Driving subscriber numbers remains a goal of most
multichannel providers. But increasingly, subscriber growth alone is not enough to measure
the success of a cable company's marketing team.
Newly named Cox Communications Inc. vice president of
marketing Joseph Rooney said the company's main objective going forward is driving
what he calls "revenue-generating units" -- or RGUs -- rather than simply adding
"Everyone sees that this industry has changed
dramatically in the past three years," he said. "We are in the revolution of
digital voice, video and data, and a revolution of competition."
Although he wouldn't outline specific penetration
projections for the MSO's new products, Cox "is going to grow like crazy"
next year, Rooney predicted. He added that the company already has a strong field team in
place and "kick-butt" products to offer customers.
Each of the company's new products -- digital video,
data and telephony -- represents an RGU, Rooney explained, and in many of Cox's
larger markets, customers are offered a choice of bundled services.
"You can have one customer with three different
revenue-generating units," Rooney explained. "That's why we talk about our
growth as adding RGUs."
"The year 2000 is going to be about execution for
Cox," he added. But he doesn't plan to wait until next year to begin executing
In mid-September, Cox executive vice president of
operations Maggie Bellville announced Rooney's promotion. Within two weeks, Rooney
had moved his wife and four children from their home in California -- where he had been
vice president of marketing, sales and programming for Cox's showcase Orange County
operation -- to Atlanta, where the MSO is headquartered.
"My first challenge is to hit this role up and
running," Rooney said. With 18 years of experience in cable, he added,
"there's an expectation that I don't have to learn the industry, the
company and the people."
While in Orange County, Rooney was tasked with deploying
all three new RGUs -- digital cable, telephony and cable modems -- for the first time at
any Cox system.
The numbers in that system are impressive. In the last week
of September, Cox executives gathered several analysts there for a briefing, and SG Cowen
Securities Corp.'s Gary Farber came away thinking that the company might exceed its
previously stated target of 450,000 to 500,000 new-service customers by year-end.
In Orange County, Farber noted in a report, Cox had 36,741
digital-TV subscribers, or 16 percent of the video base. That number is growing by 400 per
week, including some that Cox thinks are coming from direct-broadcast satellite.
High-speed-data service Cox@Home had 30,827 Orange County
customers, or about 25 percent penetration of online homes.
And the system had 23,457 phone customers -- a 21 percent
penetration rate of all video customers in upgraded areas, according to Farber.
Rooney admitted that the marketing team often debated about
whether they should speed up or slow down one or more of the product introductions, but it
determined that "each product is significant in its own right."
He called data "a tremendous breakthrough
product," for which cable has a window of opportunity to drive market share. Digital
video, too, is a key competitive advantage for Cox, Rooney added.
"It would be easier if one product stood out," he
conceded, "but it's important for us to focus on them all."
Now that new products are deployed in most of Cox's
major markets, Rooney said, "We've got to refine marketing so we're
penetrating beyond 10 percent," and focus on bundled sales, marketing and
Cox is moving toward creating new subscriber marketing
pieces featuring all three products, training customer-service representatives to speak
about all three products and training installers and service technicians to handle video,
voice and data. In Orange County, 30 percent of Cox's installers are already trained
on all three platforms.
Ultimately, Cox wants to deliver a single bill for all
three services, too.
Rooney said Cox would hold field trials in Orange County
and another system this fall to see how different bundled offers affect retention.
"Customers may want flexibility on where the discounts
are applied," Rooney said. For example, customers whose employers reimburse them for
data expenses may prefer to have discounts applied to their digital-cable bills.
Rooney's experience in Orange County has taught him
that retail partnerships will become increasingly important for Cox.
"When you buy a new PC, the question will be,
'Which kind of high-speed modem do you want built in?'" Rooney said.
"Our relationships with retail will help them to convince customers that they need
In California, Cox has worked with major stores such as
CompUSA, as well as with smaller retailers, including car washes that hold cable-modem
demonstrations while customers wait for their cars.
Char Beales, president of the Cable &
Telecommunications Association for Marketing, gave Cox credit for promoting its new
marketing vice president from within, rather than going outside of the company -- or even
the industry -- as many operators have done in recent years.
With his field experience, Rooney knows firsthand what
general managers at the system level are looking for from a corporate marketing department
and, perhaps more important, when to let them make their own decisions.
"We have very strong field marketing people who are
very strong-willed," Rooney said, "and that's good. It puts the
decision-making closer to the customer."