Jonas Reuter
Managing Director, Partner
Overcoming the price war: Convincing FTTH tariffs for municipal utilities
Municipal utilities are under strong price pressure from supra-regional providers in the FTTH market. Standardized and technology-oriented offers lead to interchangeability and price focus among customers. By developing target group-specific tariffs that meet actual needs, municipal utilities can differentiate themselves, justify higher prices and strengthen their market position.
Enforce higher prices with tariffs based on actual demand
Winning back customers with clear differentiation
The vicious circle of interchangeable products
Overload
The offers are not tailored to their actual needs, the customers do not know what they should or need.
Price comparison
Customers make their choice based on price. Comparability means that the cheapest provider wins.
Market loss
Local providers are losing customers to large competitors, even though they have a lot to offer due to their proximity and values.
Negative example:
FTTH offers
The FTTH (Fiber to the Home) sector shows how great the danger of interchangeability is. Many municipal utilities rely on undifferentiated standard products that hardly differ from those of competitors. Customers are then faced with a multitude of technical details such as guaranteed speed or data rates that often do not cover their actual needs. Instead of providing clarity, such offers often confuse customers, as they fail to address their actual applications and wishes. As a result, decisions are based almost exclusively on price, which intensifies the price war and can jeopardize economic stability in the long term.
Was würden Sie wählen?
Almost all of the municipal utilities' tariffs look like this. Without the small print, the customer cannot even compare the individual packages on the basis of the price. There is no indication of what they need.
Technische Details als Differenzierungsmerkmal
The customer structure of many municipal utilities is aging. Technical details as the main criterion do not match the needs and demographics of municipal utility customers.
Does this match your values?
Municipal utilities often explain tariffs on the basis of technical details, which, however, often fail to meet the actual needs of customers. Such approaches rarely reflect the values such as customer proximity, fairness, transparency and responsibility that municipal utilities actually stand for.
"Bandbreiten mit 500 Mbit/s - 1 GBit/s sind hingegen derzeit in der Regel nur für Firmen interessant." – Verbraucherzentrale am 07.10.2024
Welche Bedürfnisse haben Ihre Zielgruppen?
The solution lies in differentiation through target group-specific FTTH packages. Instead of creating a single offer for everyone, municipal utilities can use their strength - their proximity to the target group - to develop tailor-made products.
Families
Families need reliable security functions such as parental controls or parental filters. It is also important to be able to use several devices simultaneously for streaming and other applications, supported by stable Wi-Fi coverage throughout the home.
Pensioners
For pensioners, ease of use is paramount. They want clear operation and personal support, combined with secure access to online services. Protection against cyber fraud is particularly important to their children.
The company
Companies value flexibility and guaranteed performance. High availability, prioritized support and the ability to scale bandwidths as required are crucial.
Student:inside
Students need a cost-effective, reliable connection that enables fast surfing, video conferencing and online learning without any problems.
Gamers, working from home, SmartHome/Homecloud, sustainability...
Each target group has specific needs and requirements. In order to cover this diversity, it is crucial to precisely analyze the requirements of each target group and develop offers tailored to them
Options that your customers need
The needs of your target groups are diverse - and the options you offer them should be just as diverse. From technical details to practical application examples: Differentiation is the key to winning over your customers and retaining their loyalty in the long term.
- Technical details: speed, availability, latency
- Availability: SLA, prioritized support
- Security & protection: cyber protection options, child & youth protection filters
- Cloud & data storage: Cloud solutions, fixed IPs, high upload speed
- Hardware: WiFi coverage, WiFi repeater, FritzBox
- Price: Flexible tariff models, attractive upgrades, discounts by combining other Stadtwerke services
Example of packages - speeds could also be shown, e.g. by clicking on "technical details":
Stress-free - you don't have to change anything
Many of the approaches only affect communication and can be seamlessly integrated into your existing structures. It is not necessary to change old contracts or existing processes in order to benefit from these concepts.
Whether implemented holistically or as a targeted optimization of individual areas - e.g. in the way you present your offers - the adjustments are flexible and can be tailored to your organization. This allows you to achieve visible results without additional effort and retain full control over your existing systems.
How to develop FTTH tariffs that convince
Indem Stadtwerke nicht nur technische Details, sondern konkrete Mehrwerte und Anwendungen in den Fokus stellen, können sie die Bedürfnisse ihrer Zielgruppen besser bedienen. Ergänzende Services wie Sicherheitslösungen, Cloud-Speicher oder Hardware-Bundles schaffen zusätzliche Einnahmequellen und fördern die Kundenbindung. Das Ergebnis: differenzierte Produkte, die nicht nur überzeugen, sondern sich klar von der Konkurrenz abheben.
1. Conduct target group analysis
Determine who your customers are and what their needs are. The persona method is suitable for this in 1-2 workshops. Interview your customers.
Determine who your customers are and what their needs are. The persona method is suitable for this in 1-2 workshops. Interview your customers.
2. Link needs with specific applications
Put the needs you have analyzed into the context of everyday life. How do these needs look optimally fulfilled?
Put the needs you have analyzed into the context of everyday life. How do these needs look optimally fulfilled?
3. Define additional services
Offer added value through additional services. Such additions can not only increase satisfaction, but also promote long-term loyalty effects.
Offer added value through additional services. Such additions can not only increase satisfaction, but also promote long-term loyalty effects.
4. Develop benefit-oriented communication
Simplify your messages and focus clearly on the benefits. Fewer technical details, more focus on everyday applications - this makes your offer understandable and tangible.
Simplify your messages and focus clearly on the benefits. Fewer technical details, more focus on everyday applications - this makes your offer understandable and tangible.
5. Measure success and optimize packages iteratively
Use tools and KPIs to measure the effectiveness of your products. Regularly analyze which packages work and adjust them to continuously respond to your customers' needs.
Use tools and KPIs to measure the effectiveness of your products. Regularly analyze which packages work and adjust them to continuously respond to your customers' needs.
Product development ROI in 3 - 6 months!
Pricing is the most effective lever for achieving profitable sales growth. With differentiated products and the upselling of additional services, you not only achieve higher prices. In addition, the barriers to switching, e.g. loss of cyber security or hardware (wifi repeaters), increase your customer lifetime value. Your investment will pay for itself in three to six months.
More contracts at higher prices
Individually tailored offers appeal specifically to customers and offer real benefits. They increase the willingness to pay and make it easier to conclude contracts - even at a higher price level.
More profit through up-selling
Additional services such as hardware bundles, prioritized support, insurance or premium tariffs enable higher sales per customer - without having to compete on price.
Switching barriers effectively retain customers
Additional services such as security features or cloud services create added value that customers are reluctant to give up. This reduces the willingness to switch and secures long-term contractual relationships.
Increase in CLV (Customer Lifetime Value)
Satisfied customers stay longer, use additional offers and recommend to others. The focus on target group needs increases the average revenue per customer over the entire contract term.
Legal aspects
Unlike electricity and gas, FTTH offerings are not subject to the same strict unbundling regulations. This gives municipal utilities more freedom in the development of their products. Nevertheless, there are tax and competition law requirements that must be observed. For example, there must be no impermissible cross-subsidization between grid operation and services. These regulations can have a direct influence on the design of FTTH offerings and require careful examination.
The success of FTTH products is based not only on a convincing strategy, but also on legally compliant implementation. In order to bring your offers into line with all relevant requirements, we work closely with specialist lawyers for energy, utility and tax law from our network. In this way, we ensure that your products comply with the legal requirements.
Please note that we do not offer legal advice, but can provide experienced experts from our network if we are involved in the project.
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Our services:
Workshops for target group analysis & differentiation
Product & customer experience development
Development of the communication strategy
No FTTH? - We also provide support with energy tariffs and digital touchpoints
We not only help with FTTH products, but also with the pricing of energy tariffs - taking into account the legal framework, such as the obligation for dynamic electricity tariffs from 2025.
We also support municipal utilities in optimizing the customer experience and designing digital products. Together with our digital agency medienreaktor® within the group of companies, we develop Websites, energy calculators, ordering routes and customer portals for municipal utilities and energy suppliersto successfully market their offers.
Our strength lies in the combination of strategic consulting and technical implementation, which allows you to act innovatively and legally compliant.