The second quarter of 2010 was a milestone for cable MSO‘s but NOT the kind they were looking for. In the second quarter of 2010, the USA had a decline in pay TV subscriptions for the first time in history. The cable industry alone was hammered by the loss of over 711,000 pay-TV subscribers.
One would think a new Cable CRM strategy should have kicked in, but the groundbreaking 2nd quarter was followed by the loss of additional 518,000 pay TV subscribers (and this was just the amount from 4 of the top 5 MSOs).
Pouring Salt onto the Cable Subscriber Wound
The major reasons cited by industry executives for the losses were difficult economic times and subscribers switching to telecommunications companies or satellite TV providers. However, there is a third reason that seems to be growing by astronomical proportions.
The third reason is that more and more subscribers are cutting the cord which is to say they have discovered that their favorite TV shows and movies are available from other sources including the Internet using PC’s or mobile devices at a much cheaper price and maybe even free.
How much cord cutting is going on versus pure economic attrition is subject to dispute. However, given that during the 2nd quarter of 2010, telecommunications and satellite TV providers only added 495,000 new customers (net loss of 216,000 subscribers), it is no longer an area that Cable MSOs can ignore.
Is It a Technology Battle or Fundamental Market Shift?
In our ongoing series about the Cable MSO industry, we have touched upon the intrusion of Internet TV, content wars and net neutrality. Today, the significance of the lost subscribers points to a combination of issues from technology use to the ability of Cable MSOs to adapt to a changing marketplace.
Cable MSOs no longer have a monopoly on content or delivery and are struggling to keep a dominant position. Technology has changed the face of the market and is creating a basic change in the market dynamics.
The reality of the situation is that Cable MSOs have to realize that at some point in time, the vast majority of subscribers will have access to devices that render the traditional set-top box obsolete. Cable MSOs need to remember the first law of marketing which is the Law of Supply and Demand. For cable subscribers this means they will seek out the lower cost service with greatest accessible content.
How a Cable CRM Solution Helps Cable MSOs Fight Back
There are three things that Cable MSOs can do to combat the loss of clients. Two can be done today and the third will only come after recognition of the cord cutting problem as part of the Law of Supply and Demand. The choices are:
- Use a Cable CRM features to identify each lost or potential lost client and visit them immediately to resell them on value, price, service, quality, content availability, or special discounts if they return. A Cable CRM solution helps because of its ability to create sales routes for different criteria. For example a Cable CRM solution can be used for Tap Audits or to:
- Create a DSR route for visiting upcoming disconnects by generating a route based on disconnect codes.
- Identify losses by competition. DSRs can then implement promotional specials such as a Dish win back promotion that would target all subscribers lost to Dish TV.
- Assist with proactive potential lost subscribers by identifying customers who have had quality issues. These clients can then be routed for personal visit and an opportunity to cross sell.
- Target subscribers who identified price as the loss reason. Routes can be created to visit these lost subscribers to offer promotions comebacks or for follow-up when a competitors sign up specials are about to expire.
- Schedule visits to lost subscribers to remind them of the advantages of cable including HD, live events and speed. This is particularly effective for cord cutters.
- Recognize that almost all subscriber loss is controllable. Price and service are only the reasons subscribers provide when the value they perceive for the service no longer meets or exceeds their expectations.
- Embrace technology as an opportunity to sell something new rather than as something that must be defended against. For example, recognize that cord cutting is a result of advancing technology. The key is finding Sales Force Automation (SFA) solutions to take advantage of this market change.
Lost Subscriber Realities
Reducing controllable loss is not rocket science but a set of procedures that any Cable MSO can set up to address potential problems early as well as responding quickly to disconnect notifications. The basic procedures include client empathy to issues, standardized problem resolution training and a fast response time to lost subscribers.
A CRM can help Cable MSOs get reps in the field to address issues faster than any manual system. This will reduce Cable churnas well as directly impact the bottom line.
Tell us how your cable operations handle lost clients. If you liked this article you may also enjoy reading: