Around the world, the multichannel TV universe has undergone tremendous change over the past four years as television viewers have demonstrated their willingness to pay more to watch an increasing number of channels.
Now, with powerful new digital networks in place, cable operators are preparing to roll out a host of new offerings, from telephony to cutting-edge interactive television. Moreover, as cable networks launch ever more specialized channels, studios and content providers make more movies available for video-on-demand and pay-per-view.
Operators are betting that new channels and services will allow them to grow their average revenue per subscriber at an unprecedented rate. As a result, Wall Street investors may finally reap the rewards of their patient faith in the cable market.
In the flurry to build out their digital networks, many MSOs have relegated their focus on subscribers to the back burner. Yet, escalating customer churn rates reflect the need for MSOs to now prioritize customers and customer relationship management (CRM) as the focal point of investment and management attention.
Recent competition from alternative services such as a direct-broadcast satellite has thrust customer care to the forefront of every MSO's agenda. Operators widely acknowledge that the potential for new revenue is vast, but without the ability to serve customers in a more personalized manner, they will not be in a position to take full advantage of the vast investment in their networks.
At the same time, operators are preoccupied with the need to reduce the costs of serving customers by routing inquiries to the Web or interactive voice response systems. Staff turnover among customer service representatives is also a problem. CSRs, for their part, are struggling to sell and service an increasing array of products — using outdated tools and processes — to customers who have come to expect the same improvements in service that they now receive in other industries.
To address the need for greater customer focus, MSOs should design a vision for their overall customer relationship management strategy and develop the capabilities to execute this strategy. CRM applications allow companies to manage, synchronize and coordinate sales, marketing and customer service across all communication channels and points of customer contact — including over the Web, in the call center, in the field and through reseller channels.
The economics are as simple as they are compelling. First and foremost, MSOs must retain their subscribers in order to sell them advanced services. Second, operators must capture their subscribers' profile information and analyze customer entertainment and communications needs to determine which new products to offer to each market segment, in which sequence and at what price. Moreover, operators must do this while maintaining an intent focus on profitability.
This is no small feat — it demands sweeping changes in people, processes and technology. CRM technology plays a critical role in this three-pronged strategy.
Most cable operators are not customer-centric. They have optimized their business processes around everything but
the customer — products, geographies, lines of business and distribution channels. While many organizations have mastered the automation of internally focused back office operations, very few have concentrated on optimizing their business processes that touch customers.
Consequently, most organizations fail to adequately address the customer's viewpoint when designing customer service processes. Four major obstacles typically prevent an operator from becoming customer-centric:
- Information silos and billing systems: Customer data is scattered throughout the organization in information silos segmented by product, often in multiple billing systems. Clearly, billing systems do not capture the complete history of a customer's interactions with the MSO. To compound the deficit, a typical MSO has several billing systems across service type and geography. Therefore, any MSO that relies on billing systems for CRM-like functionality is doomed to a fragmented and incomplete customer view.
- Disconnected channels: In most MSOs, customer interaction channels are not synchronized, which results in a potentially disjointed and dissatisfying customer experience. When a customer moves from interacting through the Web to the call center, for instance, many MSOs cannot track these interactions seamlessly. As a result, when a customer calls with a service request, the CSR has no way of knowing whether it is a high-value customer who is at risk of churn or an analog subscriber who just received an upgrade-to-digital marketing campaign.
- Business processes do not reflect best practices: Processes have not been designed with customer needs and preferences in mind. For example, most MSOs originally designed their billing cycles to optimize back office efficiency rather than the quality of customer service. As a result, once an MSO has assigned a specific billing cycle to a customer, service agents are not able to change the cycle in response to a customer's request. Billing systems are designed to be dwelling-centric, not customer-centric.
- Poor coordination of business partners: Although MSOs increasingly rely on partners such as field service crews, most organizations do not have the systems to effectively align partners with the operators' objectives. Moreover, organizations are rarely able to monitor and manage the performance of their partnerships.
Fully functional CRM applications enable operators to overcome these obstacles to become more customer-centric. By providing a centralized repository of customer data captured from all customer interactions across all channels, CRM applications enable organizations to maintain an ongoing and seamless dialogue with customers, regardless of when, where or how the interaction occurs.
CRM applications allow organizations to apply best practices in sales, marketing and service, enabling operators to better understand, anticipate and respond to subscriber needs. By providing real-time views of customer activity, CRM applications provide managers with better visibility into market dynamics, customer demand and revenue.
CRM applications can enable operators to increase revenue by reducing customer churn and selling appropriately targeted advanced services to subscribers. In addition, CRM applications can reduce cost by providing CSRs with a single customer dashboard that provides a comprehensive customer history.
Costs can be cut further by automating redundant tasks from multiple desktop applications, reducing call-handling time, enabling better campaign management, and migrating customers to Web-based self-service for routine account and service inquiries. In addition, Web-based CRM applications afford significant advantages over thick-client and mainframe-based applications.
A zero-footprint Web architecture that provides high levels of interactivity offers MSOs the best of all worlds: cost savings associated with rapidly deploying a zero-install Web application and the rich, interactive, intuitive user experience available only from a desktop application. A Web-based CRM application provides MSOs with unsurpassed levels of flexibility that enable them to offer highly flexible product bundles to their subscribers.
NEED TO SCRUTINIZE
Becoming a customer-centric organization is not an overnight process. Selecting a CRM application is a significant part of the transition to greater customer focus. Organizations that invest in CRM technology must carefully scrutinize the total cost of ownership of the solution. Organizations must analyze their software investment on the basis of the application life cycle. In addition to software license fees, the total cost of ownership includes the costs of customization, configuration, integration, maintenance, administration, and upgrades.
The decision to invest in a CRM solution must be driven by balancing costs against benefits — particularly the potential strategic value of developing strong customer relationships — while simultaneously weighing deployment risk, such as the possibility that the implementation will substantially fall short of expectations. Therefore, MSOs should aggressively research the differences among vendors, products and costs before they risk the very business that they are seeking to improve.
For MSOs that master the challenges of this dynamic market and deliver high-quality content and service to their customers, the ever-increasing demand for information and entertainment affords unprecedented opportunities for growth. With fast digital networks ready to be tapped, enviable brand recognition, proven business models and a roster of enthusiastic customers, MSOs are uniquely positioned to respond to and profit from this evolving media market.
A robust CRM application can enable MSOs to leverage their digital platforms and customer relationships by empowering all employees to sell and service personalized, advanced products to reduce costs and drive cash flow. CRM can equip MSOs to better understand customer preferences and to act upon this knowledge by delivering customized products and targeted pricing. CRM can help MSOs transform their businesses from traditional analog providers to agile, customer-centric entertainment and communication providers.