Question

Topic: Research/Metrics

Toll Free Numbers And Market Segment

Posted by nat.colley on 12/8/2008 at 10:06 PM ET 250 Points
I've been thinking about using a toll free number. I think the benefits are obvious, but I can't think of a single competitor that has one, and I am wondering if that is because we are aiming at an upper income professional services market, and toll free numbers are seen as mass appeal? I did some searching on the net but haven't found anything on this. Yes, having a toll free number would definitely set me apart, but would it do so in a good way? That's why I am hoping someone out there has or knows of some research on this issue. Thx.
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RESPONSES

  • Posted by wnelson on 12/8/2008 at 11:01 PM Member
    I don't have any research on the topic to quote, but a little analysis may help clarify the picture.

    The "Circle of Value" goes something like this:

    A. Customers have a need
    B. The firm has a core competency
    C. The firm uses its core competency to create a
    Unique Selling Point - a feature not offered by the
    competition
    D. The feature provides a benefit
    E. The benefit satisfies a need

    In the case of your proposed 800 number, yes it's a unique feature - for now. It provides a benefit - a "free" phone call. The questions for you are:

    1. Does the benefit satisfy a customer need? Are you seeing sales lost to that omnipotent competitor - NO ACTION? Is the cost of a phone call tipping the balance of your product/service overall benefits, its ability to satisfy customer pain, that people forgo a solution at all?
    2. Does this feature come from a "core competency?" A core competency enables a firm to develop a competitive edge - a wall that is difficult for the competitors to climb over and enables it to attract customers by providing unique solutions to their pain. Is that the case here?

    If the answer to either of these questions is "no," then it's hard to see where offering an 800 number would provide you any advantage over your competition. As for #1 - given your target is affluent customer - I must conclude your product is in the high priced category. Today, a phone call costs - what? $10 at the most and probably more like under a dollar. If your product costs $1000 - is this really going to be a factor? And in today's phone world - most phone calls are free anywhere in the country. So an 800 number has even less value - no matter what your socioeconomic class is.

    As for the second question - calling the phone company and taking out an 800 number cannot be considered a core competency. The competitive wall would be pretty short, since the next business day, competitors could call the phone company and take out their own 800 number and the plane is even once again.

    Based on this analysis, I'd say the value of an 800 number could little for your company.

    I hope this helps.

    Wayde
  • Posted by Frank Hurtte on 12/8/2008 at 11:04 PM Member
    In my opinion, toll free numbers are obsolete. With 90%plus of your targeting buyers owning a cell phone which provides for free long distance, the lure of a toll free call will only cost you money.

    If you want to differentiate yourself, offer 24x7 IM service or alternative hours of operation.
  • Posted by MarketGoGo on 12/8/2008 at 11:19 PM Member
    Toll Free numbers still provide the perspective that you are a bigger company than you are. Even though my home calling plan provides free voice calls throughout most of the world, I would be perplexed if a "big" company I was dealing with didn't have a 1-800 number. Plus, it can provide you a unique opportunity to "brand" a phone number. Plus plus, it won't limit you geographically (make sure you get a 1-800 number that covers North America).

    The short of it ... if you can afford it, do it.
  • Posted by Mikee on 12/8/2008 at 11:29 PM Member
    I agree with Frank. With many people having national calling plans toll free numbers are less important than they used to be. The only time that they are big deal to me is if I will be on hold for a long time, at which point you have other issues.

    Mike
  • Posted by nat.colley on 12/9/2008 at 9:34 AM Author
    Wow, so many thoughtful responses. Thank you.

    Frank:
    It's interesting that you mention IM. I was going to add my IM anyway to see what that does.

    wnelson:
    Thank you for the circle of value. I'd never heard of it, but it makes a lot of sense. I also want to thank you for the lengthy and well organized answer you gave me. This is my first time posting here but so often on any Internet forum you get no answer at all or something flip or stupid. So even if I don't agree or act on everything you say, I want you to know how much I deeply deeply appreciate a thoughtful and detailed answer, because it gives me something to think about, and may send me off in a direction I hadn't thought of before where I do find the answer. So again, thank you, thank you, thank you.

    You are right that the cost of a call is nothing compared to the cost of the service, but I wonder if people are always thinking so rationally? Maybe the fact that it's a long distance call might, reasonably or not, make someone skip over me instead of giving me a chance to talk to them - especially if they’ve never used a service like this before.

    How long can any company really create and maintain a unique selling point without a patent, copyright, or trade secret? My sense is that in most circumstances, if you've really got a competitive advantage, sooner or later people can copy it, and it would be suicide for them not to.

    MarketGoGo:
    I was thinking along these lines when I posted the question. Maybe I spent too much time in school, but I tend to want research rather than just go with my gut - or to make me feel better about going with my gut.

    Mikee:
    They won't be on hold, but they could well be on the phone talking to me a long time.

    Niti:
    I hadn't even considered a vanity number. But isn't that more trouble than it's worth? Aren't people frustrated trying to figure out what numbers go with the letters? Yes, they're printed on most phones but my sense is that hasn't alleviated the problem.
  • Posted on 12/9/2008 at 11:40 AM Accepted
    Hi Nat -

    Here is a link that hosts some current research on this topic:

    https://www.800response.com/800numbers/studies/index.html

    Realizing that this research is on the webpage of an 800-number vendor, you may want to take what you read with a grain of salt. Still, you might some valuable information.

    Good luck!
  • Posted by wnelson on 12/9/2008 at 1:13 PM Accepted
    Thanks for your compliments. Any business decision should be made with a thought process and analysis based on what you know. In the end, each of us has to make a decision based on what we know and how we feel about it. More data and thought is better than none.

    The analysis and conclusions were from my point of view. Yours is from your point of view. Everyone else who answered is from their point of view. We can discuss all day and these points of view really don't matter much. The key point of view is your customers'. If you really want to know if a toll free number has value - stop second guessing and ask them if it's important. Ask on a scale of 1 to 10 - is toll free important and would it influence their decision.

    Your reply discusses rationality of the client. One segment that still thinks of long distance as "a big cost" is the older boomers and the generation before boomers. The ones who have experienced party lines. Their thinking is irrational concerning cost of long distance.

    As for competitive advantage - yes, everything can be copied. Some things more easily and quickly than others. The point I am making is that with the speed of competitive reaction being less than a day, considering the toll free an edge would be highly optimistic. If you are justifying the cost of doing this based on gaining customers versus your competitors - I would have a hard time with the justification.

    However, I can't see a downside to the move other than the cost to your company. If the cost of the toll free number plus changing of collaterial material (brochures, website, business cards, etc) is insignificant, then you probably spent more money/time debating than it's worth - just go do it.

    Wayde
  • Posted on 12/10/2008 at 1:35 AM Accepted
    The benefits of a toll free number go way beyond the fact that it’s toll free for the customer. If that was the only benefit they would certainly be less in demand and of less value than they were years ago. But in fact the opposite is actually true. And while there isn’t really very much unbiased research about toll free numbers because the research is always done by people trying to promote toll free service, the fact that practically every large business uses them (more than ever).

    They make you look larger, more successful, and more customer focused. They add credibility and make customers feel more comfortable, like you will be there if they need help. They give you more control as to where the calls go. If you print a local number and you want to use a different call center or have someone different handle the calls you wind up having to forward the calls to a different number which costs more than the 3 cents per minute it would have cost for a toll free call. How about the benefit of getting a list of all the calls you received each month which can be used to generate leads or do follow up mailings to.

    These benefits don’t even count the increased response rate you’ll get from a more memorable vanity number that includes the name of your business, your website or your brand. How much of an increase in your response rate does it really take to cover the couple cents per minute that it costs to have a toll free number. The benefits go on, but you get the point. And the value is even higher for a small be starting out since they only pay for the amount of calls they receive small businesses pay an average of about $12 a month for their toll free service. (The prices mentioned are only examples to show that toll free numbers are much less expensive than most people expect)

    I admit that I’m biased because I’ve helped tens of thousands of customers get toll free vanity numbers with the Toll Free Search Engine on my website. We’re like the GoDaddy of the toll free business and I’m literally the only one in the toll free industry not trying to sell you the ongoing service.

    For most people, your phone number is the front door to new business. And asking if a toll free number will work is kind of like asking if a good domain name will help your business. That’s really not much of a question any more. If you’re spending money to get customers to call you, you need a toll free number. Because using anything else, is like running the air conditioner with the window open. You can still get cool but your advertising will be more effective and give you a higher return if you close the window.


    Bill Quimby, President of TollFreeNumbers.com
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