PRODUCT INNOVATION IN A SERVICE INDUSTRY

NATIONAL BUSINESS SHOW MAY 15, 1990

We do not have a product. We have a service.

We do not manufacture anything. Most of the phones that we supply to our customers come from Japan or elsewhere.

We can not really influence the specifications for these units as the phones must work internationally and therefore have reasonably similar features and operate on the same frequencies.

So why am I on this panel?

I believe that we have the toughest task of all for we are trying to differentiate our offering on intangibles. This is something like putting Chichita on bananas where the product can not really be differentiated.

Cantel is Canada’s national cellular licensee.

• We will be in 10 provinces by mid-1990.

• We must compete against the local telephone company in each area which means we compete against some of the largest companies in Canada many of whom have been around for over 100 years.

• We started less than 5 years ago.

• Yet despite this competition Cantel has been an incredible success.

• We split the market fairly evenly on a nationwide basis.

• Sales have been far ahead of anyone’s expectations.

The original landline phone companies can ultimately build in all the areas we build and can install the same type of network equipment as we can. The only thing that differentiates us from them has to be service.

CONTINUOUS SERVICE

Our service starts before we even have a client:

Ease of Access

• To make access easy we have over 50 Cantel Service Centres and over 14 00 agents across the country.

• To ensure that these organizations provide first rate service we provide intensive training courses.

• We also monitor the performance to ensure correct installation.

Choice

• Our CSC’s will install any phone the customer wishes although we do have recommended product lines.

Installation

• This must be done carefully to ensure convenience, appearance and safety (hands free).

• We even clean the windshield.

Manuals

• We provide user friendly operations manuals.

• But knowing people seldom read these, we also provide video tape instruction while the client is waiting for his phone to be installed and audio tapes explaining features.

Call Follow Up

• A couple of weeks after the client has had the phone installed we call to find out how it is going and if there are any problems.

Customer Service Group

• Service really is our middle name.

• We pioneered 24 hours a day, 7 days a week service.

• The service is bilingual.

• We aim to have 90% of our calls answered in 15 seconds.

Audit

• To ensure we are doing the right thing we have Customer Report Cards which are closely analysed by Cantel management.

BUT WHAT ABOUT SERVICE INNOVATION?

This is a major commitment by all employees. We have a Cantel Heroes Program which encourages all employees to make suggestions on how we can improve our service.

However, there is a more formal service improvement approach. Most of the input comes in one of two ways.

• Can do, i.e. ideas developed by the engineering group on things that could be added to the service.

• Should do, i.e. requests from marketing for new services.

Cantel has a Development Co-ordinator who monitors a process:

• He receives ideas from any area.

• He identifies a Champion for the ideas.

• He ensures that there is adequate market research and a technical feasibility study.

• He ensures that there is a costing of the product so that the correct pricing can be determined.

• He explores the possible funding of the project.

• He establishes a schedule.

• The project then goes to the Executive Operating Group (EOG).

• Upon approval the development commences and a test is set up.

• A launch is scheduled with all the marketing trimmings.

The cycle is short despite the formal process. Our aim is at having new services in months, not years.

Despite this analytical process gut feel is very important.

For example, I am the champion for something known as Personal Communications Networks. This is a ‘personal cellular’ concept that has not yet gone over that well in the United Kingdom where it was originated. But I believe there is a huge market for a light, inexpensive portable phone (show CT-2).

This is hard to justify on an analytical basis but is still a major project within Cantel.

WHAT NEW SERVICES HAVE EMERGED?

Mobile Office

• This is data on cellular. Frankly it has not gone over well as a project to encourage PC’s to be hooked up to cellular.

• However fax machines have been widely accepted.

• Therefore, tomorrow we are announcing Mobitex Data Communications which is a completely new approach to handling data on over the air channels.

Mobile Info

• This has been a great success. Information is available by dialing #123 on such things as weather, news, financial data, sports and traffic.

Call Following

• This is a unique offering to Cantel. It allows a client to dial a customer using his or her local phone number and the system will find the customer wherever they may be in Canada.

Credit Card Phone

• We do however make the occasional product. We could not find a credit card phone that worked adequately and therefore have developed our own.

• It is very user friendly being voice prompted (with up to 9 languages if required).

SUMMARY

Cantel committed to spend 2% of its regulated revenue on research and development when we were granted the original licences. We have been spending more than this.

All of this money is expended in Canada.

We have a huge task ahead in a very fast moving field.

• Conversion to digital cellular.

• Further developments on data over cellular and through Mobitex.

• International paging.

• PCN.

In summary, we have a very exciting challenge in one of the world’s great growth industries.