Marketing

Cable Offers ‘White Glove Glove’ Treatment

1/03/2011 12:01 AM Eastern

Steve Mehs really likes his TV.

A Time Warner Cable customer in rural
western New York state, Mehs has signed up
for practically everything the cable company
has to offer in his area.

Gold-plated video package? Check. Unlimited
phone service? Got it. Highest available
high-speed Internet service? Done that.

But the 25-year-old delivery-truck driver
was missing a couple of things — a wholehouse
digital video recorder and a level of
customer service that made him feel like the
money he was plunking down every month
was not only worth it, but appreciated.

Christmas came early for Mehs on Dec. 11.
That’s the day that he signed up for Time Warner
Cable’s Signature Home package, he said.

“I’ve been very impressed,” Mehs said in an
interview last month. “The customer service
has been out of this world.”

Mehs is part of a new segment of cable customers
that companies such as Time Warner
Cable are spending more to address. As the
economy begins to claw back to life and customers
have more disposable income, cable
operators are investigating higher-end packages
geared toward more affluent customers
with products and services beyond the usual
premium channel-laden offerings.

Time Warner Cable made a sizable splash
with Signature Home — a $199.99-per-month
package — last month, renting out a luxury
townhouse in Manhattan to show off the
product.
Cable operators have long said that customers
who spend more stay longer — most
claim that the bulk of customer defections
over the years have been single-product video
subscribers — so, to foster loyalty, they’ve
increased efforts to sell more-expensive and
higher-margin products like digital video recorders,
beefier programming packages and
home-networking services.

But Time Warner Cable’s Signature Home
seems to be taking that concept a step further.
The nation’s No. 2 cable operator isn’t
just offering its more-expensive products.
It’s making a higher class of customer service
available to more-affluent homes.

Leichtman Research president and principal
analyst Bruce Leichtman, himself a
former cable marketing executive, said the
approach is a long time in coming.

PIQUED BY PERKS

“I have always thought that you should treat
your highest-paying customers differently,”
Leichtman said. “Those that are spending
in the top 1, 2 or 3%, you should find ways to
make them feel better.”

Cable and Telecommunications Association
for Marketing CEO Char Beales said that
other industries have been offering elite-type
service to customers for years. She added that
Harrah’s Entertainment CEO Gary Loveman
urged the cable industry to do the same at the
CTAM Summit in 2007, adding that he spent
about $230 per month on cable and received
no perks in return.

“Treat me differently,” Loveman said to audience
applause at the 2007 conference. “I deserve
it.”

Beales said Signature Home and efforts like
it are cable’s answer to Loveman’s rallying cry.

“That was exactly the message
he [Loveman] had,” Beales said.
“There are different segments,
their service levels are different,
their profit levels are different and
their demands are different.”

The cable industry has a long
history of rather tepid rewards
and incentives for loyal customers,
typically discounts on programming
or premium packages
and free pay-per-view movies. But
for the higher-end customer, that
just doesn’t cut it, Leichtman said.

“They want a separate [service]
number to call,” he said. “When
you’re paying a lot of money, you
want to be respected.”

That respect can come in many
different forms.

“In lots of businesses, you can
buy a higher level of service if you
want to pay for that,” Beales said.
“Businesses do it in all kinds of
ways. The fact that I fly a lot and
have gold status with US Airways, it means I
get to get on the airplane first. I like that.

“I didn’t get a free upgrade, but I still got to
get on and get my bags on before everybody
else,” she added.

Time Warner
Cable executive
vice
president and
chief marketing
officer Sam
Howe said that
in developing
the Signature
Home concept
— a process that took about a year to complete
— the cable company wanted a package that
would be outside of the traditional “one-sizefi
ts-all” philosophy.

“We really wanted to understand every facet,”
Howe said of the yearlong development
process. “Inside that year, we were able to test
launch in Charlotte in a robust way so that we
could put on a signifi cant number of customers
and understand how they were responding
to the product.”

More than 1,000 customers participated
in the Charlotte, N.C., trials, and aside from
learning about which product mix to offer,
TWC combined channel packages, equipment
and relatively new services like home
networking and Wideband high-speed data
(at speeds of 50 Megabits per second) with
existing offerings like the “Start Over” function,
which allows subscribers to restart
some in-progress shows, and “Look Back,” which allows digital-cable customers to
watch selected programs from the prior
three days without setting their DVR to record
them. It also created a new level of customer
service.


NOT PRICE-SENSITIVE

“A lot of these customers are triple-play
already,” Howe said. “They were looking
for more, not for discounts.”

On the surface, Signature Home has the
expected beefy programming offerings, with
more than 180 video channels, as well as the
requisite bells and whistles, such as wholehome
DVR, HD, Wideband 50 Mbps highspeed
data and robust digital phone service.

The “more” is the elevated level of customer
service and a sophisticated “connected” techsavvy
component that allows Signature Home
customers to link their multiple electronics
and communications devices wirelessly inside
the home and manage them online and
via their mobile phones.

“Everybody is trying to make it all work together,”
Howe said. “I think that is the mantra
for our brand, a company that will provide
you control that is simple and easy.”

Signature Service means each customer
will receive a “Personal Service Assistant”
dedicated to their account and available
around the clock, on the phone or online.
Specially trained service technicians are dispatched
to Signature Home customer locations
on an appointment basis, which means
the typical three-to-five-hour window for service
calls doesn’t apply.

Time Warner Cable pulled Signature Home
agents and techs from its own ranks, Howe
said, focusing on repair technicians who already
had high-tech skill sets that could be
used to address the premium subscriber. Customer-
service representatives were plucked
from the existing ranks and given special
training to better address the Signature Home
base, he said.

“With Personal Service Agents, we’re staffing special call centers only designed to handle
Signature Home customers,” Howe said. “They
don’t do rollover work from other call queues;
they’re focused and targeted only at this. That
allows us to train much more specifically.”

Howe wouldn’t reveal how many Signature
Home technicians and PSAs the MSO
has, but said that TWC is continually adding
new people to its team and can ramp up those
ranks as the service becomes more popular.

OTHERS HAVE TRIED

Offering high-end packages for more affluent
customers is nothing new — DirecTV
even took it to the extreme in 2006 with its
“Titanium” package, which offered up to 10
HD DVRs, 24-hour concierge service and every
programming choice (including all payper
view movies and events and all premium
channels) for $7,500 per year. The Titanium
service had just 200 customers and DirecTV
shuttered it a few years ago. (DirecTV had
18.9 million U.S. subscribers as of Sept. 30).

Currently, DirecTV offers a premium package
for $85.95 per month ($114.95 after the
12-month promotional period ends) with 285
digital channels (including all premium services),
free HD, sports networks and DirecTV
Cinema.

Other cable operators have high-end offerings
that are similar to Signature Home. But
the differences appear to be its VIP level of
customer service and Time Warner Cable’s
aggressive promotional efforts.

Comcast, for example, off ers a “Premiere”
package for $159.99 per month ($179.99 after
the discount period) that includes about 200
cable channels, including all premium networks
and a sports entertainment package;
Blast 20 Mbps high-speed Internet service;
Anyroom DVR service; and unlimited voice
service.

On the service side, Premier customers get
the same level of service that all Comcast customers
get — Th e Comcast Customer Guarantee
— which, among other things, pledges to
respect customers’ homes, schedule appointments
mindful of each customer’s time and
offer a 30-day money-back guarantee on all
services.

Other cable operators have offerings similar
to Comcast’s. For example, Charter
Communications, Cox Communications, Cablevision
Systems and Mediacom Communications
offer various packages that include all
its premium channels, top-tier high-speed Internet
service and phone service that could
technically be geared toward high-end customers,
but without a separate VIP level of
customer service like Signature Home.

Charter and Mediacom have said they are
investigating the higher-end concept, while
Cablevision has no immediate plans to offer
a high-end package. Cox wasn’t available for
comment.

A WORTHY TARGET

Each cable operator has its own method of
segmenting its markets and most are offering
various low-end and mid-range packages
as well. While the number of high-end
customers could be limited, Wunderlich
Securities media analyst Matt Harrigan said
the segment is well worth attacking.

“I do think there is a place at the high end,”
Harrigan said. “DirecTV has been very successful
in developing a premium brand. I
think it’s very niche-y, but there is enough to
maintain some semblance of growth.”

And though Harrigan said that price can be
an issue even with more-affluent customers
— “you would be amazed at how many hedgefund
managers I know that will call up Comcast
to see if they can save $10,” he said — he
believes the service aspect will also resonate.

“There is a place for this,” Harrigan said.

It definitely seems to have resonated with
Mehs, a former satellite-TV customer who
switched back to cable in 2006. Although
it was the whole-house DVR that attracted
Mehs to Signature Home in the first place,
he said the customer service will keep him
around for the long term.

“You can definitely tell that they are more
enthusiastic and more into this,” Mehs said of
Signature Home technicians. “I’ve never had
a problem with their service before, but it’s
nice to know if issues arise, they have a dedicated
support team.”

November

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Affinia Manhattan, New York, NY