For Sale: VoIP Subscribers

By Gerry Blackwell | Aug 15, 2005 | Print this Page
http://www.enterprisenetworkingplanet.com/unified_communications/For-Sale-VoIP-Subscribers-3527391.htm

It's surely a sign that VoIP is about to go mass market. An Iowa-based marketing outsourcing firm called Total Marketing One (TMOne) is offering to deliver subscribers by the bucketful to VoIP providers. Fast. Guaranteed. Just $200 per head.

TMOne, which has been in business for three years, mainly sells its call center and list marketing services to the telecom sector, although it also has some financial industry clients as well. It is already working with a few VoIP providers, but it is clearly now keying on this emerging market. A recent press release written in florid advertising-ese trumpeted, "TMONE: Delivers 100,000 VoIP Subscribers Upon Request."

Well, you do have to pay as well as requesting.

Volume business
TMOne contracts with VoIP providers to deliver paying subscribers in multiples of 20,000, by an agreed-upon date. "Twenty thousand is sort of a minimum," explains TMOne president and CEO Anthony Marlowe. "We don't do contracts for anything less than 20,000 units. Mentioning that figure [in the press release] was a way to eliminate the tire kickers. The reality is, the contracts are typically more in the six figures [of subscribers]."

The $200 per subscriber price is the high figure clients pay. The actual price depends on the number of subscribers contracted for, the services the client is buying, and how recognizable the provider's brand is—which presumably determines how easy it is to sell. "The price is very flexible and negotiable," Marlowe says.

TMOne doesn't just deliver "an x on a spreadsheet" either. To count against the contracted total, the subscriber has to stay with the VoIP provider at least through the money-back trial period, usually three or six months.

Marlowe argues that the price is cheap. For one thing, it would cost more like $400 to $500 per subscriber to acquire them other ways. TMOne's marketing efforts on behalf of the client will also attract customers that contact the provider directly, and these don't count against the contracted total. "That's just an ancillary benefit of doing business with us," he says. "It's the risk I take."

Growing investment
Perhaps most important, the subscribers TMOne delivers will soon be worth a lot more. Now that the regulatory picture is a little clearer after the FCC's decision to require VoIP providers to supply 911 services, there is nothing to hold VoIP back. "The dust is settling," Marlowe says. "VoIP is going to take off in the mass market. There are already a couple of million subscribers in the U.S. and the prediction is there will be 15 to 40 million by 2009." And that will attract big money players to the VoIP market.

"If XYZ company gives TMOne $200 for a subscriber today, they're going to be able to sell that subscriber down the line for five to ten times what they paid us," Marlowe says.

It almost sounds like trading in telephone subscriber futures. Pay TMOne for an instant subscriber base now, then sell it later—perhaps back to the same traditional telephone companies from which the subscribers were originally stripped—at a tidy profit. Certainly traditional telcos are already starting to offer VoIP services as a way to stop customers jumping ship. And Marlowe sees big media and MSO (Multiple System Operator) conglomerates jumping into the VoIP market as well.

TMOne uses a full slate of marketing tools to acquire customers: telesales, direct mail, print, Internet and TV advertising, and retail agents. Telesales, though, account for 50 percent of customer acquisitions. The company has multiple call centers in different parts of the country and is looking to add more.

Source pool
The database from which TMOne agents work is "arguably the largest database of broadband consumers" available. It includes roughly 20 million consumers, 2 million SOHO (Small Office, Home Office) customers and 7 to 8 million small-medium enterprises. "So we're sitting at somewhere around 30 million names and growing," Marlow says. "If you had a ticker on it, it'd be counting up continually."

He is guarded about how TMOne compiles the database. Some names were purchased, some come from prospecting by telesales agents. Many now come automatically from Web-based software that can detect the speed of connection of visitors to a site. Marlowe doesn't say how the company then acquires the names and phone numbers of such visitors.

The names are all broadband users, the market universe for VoIP providers. It sounds like a big number, but as Marlowe notes, it's finite. "It's not as if everyone has broadband." Nor will they anytime soon, though he jokes that if it were up to him, home owners would be required to have broadband service of so many kilobits per second just as they're required to have electrical service of so many amps today.

Quick, hard sell
One of the challenges for anyone attacking this market is to ensure they convert—close the sale to—as many contacted prospects as possible, as quickly as possible. There are only a certain number to go around and the market is beginning to be crowded with providers. "You don't want to solicit [a prospect] three or four times and then have another [marketer] come in and scoop them," Marlowe says. "You have to see it through until they become a subscriber."

At the same time, though, marketers have to maintain "professionalism" in order to protect the "integrity" of the provider's brand—which is marketing code for not hounding prospects until they're so prejudiced against the provider they'll never buy from them. This TMOne ensures it will not do.

It can also "almost guarantee" that the customer conversion rate at its call centers will be higher than for other marketing companies, Marlowe says. The boom in telesales in the communications industry means "there is a talented group of people out there who are extremely proficient at closing telecom sales," he says. "And I have those people in my organization."

Flexible policies
Another crucial competitive advantage TMOne claims is that, unlike traditional media advertising firms, it will often underwrite the cost of campaigns rather than demanding millions of dollars upfront in creative fees and media. It also offers billing terms, which Marlowe says is unheard of in the industry. "There's going to be a trend to more fixed acquisition costs," he says. "That's the only way the model can work."

Providers contracting for the services of a company like TMOne will want to know how it keeps client information confidential. The company might run simultaneous campaigns for different VoIP providers from a single call center, Marlowe concedes, but agents are for the most part dedicated to a single client. And even if for some reason they are moved to another client team, they don't take prospects with them.

Is TMOne's assault on the VoIP market just the thin edge of the wedge? It looks like it. As VoIP catches on, subscribers will become the true currency of the industry—even more than they are now. This means, for one thing, that you can look forward to an up-tick in annoying sales calls at dinner.

It also means that if you're a start-up VoIP provider, and if TMOne's marketing prowess is on the level, you can build your subscriber base in a trice, and without investing heavily in people. And speed in the emerging market, especially for consumer services, may be of the essence.