Working Assets Long Distance

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Working Assets Long Distance

101 Market St., Ste. 700
San Francisco, California 94105
USA
Telephone: (415) 369-2000
Fax: (415) 369-2000
Web site: www.workingassets.com

DIRECT MARKETING CAMPAIGN

OVERVIEW

Founded in 1989, Working Assets Long Distance was the only enterprise offering a long-distance phone service and regularly donating to nonprofit organizations. It was a subsidiary of Working Assets Funding Service, Inc., which had been established four year earlier by Laura Scher, Michael Kieschnick, and Peter Barnes. Compared with the telecommunications giants AT&T, Sprint Corp., and MCI Communications Corp., Working Assets was a minuscule player. Nevertheless, it had succeeded in rapidly developing a base of customers and in generating considerable annual profits. Hoping to instill loyalty in its subscribers by sending them mailers that addressed social issues and its philanthropic work, Working Assets created an inexpensive direct-marketing campaign.

Every month Working Assets enclosed a letter with its subscribers' long-distance phone bill. The letters, which were printed with soy ink on recycled paper, informed customers about political issues and encouraged them to phone their Congressional representatives to register their opinions. Ten minutes of free long distance were allotted for every customer to call representatives in Washington, D.C., once a month. Without the burden of a large marketing budget, Working Assets was able to charge fees that were actually lower than those of most other companies. The company also donated 1 percent of its gross revenues (as opposed to profits) to an array of progressive nonprofit organizations. The subscribers voted annually on which organization should receive the funds.

Working Assets' political agenda and generosity brought the company a degree of publicity transcending that which it could have obtained from a more conventional marketing effort. Between 1985 and 2005 the Working Assets companies donated more than $50 million to nonprofit organizations. Although its direct-marketing campaign was responsible for spurring the bulk of the company's new subscribers to sign up, it was Working Assets' fundamental principles that ensured it a loyal base of consumers.

HISTORICAL CONTEXT

Working Assets Long Distance was the brainchild of Peter Barnes, who had established the Working Assets Money Fund in 1983. This mutual fund refused to invest in the stocks of companies that were involved in defense contracting, had poor environmental practices, or did business with oppressive political regimes. Once the viability of the Working Assets Money Fund was assured, Barnes diversified his interests and introduced the Working Assets credit card, which donated 5 percent of the value of all purchases charged to the card to various progressive charities.

When contemplating his next business venture, Barnes hit upon the idea of offering long-distance service. He determined that such an enterprise would satisfy the criteria he had laid down for all of his forays into the consumer market. As Barnes explained to the Chicago Sun-Times, he was only willing to get involved with a product that could offer "a basic service, could be marketed nationwide, and could be donation linked." From these principles Working Assets was born in 1989. Operating as a long-distance re-seller (that is, as a company that bought phone-line capacity from other providers rather than owning its own), Working Assets purchased service in bulk from Sprint (and later MCI), which it then sold to its own customers. After starting small the company began to market itself to a national audience with a direct-mail blitz in 1992. Between 1992 and 1997 its roster of subscribers grew from 50,000 to 250,000.

TARGET MARKET

This dramatic expansion was a result in part of the receptive market the company had discovered. According to Marketing News, Barnes's venture tapped into "a growing niche [of] people who want to change the world, but don't want to go to too much trouble about it." Working Assets estimated that 20 million Americans were "societally conscious" and open to discovering new ways to support their beliefs. As a result, its potential audience was quite broad. The company focused primarily on residential long-distance consumers who subscribed to another carrier (generally perceived as a large and impersonal bureaucracy) and who often felt marginalized and disrespected by politicians and corporations. Characterized by their commitment to liberal social and political causes, this group spanned divisions of age, race, and income. "The demographics of an average [Working Assets] subscriber are hard to define, since they range in age from 20 to 75," Robin Greiner, a company manager, told Marketing News. "It's more of a psychographic," she added, a shared mindset as opposed to the sorts of commonalities that more traditionally defined targeted audiences. What potential Working Assets customers had in common was a dedication to causes such as abortion rights, civil liberties, and economic justice. They tended to live in major urban areas (particularly San Francisco, Chicago, and Boston) and were a highly educated lot. As the San Francisco Examiner noted, a full one-third of Working Assets' customers had postgraduate degrees. They were "take action" people, Greiner emphasized, the sorts who would write letters to the editor and wanted to be involved in effecting political and social change.

The primary way Working Assets sought to connect with this audience was through its corporate policies. The organizations and ideals the company supported matched those of the group it hoped to reach. The direct-mail campaign was essential in driving home this convergence of interests to potential consumers. Because these ads were in a letter format, Working Assets could explain its policy positions and its unique place within the telecommunications industry in a clear and detailed manner. This medium allowed the company to elaborate its goals without having to resort to the generalizations and oversimplifications that so often pervaded 30-second television commercials. Moreover, for Working Assets' highly educated target audience, the low-tech and traditional format of a letter carried more credibility than flashy television advertising.

In its direct-mail missives Working Assets positioned itself as an altruistic organization, more like a selfless political crusader than a profitable telecommunications company. Although it always noted that its rates were at least competitive with (if not better than) other longdistance service providers, Working Assets devoted most of its direct mail ads to informing consumers about its substantial charitable donations and its endeavors to mobilize the public in support of various causes. The ads touted the range of "Citizen Actions" the company had supported as another way in which Working Assets was more than just another corporate player. Special programs were highlighted as well, such as different phone-card giveaways Working Assets had run to encourage people to contact their elected representatives (at the company's expense). In 1995, for example, Working Assets distributed a bevy of "Stop Newt" calling cards (and not exclusively to Working Assets customers) in an effort to mobilize opposition to Republican Speaker of the House Newt Gingrich's action plan, the "Contract with America."

COMPETITION

With its corporate objective of "build[ing] a world that is more just, humane, and environmentally sustainable," Working Assets had a strong platform from which to differentiate itself from other long-distance service providers. For the most part its three largest competitors—AT&T, MCI, and Sprint—used price and convenient calling plans to attract residential long-distance customers. The market was fiercely competitive, constantly shifting, and saturated with advertising. The "Big Three" (as AT&T, MCI, and Sprint were collectively dubbed) flooded television, radio, and print media with a steady stream of commercials (both product-specific as well as image-oriented). Telemarketers from all of these companies also frequently contacted consumers at home (often in the evenings around dinnertime), promising cheaper rates and better services than their rivals. AT&T was the largest of the three and had an annual marketing budget of about $300 million. Employing these resources the company aired a slew of commercials that played up its status as the oldest long-distance provider in the country. Beginning in 1996 AT&T used actor Paul Reiser (from the television show Mad About You) in television spots that patiently explained how AT&T's calling plans were a simple alternative to the often gimmicky offerings from Sprint and MCI. These commercials, conceived by ad agency Foote Cone & Belding, were updated in 1997 and 1998. In May 1998 Reiser was portrayed on top of a mountain promoting AT&T's updated One Rate Plus calling plan.

Both MCI and Sprint incorporated celebrity endorsers into their marketing strategies as well. Like AT&T they went "tit-for-tat [in] lowering per price minutes and offering package details," noted an article in the September 8, 1997, Advertising Age. In September 1998 MCI, the country's second-largest telecommunications company, used National Basketball Association icon Michael Jordan in partially animated spots that featured a cast of Warner Brothers cartoon characters such as Bugs Bunny. In August 1998 the company brought back Jordan and his cartoon companions to herald MCI's new Five Cents Everyday calling plan in spots created by ad agency Messner Vetere Berger McNamee Schmetterer/Euro RSCG. In addition to its Jordan-centered spots, MCI used actor John Lithgow in Messner-produced advertising designed to promote its 10-321 (later 10-10-321) service, which was provided by MCI's wholly owned subsidiary Telecom USA. The digits were actually an access code that, when entered prior to dialing a number, would route a customer's call through MCI's telephony facilities irrespective of which company puta-tively provided long-distance service to the residence where the call originated. The 10-321 service was "the fastest-growing product MCI ha[d] ever introduced," the company told Advertising Age in 1997. MCI particularly hoped to win consumers away from AT&T with this effort.

Sprint opted for Candice Bergen to represent its telephone service. In 1997 the company dropped her long-standing "Dime Lady" persona (which focused on Sprint's offering of long-distance service at the rate of a dime a minute) and opted instead for commercials that looked more broadly at the company's low 10-cent rates and its calling plans. In three spots produced by ad agency J. Walter Thompson, Sprint "stress[ed] the power of a dime to bring simplicity and control to consumers' lives," according to the January 13, 1997, Advertising Age. Sprint severed its relationship with J. Walter Thompson in May 1997 in favor of Grey Advertising, which it commissioned to create a corporate-branding campaign.

Furthermore, Working Assets was not the only long-distance provider that strove to distinguish itself from the three telecommunications titans. An upstart phone company, Qwest Communications, launched a $50 million advertising campaign in February 1998. As Advertising Age revealed on February 23, 1998, the commercials, by Omnicom Group's Focus Agency, "toss[ed] humorous barbs at the entrenched long-distance telephone companies." The clever spots related the misadventures of "Bob," an employee of a "big long distance company." In one commercial Bob was beaten by a priest and a nurse in a hospital when they discovered his occupation. Working Assets also had a rival from a long-distance reseller at the opposite end of the political spectrum. Lifeline, owned by AmeriVision Communication, donated a portion of its proceeds to conservative organizations such as the Christian Coalition, Operation Rescue, and the Moore Foundation for Home Schooling.

MARKETING STRATEGY

Working Assets concentrated its marketing efforts on the features that distinguished it from other phone companies (indeed from most other corporations). As the newsletter Report on AT&T noted, "knocking on customers' doors and getting involved with their causes is a good way to steal away part of the … long distance market from the likes of AT&T." An industry analyst concurred with this assessment in Telephony. "They're selling brand differentiality in a way that a large carrier could not." Ironically, irrespective of the (progressive) personal convictions of Barnes and his company's employees, positioning Workings Assets as a socially responsible company made good business sense. Recognizing this fact, Working Assets took every opportunity to trumpet its generous donations, its activism, and its liberal pedigree.

A SWEET DEAL

In another effort to draw people to its long-distance services, Working Assets entered into an arrangement with the famously progressive Ben & Jerry's ice cream company whereby new subscribers to Working Assets phone services would receive coupons good for one free pint a month of the Vermont-based firm's delectable dairy offerings for their first year as Working Assets customers.

The company encouraged its customers to get involved in national political debates in other ways as well. Each phone bill contained two "Citizen Actions." These consisted of briefs on particular issues coupled with pleas from the company for its customers to take stands concerning these topics. In 1993 the company launched "Have a Heart," in which it advocated aggressive lobbying on behalf of a smaller defense budget. "We are trying to increase the number of ways that people can make a positive social impact from money that they spend in their daily lives," Working Assets' founder told the San Francisco Chronicle.

Direct-mail letters lay at the heart of Working Assets' efforts to grow its business. According to Telephony, direct mail was the company's "largest source of acquiring new customers." To aim the letters at consumers most likely to respond to them, Working Assets obtained mailing lists from various like-minded political organizations and publications (such as The Nation, Utne Reader, and Mother Jones) who shared information about customers and subscribers. In the mid-1990s the company added small perks to encourage consumers to switch over to Working Assets. The company offered 60 free minutes of long-distance services in an initial bonus for becoming a customer. Beyond such tactics (and the occasional print ad placed in progressive publications such as the Nation) Working Assets relied on word of mouth to raise consumers' awareness of its services and products. Report on AT&T concluded that the company's "most successful marketing channel is its own customers," from whom it generated nearly 25 percent of its business. While its large competitors offered rebates, frequent-flyer miles, and other incentive programs to capture new customers, Working Assets depended predominantly on its community values and the goodwill of its subscribers.

OUTCOME

Working Assets' marketing strategies were a success. "We've proven it's possible to do good and do well at the same time," Barnes announced to the San Francisco Chronicle. By 1998 the company could claim 320,000 subscribers, and future prospects looked promising. Although Working Assets had only a small fraction of the customer bases of AT&T, MCI, and Sprint, it found that its subscribers were ideal consumers. The massive telecommunications giants were plagued by fickle customers who hopped from provider to provider in search of the latest deal. Working Assets subscribers, because they joined for political as well as economic reasons, tended to be more loyal. Moreover, because they believed in the company's mission, they were more responsible and timely in paying their phone bills. In 1997 Working Assets expanded its enterprise and began offering both pager and Internet services.

Working Assets evaluated its success partly in terms of the activism it had engendered. In 1998 alone Working Assets consumers generated more than 1 million calls and letters to Congress and the White House. That same year the company succeeded in advancing political causes ranging from safeguarding the integrity of the organic food label to securing higher levels of government funding for civil rights enforcement and family planning. In 2005 all of the Working Assets companies donated more than $4 to progressive organizations, bringing the cumulative total since 1985 to $50 million. The campaign continued into 2006.