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New Cover Story: To Win Wallets, Win Hearts First Cable Operators - 12-October-2009, 01:10

Cover Story: To Win Wallets, Win Hearts First
Cable Operators Improve On J.D. Power Survey, But Still Lag Behind Rivals
by MCN Staff 10/12/2009 2:00:00 AM



You could almost hear the collective groan from the cable industry when the 2009 J.D. Power and Associates U.S. Residential Television Service Satisfaction Study was released last week.

The firm's own headline, AT&T U-verse, Verizon-FiOS and WOW! Lead Regional Customer Satisfaction Rankings Among Television-Service Providers confirmed that cable operators generally wouldn't love the results.


Some cable operators have more work to do than others, said J.D. Power director of telecommunications Frank Perazzini.

Moreover, nearly all cable operators showed year-to-year gains in customer satisfaction; Time Warner Cable notched a 5.8% improvement in the West, and Comcast and Charter Communications each posted 6.5% gains in the North Central, albeit on relatively smaller scores.

The problem is, telcos and satellite operators raised the bar, too: Average satisfaction nationwide in 2009, across all TV-service providers, was 632 on the 1,000-point scale, up 23 points from 609 last year.

How did just about every provider boost satisfaction Perazzini suggested that after the poor showing in 2008 the lowest overall scores for pay TV services in five years everyone redoubled efforts to better position themselves to retain and grow their customer bases. Fewer TV customers reported outages on the 2009 survey (11% versus 15% in 2008), and providers cut hold times to resolve a customer's issue by 13% year over year.

Another factor that has surely moved the needle: There's more competition. With as many as four (or even five) providers in some markets, there's been a surge of special promotions, pricing deals, expanded HD lineups and more VOD, all intended to make television subscribers happier.

Bruce Leichtman, a market researcher and former cable-operator marketing executive, said he thought it was significant that cable's scores were up in the new survey. To me, that's as much a story as DBS beats cable, he said. That [the scores are] up, not going down. And heck, as you're losing subscribers, the ones that are still with you are satisfied because they made a choice.

In his latest Leichtman Research Group survey on the topic, published in May, 62% of cable-TV subscribers were very satisfied with their provider (satisfaction ratings of eight to 10 on a 10-point scale), while 66% of satellite TV subscribers are very satisfied with their satellite-TV provider. That's the first time the difference in the levels of satisfaction were not statistically significant, he said. (J.D. Power's 2009 survey is based on responses from 28,118 U.S. households that evaluated their cable, satellite or IPTV provider; Leichtman surveys a smaller base of 1,600 adults.)

The J.D. Power survey skews heavily toward video providers that subscribers have chosen in markets where a choice is possible, one reason why cable operators do comparatively well in phone-service satisfaction.

Cable operators and other critics of the study noted that the results also failed to discount the telephone companies' lack of service record in the survey. Even as cable operators have made great strides in customer service, there's a psychological predisposition for many people to not like the incumbent cable service. It can take years for cable companies to erase bad customer-service experiences, of which there were far more in the 1990s.

The annual J.D. Power study isn't a completely accurate picture of consumer sentiment for a couple of reasons, said Time Warner Cable vice president of enterprise customer care Andrew Haines. One, there is some time lag between when the customers are surveyed and the release of the information, so we are farther along on improvements than J.D. Power is reporting. Second, consumers seem to be swayed by new technology and tend to place a higher value on new entrants than traditional providers.

Senior executives at Mediacom Communications which generated the lowest scores among cable operators in the J.D. Power survey visited six regional locations last week to give awards to employees for exceptional customer-service efforts.

Essentially, it's a week of celebration for what the front-line folks go through with customers, said senior vice president of customer service and financial operations Tapan Dandnaik. About 60 to 70 Mediacom employees will end up being honored, he said, for efforts such as overtime put in making sure customers weren't negatively affected by a recent nationwide change to the company's telephone-provisioning system.

All companies preach customer service in advertisements, bill-stuffers and marketing programs. But these days it's more critical than ever for cable operators to perfect the art of winning loyalty.

There is clearly a focus now that it is going to be more of a marketing game here on out, said Miller Tabak media analyst David Joyce. There has been a lot of investment in more customer service call centers and training because that's been one of the long-held beefs with the cable industry. At one time, they were the only provider, but that's not the case anymore. When you've got new entrants, you have to have good customer relations to try to retain those customers. I think that is evident in all of the cable companies improving their numbers, even if the [rankings] didn't change significantly.

A telling detail from the J.D. Power study is that despite an overall improvement in recommendation rates, there isn't a corresponding increase in loyalty.

The percentage of cable customers affirming their loyalty to their provider declined to 25% in 2009, from 27% in 2008. Satellite providers have experienced a similar decline with a loyalty rate of 40% in 2009, down from 44% in 2008.

J.D. Power attributed this to customers who want to keep their options open in a tough economy.

To increase loyalty, the firm said in announcing the results, Providers should continue to enhance the service improvements offered this year, and to remain competitive from a cost-and-offerings perspective.

BEYOND THE NUMBERS
Multichannel Newsasked operators what they are doing in five key customer service areas. Here's what five top MSOs told us.


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