Staying Ahead As 'Last-Mile' Advantage Wanes

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By Judy Shapiro

In the 1990s, when I was at AT&T, owning “the last mile” - the pipe into the home - was the most valuable and monetizable place to be.

As the competition began to chip away at the edges, our defensive strategy was to offer more services as a way to bind the customer to the AT&T franchise and - voila - bundled services were born. We offered a wide variety of communications plans with endless combinations. We got into the home-security business; we developed new small-business services plans. We even played with PPV for a while.

But customers still churned. Unbeknownst to us, consumers had a very clear ceiling as to what they were willing to pay “the phone company.” As competition heated up, they learned to circumvent our sacred “last mile” advantage while we failed to grasp quickly enough that just offering services does not move customers up the value chain. In fact, adding more “stuff” just made it worse because lots of time and investment went into these new offerings, which ultimately did little to mitigate the downward slide.

The sad result was that instead of slaying the commoditization beast (low-cost telecom plans, etc.) - we fed it by offering more services that were likely to become commoditized themselves.

And here we are.

While the marketing landscape has utterly changed in the last 15 years, the knee-jerk reactions of today’s service providers to bind subscribers to the franchise via more services are the same. “Multiplay” bundles combining two, three, or four services are a common practice. Offerings from cable companies now typically cover the gamut from home security to information services.

And as in the telecom wars of the 1990s, competitors today are also looking to undermine the industry’s “last mile” advantage. Google will once again try to make a 500-channel world a reality. Facebook is looking to offer “media” to its 750 million users (The New York Times, Sept. 19, 2001) and the sheer tonnage of online content options make it harder for anyone’s content to monetize.

Looking back, we can see another way forward that puts us on the path to profitability by moving up the consumer’s value chain. The real prize then is to solidly get our footing on that next rung up through a sustained experiential offering (versus short-term promotions) that people will value since it becomes an offering that, quite literally, they can get nowhere else.

What might this look like? With frictionless connectivity as the strategic bedrock (fueled by all the wonderful tech out there now), you go about architecting and staging a consumer’s experience with real time multicasting, “many to many” topic-based digital communities, format delivery options and social communications combinations that interweave into a tangible experience offering so individual to the consumer that they are invested in the experience and thus to your brand. This model simultaneously deals a death blow to the commoditization beast while offering new revenue opportunities that allows outside brands (e.g. advertisers) to participate as long as they enrich the experience for consumers.

By far the best part here is that the cable and telecommunication industries are already rich in the assets needed to pull off this type of frictionless experience-based offerings: content, community, communications and commerce.

Further, as the “last-mile” advantage of a typical communications or cable network evolves into an experiential digital delivery system, competitors will be hugely disadvantaged since it will be hard for them to match the depth and breadth of the experience that this “new” last mile pipe can offer.

With the right amount of marketing art and technical skill, the stage can be set for long-term loyalty. And this type of transformational thinking is indicative of what smart marketers will hear during the next 48 hours at CTAM in New York. Dim the lights. It’s show time.

Judy Shapiro is founder and CEO, engageSimply. She speaks Oct. 5 at 2 p.m. at CTAM in New York as part of “Digital Strategy and Beyond” in the Shubert Complex, 6th floor.