A New Product Launch
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ubiquitous as plain-paper faxes and cell phones, the prepaid phone card
was truly a revolutionary product when it was launched in 1992. Basic phone
which offered customers the convenience of charging long-distance calls to
home-area numbers while traveling, had been in use for years. It was the
feature that was new in ’92, along with real-time tracking of call duration.
At the time, in-state calling was controlled by monopolies, and per-minute
were high—anywhere from 35 cents to 56 cents per minute. The innovative
introduced with prepaid cards was that users could avoid high rates within
own states by calling an 800 number in another state, keying in their
personal identification number (PIN), then calling the number of the party
wanted to reach. By first dialing an out-of-state number, callers were able
advantage of significantly lower rates while “dialing around” the laws
“We were basically selling secret nine-digit numbers,” says Bill Span, one
first sales agents for the prepaid cards in the U.S. who launched the
product in Hawaii
and Alaska and who was among the top 10 sales people in the country. “The
itself was a promotional item that helped people remember the 800 number and
their PIN numbers!
“In Hawaii we kicked off our sales program by using the card as a tourist
item for hotels. Our first customer was the Sheraton Hotel Waikiki. We put a
of the Sheraton on the cards, and the hotel gave them to tourists. When
them back home, they were reminded of the Sheraton every time they made a
As a sales agent for AmeriVox, the multi-level marketing company that
the prepaid cards, Span quickly built a sales organization. Within two years
5,000 people in his network. After four years, he had 8,000 salespeople
and 1 in 10 people in Hawaii had a phone card. Kevin Young, one of the first
leaders in AmeriVox, eventually had more than 70,000 people in his down
line, and the
company had 100,000 sales representatives throughout the country.
The entire organization was built on the foundation of one powerful
the aid of advertising, marketing materials, or a public relations campaign.
It was a classic example of the word-of-mouth promotion that multi-level
marketers depend on.
Inspired by phone cards that were in use throughout Europe and in Japan,
associates wondered how to adapt the idea to the U.S. market. Towru Ikeda,
and Larry Huff had made millions together in the 1970s and each had gone on
to other endeavors.
But when Larry’s daughter, who was a model in Japan, showed him her prepaid
he got excited about the potential for the American market and immediately
called Ikeda and Eastis.
In Japan and Europe, the phone cards depended on a technology that required
telephones. The cards were coded with the amount of time the customer had
The caller inserted the card into the telephone, which “read” how much time
The phone timed the call in progress and then cut the call off when the time
Because it would have been impractical, if not impossible, to replace all
telephones across the U.S., the three business associates had to come up
way to apply the pre-pay concept. An engineer, Huff wondered, Why couldn’t
a system that works with the phones instead of requiring a special phone to
read the card?
That would allow card use from any phone in the country--or around the
Huff and Eastis spent three years on research and development. Their
solution: 800 number
dial-arounds, real-time tracking of calls, and an automatic option to
“re-charge” the card
instead of cutting off a call in progress. Another significant feature was
that the per-minute
rates were up to 50% lower than the phone companies were charging.
After creating their version of the calling card system, Huff, Eastis and
Ikeda began searching
for someone to mastermind sales. They turned to Kevin Young and Doug Davis,
who set up
an office in Kirkland, Washington, where they lived, and started their own
search for sales
people. One of their recruits was Matt Jones, a long-time friend of Young,
who, along with
Young and Davis, went on to become one of AmeriVox’s first vice presidents.
Jones, in turn, recruited a young man who was helping him develop a regional
That young man, Earl Young, didn’t have any sales experience, but he was
eager to learn.
Jones suggested that he try to sell the card to truckers.
“They use phone cards a lot,” Jones told him, “and they’re very expensive.”
In addition to
charging as much as 56 cents per minute for in-state calls, the major
telephone carriers like
AT&T, Sprint and MCI were tacking on a 75-cent surcharge for placing a call.
was no more than 25 cents a minute and was discounted to as low as 15 cents
as a caller
continued to recharge the card. “Why don’t you call some trucking companies
and see if you
can get someone interested?” Jones suggested.
An owner of one of the largest trucking associations in the country jumped
at the chance to cut
his phone expenses in half. With 30,000 truckers in his association, Steve
Wybell began buying
thousands of cards every month, and by the end of the first year, Earl Young
thousands of dollars a month from that one sale.
Prior to his success, prospects were not fired up about selling the new
product. Armed with the
story of the rookie’s success, Jones and Span used it to recruit salespeople
in their organizations,
and the prepaid phone card industry exploded across the U.S. AmeriVox’s card
was the first
product sold in Hawaii that generated revenue for Hawaiians from the
mainland, and it was the
hottest promotional product the state had ever seen.
The launch of the innovative product caught the major carriers by surprise.
As a sales executive
with AT&T at the time later told Young, “You guys hit us from out of left
field. We didn’t see you
coming, and by the time we saw what you were doing, we asked ourselves, ‘How
do we catch up?’”
*An interesting footnote to the prepaid phone card story is that the
Sheraton Waikiki cards
—and many others—have become collectibles. As with any collectible, the
fewer made, the higher
the potential value, especially if a card is in mint condition. Not only was
the Sheraton Waikiki the
first hotel in the U.S. to issue a card, but also, according to Jones, “it’s
also a beautiful card and
because only 1,000 were made, it’s quite valuable.”
Recognizing the collectible potential for the cards, Jones and Span urged
sales recruits to tell
their customers to “buy the card, use the card, save the card.” In many
cases, companies issued
cards for special events, distributing only a few hundred. One of the
hottest cards ever made
features a photo of—who else?—Elvis Presley!