Cox Communications Inc. is betting that repeat personal
contact with its best customers will trim churn.
And recent field trials of the "Cox VIP" program,
which targets the highest-spending 20 percent of new customers, seem to bear that out.
In 90 days of field tests in nine systems, Cox saw a 45
percent reduction in churn among subscribers targeted with the customer-loyalty program,
compared with a control group, Cox director of direct-response and database marketing
Margaret Ross said.
She called the VIP program "a collection of positive
touches and serendipitous benefits. It's true one-to-one marketing."
Like any new one-to-one marketing effort, the Cox VIP
program has start-up costs related to creating a database. But Ross said retaining
customers is worth the effort, especially considering that it costs six times more to
acquire a customer than to keep one.
Ross worked on airline frequent-flyer programs before
coming to Cox, and she said she learned to listen to customers and realized that different
groups had different needs.
In the first 90 days, Cox VIP customers get three
"personal touches" -- a welcome letter, a follow-up phone call and another
letter containing a personalized offer or discount.
The welcome letter, Ross said, details every service the
customer recently purchased and reinforces why those purchases were good investments. The
letter also alerts the customer that a Cox representative will call soon to see how the
customer likes the service.
Of those customers who agree to start the call, 95 percent
stay on the phone long enough to finish the interview, Ross said. During the call, Cox
extracts facts and statistics about its customer base, then moves on to see what kind of
programming interests them and their families.
The call also serves to check on any unresolved problems.
The customer can be connected to a service representative on the spot if necessary.
Two weeks later, the customer gets a letter of thanks for
taking the time to talk to Cox. The letter also includes two benefits: a discount on a new
service, plus a move-transfer benefit, or installation discounts for customers who move to
new Cox territories.
New VIP customers get three more positive touches by the
end of the year, Ross said. Within two weeks, VIP members get surprise postcards offering
discounts on travel-related products, such as luggage and hotel rooms. The postcards also
direct them to the Cox Web site, and then to Travel Channel's site, with more
Also, VIP customers get invited to local events sponsored
by their systems. And they get special values on new services that they expressed interest
in and notices about "What's on TV," also tailored to them.