about their bill; gaining a better understanding of the products and services available to them as customers; and having the provider better understand them as customers by knowing what services and products they already were using or had purchased.
These learnings helped the company reshape its new customer best practices:
1. The first 90 days are critical;
2. The earlier you engage your customer, the better;
3. Messaging early in the relationship should be designed to set expectations and validate;
4. Personalization works;
5. Multiple touch methodologies are preferred;
6. Multiple response channels are essential;
7. Surveying and data gathering are critical factors to gain customer insight;
8. The velocity of customer communication and engagement should increase during "moments of truth";
9. Consultative selling is a key part of any new customer program and can help avoid "moments of truth"; and
10. A product-centric focus is not the key driver in new customer retention.
In turn, these best practices helped reshape the new customer program. At the core of this initiative is a precise contact strategy combined with extremely customer-centric creative.
Fed by both small business customers brand new to BellSouth, as well as those returning to the service provider after an absence, the program has been redesigned to guide the small business customer through the first six months of its relationship with the communications services provider.
"I think there are these moments of truth in the customer relationship with the company where frustration can set in; where they are looking at the company and their decision to continue or discontinue interacting with our brand," explains Raible. "This program is really designed to cover that initial time period with BellSouth and make sure that it's an easy process, so those moments of truth are positive and there's a decision to continue because BellSouth understands their needs."
The first touchpoint of the new customer program, the Welcome Kit, now is mailed within five to 10 days of service activation and is designed more from a marketing perspective. The 91⁄2˝ x 12˝ package is entirely BellSouth blue in color and easily stands out in the mailbox. Each of the elements of this piece establishes one-on-one communication with the customer from the start. Inside, the kit features a brief welcome letter thanking the customer for choosing BellSouth. To the point, it hits on the various services available to the customer. An attached, perforated slip at the bottom of the letter allows the customer to send away for more information on the company's many services. Also enclosed is a small brochure with directions that show new customers how to read their bill. There also is a separate sheet of coupons, a BRE and a BellSouth folder.
Christopher Castano, copywriter, Harte-Hanks, explains the reasoning behind including the coupon page as a separate element in the kit: "We wanted to be as tactful as possible. We actually have [it as] a separate element in there so it's not hitting the customer a little too aggressively."
The folder included in the kit is a value-adding component and features a thank-you message from David Scobey, president of BellSouth Small Business Services. The folder's interior copy emphasizes the breadth of services BellSouth provides. It's also an element the customer can keep—and keep using. "We're going after people who are small business owners," says Castano. "They're the same people who are trying to get that new business, who are also filling out bills on a daily basis. They wear a lot of hats and we thought the folder would be a good idea to really help organize paperwork."
Carey Fox, account director, Harte-Hanks, notes that pushing up the timing of the Welcome Kit has proven extremely effective for BellSouth. "We've seen an increase in results on our call volume based on offers we have in the piece by touching these folks sooner in the relationship," she says.
Although the CID package still is mailed, BellSouth plans to incorporate that information into the Welcome Kit in the near future. "We're in the process of building IT systems to integrate the product information for multiple service components into this package," says Raible. "As soon as those are built, the rolling of all elements into one kit begins."
Brent Mlott, BellSouth's senior director of product marketing, says the Welcome Kit generates close to 5 percent response.
Building the Relationship
That initial touch then is followed by BellSouth's Newlywed package. This piece retains the overall full bleed of BellSouth blue color, but is scaled down to a #10 envelope, the size more traditionally associated with the B-to-B mailings. This second touch is a little more promotional, with offers included in the letter. A buck slip is included to feature additional offers, address answers to frequently asked customer questions or illustrate a customer-problem/BellSouth-solution scenario.
Of the Newlywed package Raible says, "It's also very integrated with our sales channel, so the sales channel knows what's going on, what message is going to the customers so sales can better answer customers' questions when they call in."
Small business customers are mailed several times within that crucial first six-month period, not including billing and account information. These subsequent touches are timed, says Raible, around those "moments of truth" at which point customers may have issues or questions—around billing periods, for example.
"We're also looking at learnings from our re-acquisition campaign," she adds, "so we can take those learnings and better insulate our customers from competitors' activities."
As customers go through a settling-in period, and then migrate into a long-term relationship with BellSouth, they also can expect to receive a reward-oriented package, featuring savings designed just for them, such as a Key Customer Program that can save them 20 percent on their monthly local service charges. Following the first two touches, the design of the program scales back the use of the blue, but retains the recognizable BellSouth brand design elements and colors.
The Data Connection
Well-crafted creative and customer support is only one part of the story, however. The backbone of BellSouth's direct marketing strategy is the database analysis and modeling that helps the marketer tailor the right offer, message and budget to fit the needs of each small business customer.
A small business customer is defined as 50 employees or less. These businesses then are segmented into two groups: the size of the customer, typically defined by the number of lines; and their propensity to buy more, and increasingly complex, products/services. Propensity modeling is at the heart of BellSouth's ability to effectively target the appropriate offers to those ready to buy.
Barnes describes, "We basically can take the people who have already purchased a product, profile those people compared to the base and identify people who have similar traits that would buy that product."
As many as 60 variables are used in every model. However, Barnes says five of those are key to identifying customers who are likely to buy: location (either by ZIP code or by Metropolitan Statistical Area); the customer's industry; customer size; customer tenure with BellSouth; and their credit score.
"Customers who score high propensity are typically approximately two-and-a-half times more likely to buy a product than the average customer," says Barnes.
Modeling is used not only in the direct mail programs, but also to provide the sales channel with actionable information, such as better targeting who to call and what a customer is likely to buy. Armed with this knowledge, BellSouth also can maximize limited resources and minimize waste by mailing more targeted direct mail to those customers likely to respond to a particular offer. It also has saved money for the company by identifying "inert" customers, those long-established small businesses that are not likely to change their service or buy new products. These folks primarily are sent direct mail thanking them for their continued business, but not promotional offers for additional services.
Make Me An Offer
Modeling also allows BellSouth to tailor each subsequent direct mail piece to reflect and build on the continually updated customer information.
"The Newlywed package is where you start to see different offers based on what that customer came in with," says Raible. "This is where we start introducing our knowledge of the customer, what [products/services] they have and are there any propensities we can offer up as solutions to make their package more cost-efficient and/or more effective for them."
This means a small business customer with smaller resources might receive a DSL message with the speed of the DSL line tailored to their needs. Meanwhile, a customer with more resources may receive a T1 offer.
Versioning of offers is extensive. For example, RoseAnn Haran, Grey Advertising's vice president, account management for BellSouth, says, "We're up to 43 different versions in our retention messaging, which is around bundles and growth." Grey works with BellSouth on acquisition, retention and mass media programs.
Brand new prospects with no prior relationship with BellSouth are targeted with more price-point driven direct mail, according to BellSouth's Mlott. Often these new prospects are sourced by identifying entities who recently have applied for a small business license. "We're not the lowest cost provider, nor do we want to be," says Mlott. "We give you a price point, we give you discount offers, we give you great service offerings, but the overarching theme … is that we have a tremendous breadth of services, we have highly qualified, talented, knowledgeable sales people that can handle all of your needs."
As well, BellSouth constantly is working to optimize the number of touches sent to customers. As customers migrate into the retention phase of their relationship with BellSouth, the rate of touches averages approximately once every three to four months. In fact, in 2005 the company shifted from a more traditional four-quarter approach to three promotional periods, describes Haran. "You always have to be careful not to oversaturate the market," she explains. Currently, DSL, Web hosting and Web site security are top of mind for BellSouth customers, she says.
Meanwhile, in the conversion process, sales representatives are equipped with "faxables." Used both with prospects and existing customers, these one to two-page sheets are based on direct mail pieces and also are versioned to fit individual customer needs.
"We take the direct marketing pieces and we break them down," explains Haran. Versions of the faxables are tied into the creative of the direct mail piece and can be faxed out to the client in support of that offer. Haran notes a problem/solution approach often works best when it comes to faxables, as do testimonials. "In all the research that we do, what seems to resonate with [customers] is if in fact they can see someone like themselves who has a business problem similar to theirs," she says.
Beyond the Mail
BellSouth also is quick to point out its direct marketing channels, including those used for the new customer initiative, are highly integrated, with direct marketing and the sales channel working closely together. The emphasis is on multiple touches via multiple channels. Whether it's outbound telemarketing, e-mail or direct mail, each channel is aligned in creative and content to present a consistent, cohesive face for BellSouth. The company also gives customers the opportunity to respond via their channel of choice.
However, there is an effort to provide continuity. Raible describes, "When a customer comes onboard and was sold through one particular channel, but may ultimately wind up in another, the first call back always is handled by the channel they came in through." Eventually, the customer may be "right-sized," says Raible, to the channel that will best offer the solutions that meet its needs.
All the direct mail touches are supported via outbound calling, which starts within one week of the mail drop. Here the focus is on consultative selling. Small business representatives spend 13 weeks in training prior to answering or placing their first call to be able to offer busy small business professionals the support they need.
"[Customers] may not have an IT person on staff who understands all the products and services," Raible explains. "This is really about being a resource to them based on that understanding and being able to offer solutions that are right for them."
Overall, the integrated, multichannel approach is designed to offer customers the flexibility to interact with BellSouth in the way most convenient for them. It reflects the company's respect for its customers' time and its commitment to meeting their communications needs in the most cost-effective, efficient way possible.
The new customer program is a work in progress, continually fine-tuned to reflect the marketplace and better target customer expectations, says Raible. The program is an essential building block as BellSouth integrates every element of its direct marketing programs to help grow and strengthen the connection between the marketer and its small business customer base.
BellSouth at a Glance:
- The market leader in the southeastern United States, servicing the majority of the population across nine states: Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.
- Total revenue for 2004: $28 billion
- Has joint control and 40 percent ownership of Cingular Wireless, the nation's largest wireless voice and data provider for 51.6 million customers.
- Operating segments: Communications Group, Domestic Wireless, and Advertising and Publishing Group.