The Bottom Line On Customer Satisfaction
Byline: SHIRLEY BRADY
“People just don’t like their cable companies.”
So says Jack West of the American Society for Quality, regarding the American Customer Satisfaction Index scores, released in May. Satisfaction improved overall for the 35 industries tracked by the survey, to an aggregate score of 73 out of 100. But pulling down the group was the cable and satellite sector, which fell nearly 5%, from 64 to 61, compared with first quarter 2001. Heck, even airlines saw an upward bump.
Within the multichannel universe cable’s collective butt was kicked by satellite providers, with DirecTV nabbing a score of 70 both years and EchoStar (even with a 4% dip) coming in at 68. Time Warner Cable scored 61, while last-place MSO Charter Communications plunged 16% to a dismal 53 among the top MSOs tracked. Worse still: RCN outranked them all with its 70.3 score.
That cable customers are feeling unloved comes as no surprise to Todd Wiener, president of Boston-based Innovista Research. According to a report the firm released late last month, only 69% of cable subscribers surveyed were satisfied with their service, compared with 90% of satellite subscribers.
The implications for MSOs’ bottom lines are clear, Wiener says, noting that digital cable growth is particularly vulnerable. Among the 864 households that shared their woes with Innovista’s researchers, analog subscribers who describe themselves as “dissatisfied” are 57% more likely than “very satisfied” analog subscribers to feel that digital cable costs too much. What’s more, dissatisfied cable subscribers reported they are less likely to pay for additional services such as pay-per-view or digital cable – and more likely to favor competitive alternatives such as satellite.
Customer satisfaction is not only a key predictor of churn, says Wiener, but a valuable indicator of where operators should focus their attention. The cable customers surveyed ranged from “neutral” to “somewhat satisfied” with their service. Further, the overall satisfaction of cable subscribers is more affected by a perceived decline in service quality than by price increases – indicating that operators can afford to “moderately” raise prices as long as customers think the quality of service is improving.
Wiener adds that what constitutes poor service quality is highly subjective – including the level of technical support, picture quality, slowness to respond to service calls, even being put on hold by customer service reps. Increasing the number of channels won’t resolve the perception of poor service either. “The average cable or satellite customer surveyed, with 80 or so channels, only watches a fraction of them.”
Innovista’s report concludes that customers who are continually dissatisfied with their provider are more likely to cancel and seek alternatives. One-fifth of the satellite customers polled had subscribed to cable in the previous year; the most common reason given for canceling cable was that they felt “generally dissatisfied.”
The biggest takeaway from the responses is the role that perception, and perceived value, plays in a customer’s decision to maintain, add or cancel cable service. Even if dissatisfied subscribers remain customers, operators will have a difficult time generating incremental revenue from them. “Operators typically only look quarter to quarter, but that might jeopardize building a positive relationship with customers,” Wiener notes. Greater focus “on improving service to the people contributing to the bottom line can only increase customer satisfaction and revenue.
“If you put yourself in the position of the customer and ask yourself ‘How good is this service?’ – not as an executive but as a customer – you will see things differently.”
Who’s churning and why
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7% of consumers who do not currently subscribe to satellite had subscribed during the past year.
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22% of consumers who do not currently subscribe to cable had subscribed during the past year.
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90% of satellite subscribers plan to continue to subscribe during the next year.
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79% of cable subscribers plan to continue to subscribe during the next year.
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Satellite churn rates are significantly lower than cable’s due largely to differences in customer satisfaction.
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The most common explanations for canceling cable or satellite service are “I was not satisfied” and “It cost too much.”
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The keys to reducing churn rates are improving customer satisfaction and increasing the perceived value of the service.
SOURCE: INNOVISTA RESEARCH INC.’S THE INNOVISTA REPORT, AUGUST 2002
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