Panel: Play on Subs’ Heartstrings

New Orleans— Companies are better off providing service that fosters “emotional loyalty” rather than focusing on “operational efficiency,” according to experts discussing customer-care metrics here.

“Customers view operational efficiency as our problem, not theirs,” said Charles Patti, a professor at the University of Denver’s Daniels College of Business. Customers with a deep attachment to a service provider will buy more from them, he added.

Providers should focus on each point in the customer’s life cycle, he added, from pre-decision to initial contact and ongoing business, including the final phase, termination.

“People move back,” he said.

An emotionally invested consumer is more likely to purchase bundled services, and University of Denver professor Ron Rizzuto offered computations on the different lifetime value of a single-product, analog customer compared to a triple-play customer (see chart).

His computations are based on the average multiyear subscription fees of different tiers of consumers, minus the cost to acquire and service them. Once an organization calculates the lifetime value of groups of customers, they face difficult questions, such as how to invest in those different groups going forward. Should customer service be based on the projected lifetime value, with triple-play customers getting a service hotline, for instance? Or, he asked, should operators find a way to carefully fire consumers who cost more than they are worth? Such questions must be answered within an organization.

One of the tools used to gauge the success of a provider is a third-party satisfaction pollster, such as J.D. Powers and Associates. Frank Perazzini, director of Power’s telecommunications management and service department, said his company’s cable and satellite rankings, due out in October, will be more segmented than ever. The ranking will address customer satisfaction with not just live customer-service operators, but Web-based help methods.

Perazzini noted that in 2005, 98% of customer service was provided via phone, but this year, it will be 67%. Only 1% of service calls were completed via the Web that year, but in 2008, an estimated 31% will be handled online, he added.

He offered information that could help an operator lift its score by describing how J.D. Power weights service attributes. Performance plus reliability is still the top-ranked attribute, accounting for 28% of a provider’s score, he said. Customer service gets 22% of the weight, followed by cost of service, 21%; billing 15% and offers and promotions, 14%.

Companies that subscribe to J.D. Power’s analysis can get an “attribute calculator,” where they can compare their attribute scores to those of competitors, to determine to where to improve to raise their regional satisfaction scores, he said.