Cable Operators

More Than Skin Deep

4/17/2005 8:00 PM Eastern

RCN Corp. is making lemonade out of lemons in the wake of its Chapter 11 bankruptcy reorganization by rebranding and repackaging its image.

Now that the MSO is on the flip side of its reorganization, having ditched or converted almost $3 billion in debt, the company is creating a new look, feel and attitude aimed at luring customers.

“We went through a quick reorganization, and we’re now relisted on NASDAQ,” says Bobbie Herbs, senior vice president of marketing. “We knew we had a powerful asset base, and we also knew our brand was challenged. We look at ourselves as a new company today, and we decided to rebrand ourselves as such. We can change our visual image and enhance our existing strengths at the same time.”

RCN will roll out its new logo and look this month. Although there will be a traditional marketing component to the rebranding, there is more to it than that, Herbs says. For instance, with the purchase of Pepco Communications’ stake in Starpower in Washington, D.C., RCN now owns all of that property.

The MSO’s corporate rebranding isn’t so much about a campaign as it is a long-term recrafting of the company’s image in the eyes of the public, she says.

RCN began last December by hiring Boston-based marketing company Mechanica to help figure out what kind of image would resonate best with customers. Input was gathered by talking to company executives, Wall Street analysts, customers and bondholders.

“We did a 360-degree overview of the company and its image,” Herbs says. “We found that our customers love our three-product bundle, and they like our customer service. They also believe we’re innovators with all our new service offerings.”

But the triple-play bundle advantage is fading as other MSOs and telephone companies roll out similar offerings. RCN didn’t want to abandon its triple-play story, but Herbs and RCN’s other top executives didn’t want to build on it. Instead, the rebranding includes a promise from every employee to provide top-notch customer service and educate consumers about the products available to them and encourage them to try new things.

There’s also a new look. A blue-and-green color scheme aims to distance RCN from its pre-bankruptcy red-and-black logo. It also differentiates the company from Verizon Communications Inc. and Comcast Corp., which have red and black logos.

Herbs says traditional marketing tactics will be used to reintroduce the brand, including newspaper and radio ads in its service territories. But mass marketing is not in the cards. It just doesn’t make sense to use those kinds of tactics because RCN doesn’t serve entire markets.

Rather, guerrilla marketing tactics will be employed beginning this spring. Herbs declined to go into detail other than to say, “We have an excellent direct sales staff, and we want to take better advantage of their skills and place on the street.”

Rebranding may help RCN’s image, but some analysts wonder whether it make a big difference. Adi Kashore, an analyst with The Yankee Group, believes a new look could help RCN gain more customers. But the challenges it had pre-bankruptcy remain post-bankruptcy, he says.

“Reorganization is, at best, a survival strategy,” he says. “It’s not a growth strategy. Their biggest problem remains the same as it was before they filed for bankruptcy — that is that they compete in markets with very entrenched and deep-pocketed companies that can be more aggressive with product pricing and promotions.”

RCN executives don’t see it quite that way. The rebranding effort is much larger than a logo change or single promotion, they say. Employee interaction with customers will now be tied to annual reviews and compensation and include, among other things, greeting every customer by name, confirming, explaining and demonstrating all the products a customer subscribes to.

“This is all bread-and-butter stuff,” Herbs admits. “But now everyone has made a conscious effort to make sure all these things are done with every customer interaction, and they are willing to be judged on those interactions.”

A positive attitude toward customers and competitors is welcomed by Bruce Leichtman, president of Leichtman Research. He says one of RCN’s early mistakes was its negative promotions aimed at incumbent providers. “They are obviously an innovative company, which is a good thing. But their initial marketing efforts were so negative. And when you use that kind of angry marketing, you tend to get angry customers. That is not a good thing. They’ve moved away from that, and it appears they are positioning themselves more positively, which will probably work to their advantage.”

While Leichtman says the triple-play advantage is becoming old hat, Elad Nafshi, vice president of product management for phone and Internet, says the phone companies continue to be voice centric and cable continues to be video centric, while RCN has always pushed voice, video and data equally, making it unique among telecom providers.

Even prior to its bankruptcy and decision to rebrand itself, RCN revamped its customer service operation and takes pride in its state-of-the-art network. The company worked closely with Convergys Corp. to create a billing system that would provide customers with one bill for three product lines — something that didn’t exist before, Ramani says. RCN went from having three billing systems to one in 15 months.

P.K. Ramani, senior vice president and general manager in New York, knows RCN can’t compete against Time Warner Cable and Comcast on things like video, and the company offers the same reliability with its phone service as the Baby Bells. So the differentiating factor will be service and attitude. New products like the company’s WebWatch remote home-security product and its 10-Mbps Internet-access service will be part of the mix. In addition, the company’s intensified attitude toward the business and its customers will be just as important going forward.

“It’s not necessarily the raw product that attracts customers,” says Craig Wertz, vice president and product management. “It’s how it’s offered. It’s customer service. It’s the bundle and the way we help customers help themselves.”

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