Making Innovation Work in TelecomA successful new business launch |
Abstract
In response to the rapid decline of print directories as a result of the rapid growth of online options, this company sought to launch an innovative performance-based product to retain and win back local advertisers against traditional and online search competitors.
The Challenge
Specific challenges included:
- Losing local search share to other channels
Print directories had lost share of local look-ups to online channels and consumers increasingly used alternative channels for their local search needs. - Misappropriated ad expenditures
Growth rates for online ad spending versus the traditional print medium indicated advertisers’ preferences were shifting toward media that delivered enhanced personalization, targeting and measurability. - Underserved online customer segments
Internet local search left significant segments either un-served or under-served. - Misaligned conversion rates
Research indicated that 71 percent of small-to-medium businesses prefer pay-per-call to pay-per-click. - Overly complex pricing
Due to cannibalization risk and the inability to accurately estimate call volumes, pricing for pay-for-performance was enormously complex.
How We Helped
The client engaged Deloitte to help them in their efforts to assess the strategic value of pay-for-performance in its existing and future product portfolio and to develop a go-to-market strategy. With Deloitte’s assistance, our client:
- Completed detailed customer profitability analysis, by segment, to identify the most attractive segments
- Understood the preferred product features and estimated demand for the pay-for-performance product
- Prioritized the most competitive markets for the pay-for-performance market trial
- Developed a pricing methodology that balanced a supply-side view of the pay-for-performance risk profile and a demand-side view of the value of a call to an advertiser
- Launched the pay-per-call product in major markets
Solution
By understanding advertisers’ needs and preferences, our client was able to transition a traditional business model into a more disruptive business model while minimizing cannibalization. The resulting “rate card” was seen to be a big win for our client in that it incorporated complex pricing strategy but was still simple enough for sales reps and customers to understand. Our client expects project launch to generate significant incremental revenue over the next five years.
