Keep Broadband Sticky — And Subs Loyal

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The name of the game in the fiercely competitive broadband market (whether it's Yahoo! Music or future service offerings) is this: How do you engage subscribers, create loyalty and translate that loyalty into profitability?

I read with keen interest Ron Frankel's Forum piece (Readers Weigh In, July 11) about Yahoo! Music and the squeeze it seems to be placing on cable companies to consider evolving their own music products and other content services.

I agree that the Yahoo! Music offering is compelling and I agree with Ron's assessment of the threat to your revenue streams and profit margins. But I think we need to take the example of this competitive landscape and look at it from a more global view.

ACQUISITION TACTICS

We all recognize that the subscriber life cycle begins with acquisition, and that acquisition begins with sound prospecting strategies and solid service offerings.

Your marketing staff is probably continually refining and tailoring your outbound communications so that prospects understand that you have what they want. I am confident that your company is constantly looking for new content and additional services to help up take subscribers.

Of course, your competition is working equally as hard for those same prospects (and your subscribers).

On the flip side, industry statistics prove again and again that the cost of customer acquisition requires as much as seven times the investment in hard dollars as the cost of customer retention. In addition to the huge savings gained through customer retention vs. acquisition, what about the actual value of each paying subscriber?

I'm sure you've considered not only the value of services that he/she uses today, but also the cross-sell and upsell potential, as well as the power of positive referrals.

I suggest a four-point strategy to maximize customer retention and return on your investments:

  • Pay attention to what subscribers say about your customer service. Customer satisfaction drives financial results, because happy subscribers are more likely to buy additional services.
  • Ensure that the quality of your Web site and your subscribers' complete online experience reflects your interest in them. Can they easily find their way around, sign up for additional services and pay their bill?
  • Add services that have minimal impact on your existing infrastructure. Leverage the huge investments you've already made so that they work for you in more and new ways.
  • Offer services that create an emotional investment by your subscribers. Let them create their own reasons to stay, to have “compelling reasons not to disconnect.”

I contend that you need to take a look at your existing infrastructure and ask yourself, “What can I do today to maximize what my company already has?”

It is not always necessary to rush out and implement the latest and greatest technology to improve your return on investment.

Why not take a look at adding service offerings that subscribers will find “sticky” — services that don't require you to reach deep into your pocket, and fork over those hard-earned dollars.

KEEP CENTER PROFITABLE

My take is that broadband, with all of its growing products and service offerings, as well as its expanding and ever changing competition, is the profit center today, and of the future. I believe that any service, present or future, which maximizes this delivery vehicle, becomes the key element in giving subscribers a compelling reason to continue using your services — and, in fact, to give you the highest return on your large investments in technology.

In the battle for brands, a satisfied customer with 'sticky' services is the best insurance policy there is. So the next question that begs to be asked is: How can the cable ISP improve and maintain higher profit margin revenue from “sticky” subscribers without increasing infrastructure costs?

Consider the exploding trends that show how involved individuals are becoming in creating original content and music, as well as in creating online photo and video albums. Consider the huge numbers of people (often untapped markets) that are looking for an easier, more expansive means of communicating with friends and families around the world. In addition, let's not underestimate the consumer side of the business commerce equation — shoppers with their needs, wants and established habits.

I believe that extending your broadband services to include easy and fully integrated personal Web features provides the “stickiness” that makes a subscriber say, “If I can't take my personal Web experiences with me, I don't want to change.”

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