Perhaps as much as any top MSO, Cox Communications Inc. faces tough competition, most notably from video-over-digital-subscriber-line (VDSL) provider Qwest Communications International Inc. (formerly U S West) in Phoenix. The company's stock took a hit late last month after Cox failed to meet cash-flow projections, which analysts blamed partly on increased competition. But in the industry, Cox is viewed as one of the most aggressive marketers-the first to deploy telephone, high-speed data and digital cable all within a single system. One of the highest-ranking female executives in the industry, executive vice president of operations Margaret (Maggie) Bellville deals with these competitive, marketing and operating challenges on a daily basis. She spoke with Multichannel News marketing editor Monica Hogan recently. An edited transcript follows:
MCN: How has competition changed the way you market your services?
MB: We've had to be much more specific not only about the offers we make, but about how we offer them. We've had to be where the customer chooses to buy. We have to be thoughtful about what the customer wants and what they're willing to pay.
Certainly, competition has changed us from taking a one-dimensional approach to the customer, with one-dimensional products, to a multidimensional product line, and how we represent ourselves in the marketplace.
We don't want to be just the cable company anymore. We want to be a provider of multiple products and services to the customer, someone who's been there with them for 25 years and wants to now be the total provider of those services to the home.
MCN: Do you have a sense of whether consumers are willing to see you as a multiservice provider rather than just a cable company?
MB: Absolutely. The acceptance rate of our [new] products and services by our customers has been unbelievable. When you consider the fact that now, 70 percent of the people calling us for cable service are taking digital, that's unheard of.
When you think about how high-speed data is growing-and residential telephone is at double-digit penetration rates-customers are seeing us in that light and accepting us as a provider of those kind of services. It's very good news.
MCN: What are you learning in Phoenix that you might be able to take to other markets?
MB: Remember, this is not our first major skirmish with a phone company. We had issues in Omaha [Neb.] with U S West.
We saw the same thing in New Orleans, with BellSouth [Corp.], where they took a digital MMDS [multichannel multipoint distribution service, or wireless cable] product and saturated the market with tons of advertising and marketing and 'frees' and giveaways.
And now, we see it in Phoenix, the same stuff: three months free, free service, free modems, free hardware, free everything, with tons of money and deep, deep pockets.
What have we learned? We're learning what we learned in the other two markets, as well: We're not going to let them take our customers easily. We're going to be as aggressive as we can be, but within our economic parameters.
And we're going to be patient in terms of this because we really feel like we can overcome. We can succeed, and we will. It's just new for people on the outside. But for us, we've been there before.
MCN: Is there anything unique about VDSL that makes the competition in Phoenix tougher?
MB: What makes it easier for U S West is that they can go into a very large subdivision and basically sell the owners of the subdivision on the product and capture 5,000 homes immediately. They don't have to offer service ubiquitously the way we do.
Is there anything potentially different? No. We think our product is every bit as strong.
Where we are continuing to move, however, is on our upgrade. A little more than 60 percent of Phoenix is currently upgraded, and U S West has targeted our nonupgraded areas.
They're really not competing with us head-to-head. They're going where we still have to upgrade. And once we get that upgrade in place, I'm sure we will win back many of our customers.
MCN: How decentralized are your operational and marketing efforts across your various systems?
MB: Our big systems operate based on sets of standards that this company has deployed for years and years and years: standards around customer service, around customer install, repair. Those standards are set, and our systems live and die by them.
Relative to marketing, [Cox vice president of marketing] Joe Rooney has done a great job of creating overarching marketing umbrella strategies. The systems can basically take these programs and campaigns and model them to their market, which saves a lot of money and helps us to create the same look and feel across our systems.
MCN: Do you have a mechanism for sharing best practices across the systems?
MB: We have a couple of ways. We have an operations-support team here in Atlanta run by [vice president of operations support] Jim Renken, who works for me. He basically sets up the best practices for all new products and services. And as those become deployed across the markets, those learnings go along with those launches.
We also have a very, very tight marketing organization. Even though they're out there across the country, they are very, very connected and communicate very closely with Joe Rooney and the staff here.
And operationally, we have three very strong operations vice presidents working for me who pull together-and we all pull together quite often-to share whatever's going on in the market, good or bad, and to help each other find the best way of approaching the business.
MCN: Are there some current best practices that you think are likely to be copied going forward?
MB: Right now, we are in umbrella acquisition campaigns. Systems use what [corporate headquarters in] Atlanta creates-they don't create their own.
In customer service, we've created a best practice with our call center in San Diego. We really built that to represent a leapfrog of what current customer service looks like and what it ought to be-the look of the building, the feel of the building, the desktop technology we've given the customer-service reps, the type of reps we hire.
We did 12 to 15 different best practices around call centers, and we're working to have those deployed now across other call centers in our company.
MCN: How do you train your installers and your customer-service agents? Is it across product lines, or do you train them to be experts in specific areas?
MB: We train them generally across all products, but we're specific on the types of jobs they do. We have customer-care reps divided in technical support, account services and sales. They are specific by job type and general by product.
We conduct testing of people when we're recruiting them for their propensity to be more sales- or service-oriented, or to be more technically oriented, and we place them into jobs based on what they're best at doing.
And we give them a lot of training coming into this company. The first round of training as a new hire lasts four to six weeks. And then you hit the field and you start doing your job, then you go back into training again. Then you're shadowed.
There's a lot around our training to make sure people hit the ground running.
MCN: How has the shift to a more sales-oriented call center environment changed the way you hire and train your customer-service agents?
Bellville: Cox has always been very much focused on service as a company, and, frankly, when we started this, we moved to more of a focus on selling in to customers our new products and services.
Some reps were uncomfortable with it, because they really felt their job was to serve, not to sell. They'd wait for a customer to ask about [Home Box Office] or Showtime, but to recommend it, as part of a package, some were a little uncomfortable with it.
We've created people that are focused on one of the three aspects-the sales organization-and we call them 'the sharks. 'They get paid a different way, on commission-based pay.
All sales and order calls go directly to them. They try to upsell the customer. And what's happened is that 'shark tank' has become so exciting that more and more reps want to become part of it. We're kind of changing the culture, without having to change the people, if you will. People are opting in, and that helps a lot.
MCN: In how many markets do you offer all three new revenue-generating units-voice, digital video and data?
MB: Let me count. It's probably eight markets where we have all three. And then there would be anywhere in the neighborhood of 15 to 20 systems that have two, which would be digital and data.
MCN: How do you encourage customers to buy multiple RGUs from Cox?
MB: It's in our marketing. And it's in our offers.
We've tested various offers in systems offering value. And we've tried various types of offers. I can't even tell you which one, but the key is getting the customers to call, talking to them about the products and services and, inevitably, we sell through multiple services.
It's really about getting the phone to ring by letting them know that these are available through us. And then, through the sales effort, generally, customers choose to buy two or more services.
And certainly, the bundling opportunity is key because they get a value for taking more than two services.
MCN: What has consumer research told you about what drives subscribers to buy bundled services? Is it primarily the discounts?
MB: It's convenience, simplicity and one provider.
MCN: What are some of the biggest challenges in rolling out multiple services for the first time at the system level?
MB: You should have asked me that three years ago. It almost seems like old hat. We've got this down pretty well.
Now that we're moving into some of the smaller systems, probably the largest challenge is finding the kind of people to support these products out there-especially people with computer experience, people with data experience, who can run the software. That's because all of these products are software-based, even the digital box.
It's not really about just another box going on top of the TV. It's about software and software management.
MCN: Do you think the cable industry is ready for a woman to be named CEO of a top MSO?
MB: Well, we already had one, you know, Jan Peters at MediaOne [Group Inc.]. Although Jan didn't take a very overt role, she did do a lot to promote women and minorities in her organization, and I commend her for that.
Yes, I think they're ready, and I think one thing about this industry is that everyone is respectful of people who work hard to continue the growth of our industry. It doesn't matter what color or what race or anything you are-you earn your stripes, you earn the respect, and people recognize that.