As I mentioned yesterday, I am using EV-DO to connect to the internet here in Vegas for CTIA. It’s more economical and reliable than the hotels’ and convention center’s WiFi hotspots. What I didn’t say is that the way I contract for this service is convoluted and actually, on my analysis, loses money for Verizon. Details to follow.

It’s got me feeling a bit guilty, so I would like to offer them some free advice. If they implement my ideas and wish to share perhaps 10% of their incremental profits on the change, I’d be happy to accept. [VZW, you can email me at inquiry (at) caddellinsightgroup (dot) com for my PayPal info.]

Here’s the situation with EV-DO. I have a Blackberry, using a 10MB per month plan costing $24.95 per month on top of my voice subscription. This is fine for emailing and web browsing through the Blackberry, but not enough to support what I’m doing this week–blogging, video uploading, etc.

For that application, VZW requires I buy unlimited data access for $49.95 per month, and on top of that buy tethered modem service (that allows me to use the Bberry as a modem for my computer) for an additional $15 per month.

As a result, it would cost me $39.95 extra per month to subscribe to this EV-DO service. Except for the fact that I need it for perhaps 15 days per year. The rest of the time, cheap or free WiFi hotspots do the job. So I can’t justify an ongoing subscription for this service.

But here’s the thing: VZW allows me to sign up for the service, then, when I don’t need it anymore, I call them back to cancel. The billing is ugly and almost incomprehensible, but at the end of the day I only get billed for the days I use EV-DO, at the rate of about $1.33 per day. A bargain for me.

But not for VZW. Here’s a litany of costs they incur, each time I set up the service:

Calls to tech support: 2 @ $10 (one call to activate, one call to deactivate)
Letters informing me of a change in service: 2 @ $2.50
Incremental billing costs for changes, prorates, etc.: unknown

Total: at least $25

For this trip, I will use the service for four days. Meaning VZW will get incremental revenue of $5.33, but spend $25, for a marginal contribution margin of ($19.67). Ugh.

Here’s my idea. VZW should offer a daily plan. [Virtually every other wireless ISP offers such a plan.] I would pay $5 per day for that plan. Have the signup be online rather than through tech support, meaning the incremental cost should be near zero. Have me sign up for exactly the number of days I need, and have deactivation be done automatically by the ordering system.

Related post: “Worst Practices in Product Management“

I had a call with Verizon Wireless yesterday afternoon that went something like this:

“I got a Blackberry recently and I was trying to use it as a wireless modem for my laptop and I’m having trouble.”

“Let’s try some things.”

“I checked and I found out that you need to activate a feature to enable you to use the Blackberry as a modem. The feature costs $15 per month.”

“What? I am already paying for data access, by the megabyte. Modem support costs $15 more?”

“Yes, I’m sorry. Would you like to speak to Customer Service?”

“Yes, sir, that feature is $15 per month.”

“How come that wasn’t clear when I signed up for the Blackberry service? Plus, I’m already paying you $150 a month.”

“I’m sorry, that’s the only way we sell it… think of it this way: It’s only $0.50 per day.”

“But I only need it occasionally. I can’t justify paying $15 per month for occasional use.”

“This might solve your problem. You can activate it when you need it, then deactivate it when you’re done. You’d only pay for the days you use in that case.”

“I have to call once to activate, then again to turn it off? Every time I want to use it? Why don’t you have a daily access?”

“That’s the only way you can do it.”

“I might try that, but it’s unfortunate that you don’t have a plan that helps the occasional user, like me. And I don’t like having to pay $15 or even $0.50 per day for something that should have been included with the data feature I already bought.”

“I’m sorry. Can I help you with anything else today?”

So: no resolution. Tech Support and Customer Service were fine, creative, even approaching that state of bending the rules to satisfy a customer. (Installing rigid processes that force this kind of behavior is a worst practice depicted nicely in a recent post by Dave Snowden.)

It’s Product Management I have the problem with. First of all, an additional fee for my laptop to use megabytes I’m already paying for is bad. (It’s done so that people who pay $60 per month to use the Verizon PCMCIA card in their laptop won’t feel that they’re getting ripped off–even though they already do.)

Second of all, not having an occasional-use plan and forcing me, the customer, to do work to synthesize this plan (call to activate, call to deactivate, every time I need the service) is also bad.

Finally, I am a $150 per month wireless customer. (VZW’s ARPU is around $50.) I’m a Verizon VIP. Yet there’s no accomodation built into the product for my kind of customer.

It’s just poor packaging all around. And it needs to be fixed. This is one of the reasons mobile phone customers hate their suppliers.

Aaargh.

product management mobile wireless customer service customer service packaging pricing technical support Verizon Wireless

Last month I wrote about product packaging. Since that time I’ve noticed a few examples of particularly innovative packages, pictured above. (I also ran this New York Times article. When you’re interested in something, it seems you find it everywhere.)

Cape Cod Beer sells its products in half-gallon jugs that resemble old moonshine containers, standing out from the zillion other beers in the store. (It’s good beer, too, but difficult to get outside Cape Cod.)

I noticed the Aquapod container at a school orientation picnic. (Check out its kid-oriented web site.) Its “orbtastic shape” is “a Blast of fun!” Elementary schoolers agreed: Among the six different types of water in the cooler, kids grabbed this one.

And, finally, at breakfast last week my six-year-old son pointed out Maple Gold Syrup. He said, “You’re studying packages. You should write about this one.” It has a built-in spout surrounded by a rim, to catch any drips and funnel them back into the bottle. This innovation has saved our kitchen counter any number of sticky syrup glops.

innovation marketing packaging New York Times

Consumer-packaged-goods companies have long relied on packaging as the last frontier of innovation for aging products. Think of the cupholder-sized containers of Cheetos you can buy now. Or the toothpaste tube that stands upright.

But for content, packaging has not been a priority. And with music, technological advance has made packaging progressively worse. From the LP to the CD, credits and lyrics shrunk to unreadability. With downloadable music, even that small amount of text and photos went by the wayside. Music was simply a bunch of bits. It’s no wonder that recorded music doesn’t have the magic it once had.

A group called FM3 has once again brought honor to music packaging. As profiled in the recent New York Times Magazine, FM3 has sold 50,000 units of a release that had sold only 1,000 copies on CD. How? By packaging it in a plastic device called a Buddha Machine.

The Buddha machine is a self-contained unit with a speaker and a volume dial. It looks like an old-style portable radio without the tuner, and is based on a device that FM3’s Christiaan Virant saw emitting chants in a Buddhist temple.

The novelty of the device created a buzz that has lasted since 2006. Writes Rob Walker in the Times article:

The public radio show Studio 360 featured the device in 2006; FM3 toured Europe again with a performance built around the Buddha Machines; and bloggers keep finding it anew, attracting music fans, design fans, gadget fans and those who view it as something like a fashion item.

It may be a mystery exactly why the Buddha machine has been so successful. But by finding an innovative way to bring its music to the people, FM3 has shown that plain old content, packaged cleverly, can capture the public’s fancy.

(Photo: a whimsical Buddha machine schematic from the FM3 website)
innovation marketing packaging music New York Times