What the ILECs Can Learn From Canada and Coffee

The other day I noted that Mark Goldberg has recently started blogging, and wanted to welcome him to the fold. He's well versed in the Canadian telecom sector, and had a terrific post on Friday that I wanted to amplify on.

I think you have to be Canadian to fully appreciate this, but for those of you in Verizon-land, just substitute Dunkin Donuts for Tim Hortons, and you'll get the picture.

Last week, the biggest financial story in Canada was the the Tim Hortons IPO. We don't have many homegrown retail brands left up here anymore - that's another (sad) story unto itself - and even fewer that the public can actually invest in. Everybody wants to own their stock - just like their coffee, people can't get enough of them. This business really is a gold mine. I was thinking about Mark's post on Saturday, as I was sitting in our local Tim Hortons with one of my sons having our weekly coffee/tea time. There is ALWAYS a lineup - doesn't matter what time of day - people just keep on coming. It's the same just about anywhere you go across Canada. Doesn't matter how many Starbucks are nearby, they just keep coming - eh! That said, Starbucks is a different animal, and their devotees would rarely go downmarket to Tims - or at least admit to doing so!

This is a roudabout way of getting to Mark's post. His main insight is that Tim Hortons has managed to become very successful and well differentiated in what is essentially a commodity business. Everybody drinks coffee, and people have many choices about where to go, but Tim Hortons sure gets it share. Of course, the secret is that Canadians are addicted to donuts, and that's probably the biggest reason they go to Tims. The coffee actually isn't that good, and 18% cream is just too rich for me - but that's the secret sauce to making it taste so good. Regardless, they are a well oiled machine, and you can't beat their prices.

So, I'm with Mark in saying that telcos could learn a few things from Tim Hortons, as the voice business these days isn't really that different from the coffee business. It IS possible to differentiate yourself, and as we've learned from Skype, keep the price low, make the user experience enjoyable, and keep the product simple and easy to use. Perhaps most importantly, stay close to the customer, and keep bringing out new products that tap into what people want. And if the telcos don't listen, just don't be surprised to see Tims come out with their own calling cards some day! If that's what the customer wants....