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The Kelsey Report® White Paper

Creating a Customer-Focused Yellow Pages Industry
Carlotta Mast , 12/31/2004

EXECUTIVE SUMMARY:

Executive Summary & Key Findings

By putting customers and their needs at the center of every business decision, Southwest Airlines has been able to thrive in an industry wracked by bankruptcies, consolidations and liquidations. While other airlines have lost billions of dollars each quarter, Southwest has consistently posted profits without massive layoffs or compromising customer care.

So what can Yellow Pages publishers learn from a customer-driven company like Southwest? A lot.

Customer-driven organizations like Southwest prefer measuring success using customer satisfaction and loyalty metrics rather than product profitability or market share metrics, which have been the norm in the directories industry.

While many publishers have trained their sales reps to be more consultative, most Yellow Pages companies continue to be more sales and product driven than customer driven. For instance, many publishers are focused on maximizing revenue by increasing their rates or selling new products, such as process color or cover ads, at one-size-fits-all prices rather than on forging long-term relationships with advertisers and developing products and services that will fulfill specific customer needs.

The Kelsey Group (TKG) believes becoming more customer-centric could help publishers develop stronger relationships with advertisers, compete more effectively against other advertising media, including the search engines, and stem customer churn, which has become a growing problem for directory companies around the globe. Eniro in Sweden, for example, estimates that it has lost about 30,000 advertisers since 1999. Customer churn at Seat Pagine Gialle in Italy hit a high of 12 percent in 2003.

Eniro and Seat PG are not alone. A recent Kelsey Group survey of small-business advertisers found that 11 percent of those who indicated they are current or former Yellow Pages advertisers have dropped out of the printed book within the past two years. This suggests to us that the overall exodus of small businesses out of the Yellow Pages may be accelerating.

In response to this and other challenges facing the directory business, a handful of forward-thinking publishers around the globe including Dex Media, Sensis Pty. Ltd., Seat PG and Yellow Pages Group are taking meaningful steps to overhaul their organizations to become less sales and product driven and much more customer centric. As these and other publishers are learning, the work necessary to become customer driven is challenging and touches every aspect of their organization.

In this report, we provide a definition of what it means to be a customer-driven company. We lay out the case for why we believe Yellow Pages publishers should consider implementing changes designed to make their organizations more customer centric, and we discuss the basic steps a directory company would need to take to move in this direction.

Copyright � 2005 The Kelsey Group. All Rights Reserved.
This published material is for internal client use only. It may not be duplicated or distributed in any manner not permitted by contract. Any unauthorized distribution could result in termination of the client relationship, fines and other civil or criminal penalties under Federal law. The Kelsey Group disclaims all warranties regarding the accuracy of the information herein and similarly disclaims any liability for direct, indirect or consequential damages that may result from the use or interpretation of this information.

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The Kelsey Group, Inc., 600 Executive Drive, Princeton, NJ 08540-1528
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Copyright© 2006 The Kelsey Group. All Rights Reserved.