Friday, November 26, 2010

The Cable Customer

Hopefully, everyone had a wonderful Thanksgiving.

Oddly, at my house, Thanksgiving dinner morphed into a focus group about television. However, not about the shows we watch; the tastes were too diverse. Rather, the table discovered it was united in its disdain for the cable company.

"I would be paying $1600 a year if I didn't switch to satellite... Oh, those people are crooks... I thought about switching, how do you like it?... You know, I know a guy who switches companies every year just so he can get the introductory deals."

Three different households and all have a negative view of their cable company; two of whom trudge along regretfully every month.

How did their customers who at one time happily chose them become so unhappy? Its comes back to their strategy.

They set a low low introductory price to get new customers signed up. Then the price is gradually increased and services like DVR are added. Finally, they sit back and hope the customer gets attached to the service and cannot quit.

With little competition, this can work. It was effective at keeping two of the three far anyway. However, in the long run, this strategy leads to greater price sensitivity. I believe it's far more effective for marketers to learn who their best customers are give them the service and incentive to stay loyal.

Maybe then consumers won't have to switch cable providers every year.

1 comment:

ndfSnow said...

Nice article i despise cable companies strategies and think they are very archaic. check out my article i wrote about cable tv a few weeks ago.
Also i read this just today, its Microsofts current strategy plan towards cable and the Google tv platform. Its got some serious potential if they do it right, it could be the future of tv but i highly stress the IF. either way, done correctly or not it still will be a step in the right direction