Consumer Cellular's Ed Evans on Winning with the 50+ Customer

Full Transcript

Don Kellogg 0m10s

Hello, and welcome to the three hundred and thirteenth episode of the week with Roger, a conversation between analysts about all things telecom, media, and technology by Recon Analytics. I'm Don Kellogg, and with me as always is Roger Entner. How are doing, Roger?

Roger Entner 0m23s

I'm great. I'm excited. We have a great guest.

Don Kellogg 0m26s

Yeah. Well, this week, we've got Ed Evans. He's the chairman and CEO of Consumer Cellular. Ed, welcome to the podcast.

Guest Speaker 0m32s

Hey. Thanks for having me. It's great to be here today.

Roger Entner 0m35s

So, Ed, you might be the best kept secret in wireless. You run one of the largest carriers in the industry, you have a distinction that you're an MVNO that is postpaid, not prepaid, right? Most of them are prepaid. And you focus on a particularly difficult to serve customer segment, and you excel in it. Maybe you can tell us more about Consumer Cellular.

Roger Entner 1m2s

And then you also launched just recently another fantastic product.

Guest Speaker 1m7s

Well, thank you for the compliments. I mean, we try hard and we're always trying to get better, but it is a really unique business that's been just a tremendous amount of fun to be a part of for the last seven years. And the company itself is actually thirty years old that it's been around. Now it's evolved over that time and we acquired it about seven years ago. But to your point, yeah, we target the 50 market.

Guest Speaker 1m31s

We saw an opportunity years ago where we just believed this market was being really underserved on a couple of fronts. First and foremost, I would say pricing was just out of whack. When you think about one of the big three carriers and the way they price their services, they've got to serve 18 year olds that are using 200 gigabytes of data every month, and then they have to serve 90 year olds that are using one gigabyte every month. They don't really segment out pricing so much. They take the middle, they assume you're going to use 25 gigabytes of data, they set a price, they call it an unlimited plan, and off you go.

Guest Speaker 2m8s

And so what we saw was, as we age, we use less and less data. So a 50 year old is not using as much data as a 40 year old. When you turn 60, you use less. When you turn 70, you use less. And so as a result of that, we saw a pretty unique opportunity to come in and price in the market lower than what the big three can price at, still offer unlimited services because we know what they're actually going to use, which is around seven gigabytes of data every month, and have a very profitable business.

Guest Speaker 2m38s

And at the same time, it became even more important to figure out, Okay, differentiating on price is really only one part of this. Anybody can come in and put lower prices out. What can you do better? And we really hung our head on customer service. This cohort in particular isn't as tech savvy as the 20s and 30s and 40 year olds that are out there.

Guest Speaker 2m58s

They need a lot more handholding. And we just decided that we were going to be very focused on that. We were going to do a better job than anyone else can do. So that's where we are today, and we continue to win awards on the customer service side, but just trying to provide something that nobody else can provide in this cohort.

Roger Entner 3m15s

Yeah, no, and our data shows it very clearly week after week. We exactly pick up your customer base, and you have the highest NPS scores in our survey. And we talk to more than 300,000 people on mobile every year. And you guys are the leader here in a segment where everybody else is struggling with, which is the the people who are getting older. I think it's always fantastic, and I saw it with my mother.

Roger Entner 3m48s

As people get older, their manual dexterity goes down. It's a more challenging device to manipulate, and it's more difficult to serve them and provide customer customer service. I was my mother's customer service representative, and she was not an easy customer to have. And so we see these spectacular numbers coming from consumer cellular. So you certainly have figured it out, how to serve a very challenging customer base at attractive price points.

Roger Entner 4m20s

It's like the definition of a niche player truly solving the answers and the problems that your customer base have. Now you're going, I think also more into stores and you launched a new service, which I think also hits exactly what your target customer base is looking for.

Guest Speaker 4m39s

Yeah, so we'll start with the stores. I will tell you that when we came into the business, building brick and mortar was something that just didn't look very attractive to us. They were expensive, they're hard to maintain, your cash acquisition cost goes up fairly substantially. But we were forced to look at alternatives because our biggest channel partner, Target, at the time was exiting wireless. I mean, over the past three years, they've been slowly reducing and reducing their footprint, which left us with really just a call center presence and a web presence.

Guest Speaker 5m11s

We pivoted, we went into Walmart. We've had success with Walmart. They're a good partner. But the difference in a Walmart and a Target is that Target had two, maybe three wireless providers, while Walmart has what I jokingly refer to as the wall of shame. There's forty, forty five different incumbents that are sitting on that wall when you go in and pick something up.

Roger Entner 5m34s

And they're all locked up.

Guest Speaker 5m36s

That's the other thing. Right. You can't get to anything. And so, I mean, they don't do as well as what a Target store was doing. And so out of necessity, we needed a brick and mortar solution.

Guest Speaker 5m48s

And so we started testing stores about four years ago. We opened them in what I would call the most obvious places, the villages in Florida, in Surprise, Arizona.

Roger Entner 5m58s

Yeah, you're the biggest carrier in the villages.

Guest Speaker 6m1s

We are. No, that's exactly right. Our share has gone up dramatically in those areas. And Surprise, Arizona, the exact same thing. What we have seen, we're now up to 104 stores as of this recording.

Roger Entner 6m14s

Wow.

Guest Speaker 6m14s

And going. I mean, we're going to continue to move forward with it. I mean, what we have seen with these stores has been amazing. It has far exceeded our expectations. We've seen that, yes, the cash acquisition cost is higher in these channels, but lifetime value

Roger Entner 6m29s

Is higher.

Guest Speaker 6m30s

Is materially higher. They take a better product, they take a more profitable product, they stay longer. Our churn in our stores is under 0.8% that we see. It's just everything about them is positive. We look at CAC to LTV ratios.

Guest Speaker 6m47s

The old B School metric of, Hey, if you're getting three, that's really good. If you're getting four, that's a home run. If you're getting five times, you're probably not spending enough on marketing. Our retail stores are five and a half to six times in every market. So they just continue to outperform any of our expectations.

Roger Entner 7m7s

Yeah. Stores really work. At the same time, the big guys are trying to push everything more and more digital to lower price to I'm not sure if the customer service and everything else works out. At the same time, I always use the example of mattresses. Like, what is it?

Roger Entner 7m25s

43% of mattresses are now bought online. Why can't wireless? But it is undeniable that stores buy a higher MRC product, have more attachment, lower churn, everything is better, right, on stores?

Guest Speaker 7m43s

No question. And you know what, what's amazing is, look, there are cohorts that are out there that very much prefer the digital channels. You take as an example. Mint does an amazing job in a purely digital world. Their customer journey online is very solid.

Guest Speaker 8m1s

Their customer service experience, they test very high. So there are certainly cohorts that are served by that and work well. But when you get into the older cohorts, they just want no part of it. They want somebody to answer the phone. That's all they're asking.

Roger Entner 8m16s

Yeah, and Mint is great for the children and grandchildren of your customers, right? That's where it comes

Guest Speaker 8m22s

down Exactly, that's exactly right. I mean, look, it's all about knowing who your customer is and finding the best way to serve that cohort, reduce the friction. I mean, it's just, it truly is as simple as answering the phone. And I'll tell an anecdotal story. One of the things that I do every morning when I come in is I'll dial in and I listen to random customer service calls or sales calls, just to hear what's going on, it gives me a feel for kind of what's happening in the market.

Guest Speaker 8m50s

What I noticed is around the first of every month, when our bills go out, we have a huge number of customers that have been on autopay for five years. They get their bill electronically, it's paid electronically, it always works, it's never failed for five years, but every month they call in, and they call in and it goes like this, Hi, this is such and such, and I'm just calling to make sure that you got my payment. Well, yeah, you got it, it went through, just like it has the last 27 times. Yeah. And then you continue on, and you find out that after the, you know, what should take thirty seconds to get through the phone call, then they want to talk about their grandkids.

Guest Speaker 9m34s

And the call goes from being a one minute call to a ten minute call. My initial response to that was just as a finance guy, I'm going crazy. I'm thinking, wow, if I can reduce these calls down to four to five minutes like everybody else, I can save a lot of money, right? And we can really cut expenses off. This is huge.

Guest Speaker 9m52s

We're a whole project, run through this whole thing. Four months into this, it's like an epiphany. It's like, what am I doing? These people aren't calling in to check on their bill. They're calling in because they're lonely.

Roger Entner 10m4s

Yep.

Guest Speaker 10m4s

They don't have nobody else to talk to. So yeah, we're going to take ten minutes to talk to them, and we do that. We don't limit our reps to how long to stay on the phone. You stay on until the customer's happy, and when they're ready to get off, that's when you get off. And I think that's an important differentiator.

Roger Entner 10m20s

And you're the last subscription that they ever have.

Guest Speaker 10m22s

Oh, that's exactly right. They don't go anywhere. Mean, they you know, Art Shown for an MVNO is far below any of the other MVNOs and really close to some of the MNOs.

Roger Entner 10m34s

Yeah. And it's like, you know, your number one reason for disconnect is probably the people pass away.

Guest Speaker 10m42s

Oh, you're right. It's mortality. And if I can figure out how to fix that, we're all gonna make a lot of money.

Roger Entner 10m47s

Tell me, right after you find out, give me a call.

Guest Speaker 10m50s

I will.

Roger Entner 10m51s

All right. And so, talking about mortality, what we're seeing, and I saw this with my mother again, people want to age in place. They don't want to be in a retirement home. They don't want to be disenfranchised by having to live on an organization's schedule. And you created a product that helps people to stay in their homes.

Guest Speaker 11m13s

Yeah, that's correct. We're actually in the process of creating a suite of products. And so it started, we had a minority ownership in a company called GrandPad, which is a small tablet that is designed specifically for, call it, the 85 plus market. It's locked down, it's in a walled garden, large icons. Product was very successful.

Guest Speaker 11m36s

We now own the majority of that company, and we're getting ready to introduce the fifth generation of that product into the marketplace. Next, we introduced a PERS product, which is the pendant device or a wearable on your wrist that has fall detection and emergency access, right? Another step two. Step three, what you're referring to now is the new StickEasy products that we've just introduced, which also have a caregiver application component to them. So not only can you get either a traditional flip phone or a smartphone with a very different user interface, much larger icons, walled garden approach, but now you can also get this caretaker app that allows two of your family members to sort of keep track of you.

Guest Speaker 12m21s

If you have an emergency, you simply hold the screen for three seconds and it calls out. It will notify our emergency service center. It will also notify your family members that something's going on, And we can send response, help to people right away. It also allows the caretakers to just sort of see their movements during the day, through geolocation. Hey, are they moving around?

Guest Speaker 12m44s

Are they doing things? And a one button, just check it. Just hit the button once in a while just to let your friends and family know that, hey. I'm okay. Everything's good.

Roger Entner 12m52s

Yeah. Because if somebody doesn't move for several hours during the daytime, you can take a nap for so long. But when it's like a six hour nap, it's like you get concerned as a child.

Guest Speaker 13m6s

Absolutely. It's gonna start to raise red flags. No question. And, you know, it could be something as easy as they just set the device down and they didn't do anything with it for six hours, right? I mean, it could be something very simple, but-

Roger Entner 13m19s

But it's a reason to call in so that they don't have to call your customer service.

Guest Speaker 13m22s

Absolutely. That's exactly right.

Roger Entner 13m24s

No, this is fantastic. So the service is out, right? If you have elderly parents, I think this is an ideal thing. Do the children or the caretakers, do they have to sign up with consumer cellular as well, or does No, it work with

Guest Speaker 13m40s

it works with anyone. So the app you download in either the Android Play, Google Play Store, or in the iOS Apple Store, it's just an app that you download. And then from the device, you actually send out the request to their mobile phone service, whoever they're on, if they're on any of the Big three or anyone else, they simply get a text message that has a code in it. They enter the code into the application, and then they're connected. So yeah, they don't have to be on Consumer Cellular, and it'll work on any Android or any Apple device.

Roger Entner 14m11s

That's terrific. Really good job. You're doing such a fantastic job as an MVNO that is truly focusing and servicing the niche that you've selected. Great job. Ed, thank you for coming on the show.

Roger Entner 14m27s

This was wonderful. I hope that we can help some of our our listeners who are struggling with how to help their help their parents age in place and give them a terrific wireless experience. And I think you provide that. Thank you, Ed.

Guest Speaker 14m43s

Roger, thank you for having me. It's always great to talk to you, and I look forward to catching up with you again in the near future. Thank you.

Roger Entner 14m49s

Thank you.

Don Kellogg 14m50s

All right. Thanks, Roger, we'll talk next week.

Roger Entner 14m52s

Talk to you next week.