Regulated companies should stem attrition, cultivate loyalty with customer analytics.

A weekly ritual at our house is to pore over the local Sunday newspaper print edition and drink big mugs of strong coffee. My wife and I take different sections, we discuss various items that strike us along the way, and we can often have the world's problems solved by noon. It's very productive, if not entertaining.

Sometimes we'll come across a news item that is so unsurprising that we get a good chuckle and try to imagine the poor newbie who was tasked with writing the article that shocks nobody. Today's Raleigh News & Observer included an item from the weekend Wall Street Journal that briefly inspired a chuckle until we remembered how close to home it hit with us. The title tells it all: "More Television Viewers Taking an Ax to Cable," a reference to cable television" (CATV).

There are many reasons why that news is unsurprising, not the least of which is due to the variety of free programming on the Internet now competing for the attention of anyone with Internet access. At the same time, it seems that both the CATV and the telecommunications network (telco) operators that compete with them often treat their customers as if it were still the 1980s and they have monopoly rights to operate in defined geographic areas.

Deregulation, technological progress and competition have radically changed the rules since the 1980s for CATV and telco businesses. And while they are making changes, they're going about it slowly and inconsistently. By contrast, customer mindsets and expectations have evolved quickly and people now have the ability to share their experiences via social media, which may add to the challenges for companies that don't enjoy strong customer loyalty.

If you want proof, just ask your neighbors if they've done away with their home phone or CATV service, or ask for feedback via social media. You'll get an earful either way and quickly understand why it's not surprising that people are turning their service off. And while the attrition rate cited in the Wall Street Journal article amounts to 0.2% of the combined industries' customers, it's a net loss of customers across the industry in just one quarter. Ouch! That should be a wake up call.

So are the CATV and telco operators listening? I can't really tell, but from the way they treat me as a customer, it certainly doesn't seem that way. Here's what we've experienced in the last three years at our house:

  • We opted for our CATV operator's "triple play" offering a few years back with a two year contract. When our contract ended, we had no choice but a 15% increase in our rates for the privilege of remaining their customer.
  • When we switched to a satellite-based TV provider, the installer tried to convince us that we could only get a signal from the low roof line directly outside my daughter's window or next to our driveway in front of the house. We only got the service by insisting they put the dish on the highest part of the roof, which involved a week's delay and escalation to a manager to approve the extra-long ladder.
  • And last month we got a flyer on our front door from the CATV operator promising "No contract - big savings!" Really? We didn't believe it. Did we call? No.
  • We now have "triple play" from our local telco. They helped us with one-time discounts to pay the early termination fee from the satellite provider, but it's not appreciably different than the other two services.
  • In all three cases, they package the TV channels in a way that we are forced to receive dozens of channels we don't want and never watch in order to get the few that we do. It sort of reminds me of the old days when a great band put out a new single and I had to buy the whole album to enjoy my new favorite song. Meh.

And none of these companies have inspired our loyalty, so we'll probably keep switching to get the best deal as long as they keep up their current practices. Or until we just get tired of the hassle. At this point, we've not tired of the hassle enough to leave altogether, but according to the Wall Street Journal, more and more people certainly have had enough.

What's tragic is that there's a good fix for the problem - it's called customer analytics. There are details in customer data that can explain trends, enable accurate projections and give all sorts of insights. All these companies have the data, and they just need to understand what it's telling them. And as an alumnus of the heavily-regulated telco industry, I know many business practices are regulatory requirements, but I also know that many of them are certainly not mandated and simply may have evolved into standard practice. Not a good excuse.

By contrast, one of my favorite examples of how a company created value with a 360-degree view of the customer is from a regulated telco. In this case, Verizon used customer analytics to transform customer relationships and generate triple-digit growth during a deep recession. Regulated or not, it's always a good idea to pay attention to your customers, and the Verizon case shows just how good an idea it can be. The key is to translate the understandings into offerings and engagement the customer values and wants. That kind of engagement over the long term can help a company remain relevant through changes in regulation, changes in technology or both.

Just imagine if our CATV provider had offered us a 15% decrease in our monthly rate to reward our loyalty. We'd probably still be their customer, and they might have found us more inclined to let our teenage daughter order up some of the pay-per-view movies she's always asking about. And we might also let our almost-teenage son look at any games or interactive offerings they could entice us with. But none of that's going to happen because they frustrated and angered us - and I know very well we don't stand alone. And now they will have to show us much more love than a 15% discount if they really want our business again.

Customer analytics can help any organization more complex than a mom-and-pop operation know more about their customers.  And knowing your customer is fundamentally important and always worth the effort - perhaps especially for regulated companies.

That's how I see it. What do you think?

tags: customer analytics, customer loyalty, regulation

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