Big Fortunes In Fargo

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Cable One Inc.’s Fargo, N.D., system really takes seriously the company’s goals of growing subscribers while containing costs and keeping the customer satisfied.

The Phoenix-based MSO annually monitors system-level performance in a handful of categories, from the scores that customer-service employees rack up in handling inquiries from professional “mystery callers,” to digital sell-in, to outage prevention. For the last two years, the 42,835-subscriber system has been hailed with the corporate System of the Year award.

According to a newsletter sent to systems by chairman Tom Might, Fargo earned praise in several categories: it increased its basic subscriber growth by 1,601 in 2003; increased its digital penetration to 35%, and added 2,879 high-speed data subs for a 37% penetration rate. It also had the lowest costs of any Cable One system, even though it incurred upgrade costs due to a neighboring system acquisition.

Fargo ended the year with the highest cash flow per customer (excluding ad sales) of any system in the company, a rate 17% above its 2002 numbers. The growth is particularly noteworthy because Fargo historically has high churn, due to a large college population. What’s more, 55% of all available housing stock consists of multiple-dwelling units.

“We’re clicking on all cylinders,” said general manager Scott Geston. “We know our community and we’re tracking growth.”

Indeed, Fargo is blossoming and diversifying. No less an authority that The Los Angeles Times recently crowned the community as hip, with a front-page story noting its increasingly cosmopolitan make-up.

The city is busting the stereotype of the fur-ear-flap-wearing, duck-decoy-carving, “you betcha” persona that was fostered by the theatrical film Fargo. Both Fargo and its Minnesota neighbor, Moorhead, are leveraging their position as a marketing hub for North and South Dakota and western Minnesota. The area has attracted the regional offices of medical and insurance companies and a branch of Microsoft Corp., as well as the jobs that come with them.

Housing starts are up 3% in Fargo and West Fargo, according to an area census. Moorhead is growing even faster, at 19%.

GAINING HOMES, SUBS

Geston notes that the system also has grown through timely acquisitions, adding 35 miles of plant just in the last year. Cable One traded a system to Tele-Communications Inc. in 1997 in return for the Moorhead system. In 1999 it acquired 5,000 subs in West Fargo from Harmon Cable of Denver; and last year gained a few thousand homes from a rural telco serving neighboring Dilworth, Geston said.

But it’s one thing to gain homes, and another to gain subscribers. System marketing manager Maxine Schmidt said Cable One Fargo runs promotions every month designed to incent the front line to sell.

Every technician in the system also is expected to sell in the field.

“It’s our instruction that there is a digital receiver under their arm [when they enter a home], whether it’s on the work order or not,” Schmidt said. Hands-on demos with the subscriber can lead to field upgrades, the system has found.

Changing monthly incentives really works well at pushing digital sell-in to the forefront, she noted. Incentives change because different workers respond better to some “carrots” than others, executives explained. Incentives range from cash to sports tickets to gift certificates.

$1,000 INCENTIVES

Employees are truly focused on system goals. For instance, Cable One ran a corporate program last year called “Bonus for Basics.” Systems that made the corporate goals would earn a $1,000 bonus for each of its associates.

The workers were really invested in that program, Schmidt said, often stopping by her desk to ask, “Where are we? Are we doing OK?”

“They really work for that, that level of professionalism. They expect it of each other, and of the equipment,” Schmidt said.

Selling skills are honed through a “mystery calling” program, in which associates are graded on merchandising skills, politeness, use of the customer’s name and whether they hit every product, said office manager Laureen Nyborg. The results are used to coach the employees into better selling and for career progression.

“They believe in our products; they get good benefits; they’re happy,” she said of the work force.

The Fargo execs are not letting their company laurels go to their head. Geston constantly monitors corporate statistics.

“If someone does better than us, we’re on the phone to find out why,” he said.

<p>Big Sky Story</p><p>Cable One’s Fargo, N.D., system at a glance:</p>

Subscribers

42,835

Penetration

56%

Digital subs

14,281

Premium units

2,850

High-speed data customers

11,273

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