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What You’ll Learn
Calix’s Joe Kohegyi says competing on price and speed is a recipe for failure. Modern consumers want value in their connection and smart broadband marketers are working to communicate the value they deliver.
Show Notes
Transcripts have been lightly edited for clarity and readability.
Intro: A production of Pioneer Utility Resources. StoryConnect, helping communicators discover ideas to shape their stories and connect with their customers.
Andy Johns: What does it mean to take a value-based approach to selling broadband? That’s what we’ll be covering on this episode of StoryConnect: The Podcast. My name is Andy Johns, your host with Pioneer, and I’m joined on this episode by Joe Kohegyi, who is the Director of Customer Engagement and Subscriber Marketing with Calix. Joe, thanks so much for joining me.
Joe Kohegyi: Andy, thanks for having me again.
Andy Johns: Now Joe is a super busy guy this week. You may remember Joe, if you’re a long time listener. He was on episode 97 back six years ago – six years and 200 something episodes ago – before he was with Calix. But this is a super busy week for Joe and all of his colleagues because we are here at the Calix ConneXions Conference, the epicenter of rural broadband this week. And as we always say on these episodes, anything you hear, extemporaneous, is not background noise, it’s ambiance.
Joe Kohegyi: That’s right.
Andy Johns: So here we are. Joe, thanks for a great conference you all are putting on and for taking the time to talk.
Joe Kohegyi: You’re welcome. Thanks for being part of it.
Andy Johns: Now you were part of a panel. And the big thing that you guys were talking about, and it’s something that we’ve heard a lot at this conference, is that speed is no longer enough. So you’re coming at it from a value-based perspective. We can get into a lot of different areas to talk about that. But let’s start with the basics. What do you guys mean when you’re saying speed is not enough? You need to focus on value.
Joe Kohegyi: That’s right. That’s right. For many service providers who have been in the market for some time, have felt the squeeze in terms of competition of other service providers coming in and offering the same message, which is we have a connection. You can have it too. And how fast do you want to go? And we’re seeing the commoditization of that, that messaging, and frankly the utility. We’re shifting away from, you know, connectivity being a nice to have. It’s now a lifeline for the rural markets and really every market from across the spectrum. And when you have such an influx of, you know, messaging and competitive pressure coming in and the commoditization where we’re going to see 2 or 3 high speed providers in any given market over the next couple of years, you got to do something different. Your brand is bigger than just the speed you provide and the value you bring really can start to differentiate your go to market. And so that’s what we’re trying to do at Calix with our product line, is to bring service providers a new way to realize their value to subscribers in a way that resonates with them in a differentiated fashion.
Andy Johns: Yeah, I was talking today. You know, the competition factor has continued to amp up. I was talking to somebody today, they had nine competitors. Like good luck competing with price on that. I mean you know price and speed alone. That’s a race to the bottom.
Joe Kohegyi: It really is. And you know, anyone that hasn’t, you know, lived under a rock for the last year has seen the amount of attention broadband, closing the digital divide, is getting from the government in terms of subsidies and new programs, whether it be BEAD or RDOF or other state programs, different things like that. So, there is a land grab going on with –.
Andy Johns: That’s a good way to put it.
Joe Kohegyi: Yep. And you know, we’re also seeing consolidation in terms of acquisitions and different things like that. But they keep going to the well on we’re going to win the customer based on their appreciation for the speed and the cost of the service. And that’s just not holding up anymore.
Andy Johns: What are some of the other ways and, you know, for forgive me if this sounds a little bit like a Calix commercial here the next minute, but what are some of the ways that folks can add value? Because, you know, speed is the big thing. Reliability became kind of the most – a lot of the metrics I’ve been looking at – COVID kind of made the, you know, reliability being the number one thing, even over speed and price. What are some other ways that folks, that you’re seeing folks add value to a connection?
Joe Kohegyi: Yeah, if you kind of go back a little bit, and I’ll try not to spend too much time on this. But, you know, the genesis of value is when the service provider said the demarc wasn’t the ONT on the side of the house. It was the router in the home. And so service providers started to make the switch to be responsible for the in-home subscriber experience. That sort of set off a chain of events, both, I guess within Calix and in the industry as a whole as to, well, we need to be involved in manage Wi-Fi. Well, one of the things that we’re doing is saying, we can’t just stop there. We can’t just have good enough Wi-Fi, just like we can’t have good enough speed. We have to start understanding the customers needs. And if Covid did teach us anything, it was that customers are starting to self-identify based on their use cases. Families, work from home, gaming, binge watching ,and now, with security and protection of their devices and the people in their homes. So a Calix is trying to do is with our platform is build essentially over the top solutions, manage services that service providers can deploy in a differentiated way so they can take the great infrastructure they’ve already put in the ground over the last 20, 30 years, and essentially monetize it in a new way that resonates with customers with differentiated value at the subscriber level.
Andy Johns: And an example of some of those. I mean, you’re looking at more and more of the, you know, is managed Wi-Fi for a few couple of years there, but now a lot more of what the security and protections for families, that kind of thing seems like a way that, a big way folks are doing that.
Joe Kohegyi: That’s right. And, you know, Andy, you and Pioneer are no stranger to this, where you need to peel the onion away to get to the core need to find a solution fit. And so that’s one of the things that I think is so great with what we’re doing and what our customers are being able to achieve, is they now can come into the market and say, we’re here to help you protect your kids. We’re here to help you protect, you know, your mom, your dad, your grandma and grandpa. You know, we’re here to make you more productive as you work from home. You have the ability to segment and now apply messaging based on the solutions you have in new ways that you couldn’t do before. There’s only so many ways how you can say your speed helps someone. Or only so many ways you could say that like that Wi-Fi connectivity is great because it can support 250 devices, right? We’re going down the value chain to the heart of the customer. And I think that’s what’s so unique.
Andy Johns: One of the things, as you’re saying that, there are some advantages to being a big company. There are some advantages to being a small company. So that’s one of the ways you’re really getting to know those customers. I’ll remember the example that Michael Weening, the CEO of Calix, used today when he signed up for fiber. It asked him, you know, do you stream? Well, of course you stream. You know, like it’s like, you know, it’s 2024, everybody streams. But the questions he felt like in the example he used really didn’t get to know him. And the answer to everyone is, okay, you need a gig. But what are some ways that you’re seeing small companies, like a lot of the folks that you all work with that we work with, what are some of the ways you’re seeing them really get to know their customers and kind of help them, like you said, self-identify some of those different personas?
Joe Kohegyi: Yeah, that’s a great question. So one of the things that they’re going to do that we see them doing is taking a second to stop and ask the customer. So, you know, our business intelligence service team runs NPS surveys and, you know, different folks run CSAT. And so what they’re doing is tracking over the course of the customer journey, how are we doing? Are there needs that we are not addressing? So I want to just put that out on the front end is that you don’t need fancy tools, although we have those available to you.
Andy Johns: Those are available. Yeah.
Joe Kohegyi: Here it comes. And so one of the things that we’re doing with Engagement Cloud would be one of the things specific is you have the ability to look within a particular part of your footprint. It could be a city block. It could be an entire zip code or an exchange or a county. And what you can do is start to profile those markets based on some known cohorts. And so we call that segmentation. And so that’s one of the major parts of the blueprint of adopting a value based methodology is identification. You can know the customer based on some criteria, some profiles. So what they’re doing is finding, all right, how many parents live in my service territory with kids of certain ages okay. How many work from home. You know, gaming, and are they hardcore gamers, or are they more casual gamers? And they have some particular needs. And then starting to build out their value beyond the home with things like outdoor. So that’s a major opportunity for new revenue business, for the service providers to say, “Okay, great, we’ve solved for the in-home needs. What about the outdoor needs?”
Andy Johns: Yeah, that’s been an interesting topic I’ve seen brought up a lot this week.
Andy Johns: Right. So figuring out what is your subscriber profiles? And then say, okay, now we’re going to solution around them. We’re going to standardize some of the experience, the broadband. Great, give them great speed. Let’s just kind of cut with the speed tiers. Managed Wi-Fi, absolutely. We’re going to come in and do that white glove installation. We’re going to ensure it works corner to corner. And then we’re going to figure out these other managed services. You know what do you need to protect the kids? What do you need to work productively at home? Or if you’re the technophile who wants to stay on the cutting edge like Michael, it’s Wi-Fi 7 and the latest stuff that we can do there. So you have the ability to configure and personalize offers to one to many and 1-to-1 in a scalable way, and I think that’s kind of the key takeaway.
Andy Johns: Yeah. When we’re going into those personas for a long time, the personas were a work from home, gamers, and it got kind of fuzzy after that. It sounds like, you know, here we’ve heard a lot about MDUs, multi dwelling units, apartment owners, renters who are coming and going, students. I mean, really the list is infinite, but are there any newer personas that you’ve heard folks kind of going after that make a lot of sense to you in this space?
Joe Kohegyi: Yeah, I can name two probably right off the bat. And I think the one that seems the most obvious and often gets overlooked because we make too many assumptions as service providers. I’m guilty of this when I was, at my service provider that I was marketing and doing sales with, which is the senior segment. Right. So they don’t need much. They just go on email. We can, they want cheap. They don’t want features. And what we found out through the data and also time has played a huge factor in this. People have aged into technology. And so those assumptions are wrong, right? My mom and dad, 68. They now are reliant on technology. Their devices, they’re streaming. They’re doing these things. So we’re seeing service providers lean into that and say tastefully, you know, we have a solution for the senior in a sense. Right? And so they’re building security and safety, and they’re tying in the value that they’re already bringing. You know, all the folks that we work with do a fantastic job of servicing the customers. But they don’t often talk about that, what they do from the install and the customer support, and 24/7. They’re now building that into their offers, messaging that because frankly, seniors don’t want to have to do it themselves. They want a trusted advisor. We can bring that. Whether you call it a clear connect plan, or I’ve seen others call it the silver surfer plan.
Andy Johns: Ah ha, I like that one.
Joe Kohegyi: They’re getting creative, and they’re addressing a need in a fairly large market of customers who are looking to be served with these value added solutions.
Andy Johns: A large and growing market.
Joe Kohegyi: That’s right.
Andy Johns: You said there were two personas. Seniors were one of them. And I know one of the ones we’ve seen a lot is like the part-time resident. We’re working with a lot of folks who are kind of going after those, you know, lake property or, you know, mountain property, something like that. We’ve seen a lot of those. Was there a second persona as well?
Joe Kohegyi: I love that one. We can talk about that one really quick because they’re very seasonal. And one of the hard things for many service providers, I know this was hard for me, was how do you keep their service live when they’re gone? And so things like outdoor Wi-Fi are playing into that. Connected cameras, thermostats, those kind of things, so they can have accessibility and to be able to monitor those. And then hopefully just like keep them in the service because we know it’s labor intensive to turn them down into seasonal status, and then bring them back on later so that that’s really a good one.
Andy Johns: You never know for sure if they’re coming back to you, or they’ll shop around. Yeah, yeah, that makes a lot of sense.
Joe Kohegyi: So here’s one other one. And I just want to be careful because I don’t want to talk too much about speed. But speed does matter sometimes in context of that segment. So one of the other major segments that I see. I think service providers are doing this probably in the past. They just didn’t know they were doing it, which is focusing on the techie, the technophile, the early adopter, the person that sort of wants to be immersed in all of this stuff and have the best experience possible. This is where we’re seeing multi-gig start to come into the conversations. You can start to message to them around that. And one of the things I’ve seen that is actually kind of cool as a value add, and again, back to personalization of the offer. If you sign up for this package because you’re a technophile and you want to stay on the cutting edge, every time we increase our speed, we’re going to automatically bump you. No charge.
Andy Johns: I like that.
Joe Kohegyi: One gig, 1.5, two gig, customers are wanting to go to five gig. These are high margin, high value plans with customers who are willing to pay like you heard, you know, today. And so they’re building around that with Wi-Fi 7 with other the IoT things and the application that controls it all. So we’re seeing that, and they’re directly messaging into those customers who fit that profile.
Andy Johns: Right, right. The guys want the Hemi in the truck.
Joe Kohegyi: You got it. Yeah.
Andy Johns: That’s the example I always go to.
Joe Kohegyi: They don’t might not need it, but they want the fastest, the flashiest and the look at me. You know, I think there’s a little bit of an ego play there. I’d be lying if I didn’t say, I didn’t, you know, brag when I had a multi-gig symmetrical service at one point.
Andy Johns: Nobody else could get it.
Joe Kohegyi: You know it. You know it.
Andy Johns: Absolutely. Makes sense. All right Joe. Well I appreciate the time. Let’s wrap up with this last question. What advice do you have for somebody – and this is where I end a lot of the podcast – what advice do you have for somebody who has been competing or been marketing, communicating just on speed and price and is listening to this going, you know, he’s right. I do need to start thinking about this. Where do they get started, and what advice do you have for folks in that spot?
Joe Kohegyi: Yeah, that’s a great question. I think be mindful. Take a step back and say as a brand, as a service provider, what do I want to be? Like how do I want to be perceived in the market? Because if you’re going to make a promise that you’re going to protect somebody, you’re gonna, you know, offer their kids social media protection and stop them from cyberbullying, and you’re going to be that trusted partner who’s going to deliver on the value you promise. You have to be able to back that up. So you have to make sure you have internal alignment, that the company is supportive. Because you’re where the rubber meets the road. I can build you the best plans, the best offers, the best messaging and the best go to market model. But if you don’t back that up in your execution and delivery, that’s where we start to run. We, you know, we run into a mismatch. And I always say, make sure that the party matches the invite. You know what I mean?
Andy Johns: I like that.
Joe Kohegyi: Yeah. And so that’s sort of the first thing. And then I think the second thing you do once you can kind of get your mission down is to own it, and then start to address the needs of the market that you’re serving in. Segment, identify. Take a step back. You don’t need 20 plans. And I don’t want people to think that they need 50 SKUs. You’re doing this already today. You have a broadband package. You have Wi-Fi likely. Okay. What else can you do now to say, you know what? This is for you, mom and dad. This is for you, grandma and grandpa. And take that and use it as sort of a blueprint or a template to create the offer. And again, it’s not a new SKU. It doesn’t have to be a bundle. I know that’s a dirty word sometimes.
Andy Johns: Right.
Joe Kohegyi: And then just start to message. Send the invites out. Make sure it looks like they will, you know, message them to join the party. Send them to landing pages, so it looks like the party is going to be a good time. And then deliver on the experience so they can leave with a great parting gift once you sign them up for service. So that’s my thing is, number one, make sure you can back it up. Number two, identify your audience. Number three, keep it simple. Pick a couple. Try it out and keep working at it because it’s an evolution.
Andy Johns: I always love a good metaphor, and the party invites a good one. We’re also recording this after October 10th, so I know that folks will be relieved that they don’t have to create a bunch of new packages based on what those broadband labels work and all that so.
Joe Kohegyi: That’s right.
Andy Johns: Understand that. He is Joe Kohegyi. He is the Director of Customer Engagement and Subscriber Marketing with Calix. Joe, thanks so much for joining me.
Joe Kohegyi: Thanks, Andy.
Andy Johns: I’m your host, Andy Johns. And until we talk again, keep telling your story.
Outro: StoryConnect is produced by Pioneer Utility Resources, a communications cooperative that is built to share your story.