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Time Warner Cable CEO Glenn Britt considers value conscious customers a nuisance, so much so the company has changed its promotions to make them less attractive to ‘big bang for the buck’-discount hunters.
Speaking at the Bank of America/Merrill Lynch Global Telecom & Media Conference in London, Britt said the company had to beef up its in-house customer retention specialists to try and keep frugal customers who signed up for aggressive triple-play promotions in the last two years that the company now wants to reset to a higher price.
“It’s easy to generate a lot more customers by being very aggressive on price,” Britt said. “It isn’t clear that those customers are profitable. They tend to be lower income — people who tend to rent as opposed to own their dwelling unit. They move a lot and sometimes they don’t pay very well. The real trick is to create the optimum profitability.”
“Going back to fourth quarter of 2011, we pushed too hard on volume and we had very aggressive offers in the marketplace,” Britt explained. “These typically stepped up in price after a year and we kept those offers in place through most of 2012. So we got a lot of customers – particularly voice customers. That seemed good at the time. What we found is as we try to step them up to higher prices, that they are not very sticky. They have worse/bad pay characteristics than our average customers. So that’s all been a problem. Quite frankly we did not prepare our retention centers for the volume of people who are in this. We’ve changed our offers so they are less rich and we’ve stood up and enhanced our retention centers.”
As a result of the changes, Time Warner Cable lost more voice customers than it gained for the first time. That does not bother Britt, who sees selling faster broadband to customers more profitable than discounting phone service to keep phone customer numbers up.
Britt: The Sale is Over
Chief operating officer Rob Marcus told investors this week the company was hiring more in-house customer service representatives in the retention department to keep customers from defecting after their promotional price expires. Time Warner used to outsource many of those last-ditch retention calls, but has now staffed at least 500 new customer service representatives in four retention centers around the country. At least 400 additional hires are expected by the end of the year.
“What that enables us to do is route a greater portion of calls from customers likely to disconnect to these specialists, as opposed to sending them to either our care queue or outsourced reps who we think are less effective at handling those kinds of calls,” Marcus said.
Britt said the biggest segment of customers threatening to disconnect are TV customers who can no longer afford the cable package due to increasing programming costs. Britt does not believe online video cord-cutting is a major threat.
This Glenn Britt is an f’in idiot!!!
I don’t think most people need to be “lower income” or by Britt’s implication financially irresponsible to take issue with a sudden 40%+ increase on the cost of service.
I don’t see how labeling bargain hunters of TWC service to be a “nuisance’. If you were making a profit on customers with a $99/mo triple play, by all means, keep them happy.
Hiring more CSRs to try and convince canceling customers to stick around at a higher price is just an unnecessary expense. If you hire more CSRs, you are even more dependent on keeping customers. If you just keep customers happy with a constant low price, they are less likely to cancel, and you wont have to hire additional CSRs.
So lets see 500 people at 240 days a year at 10 dollars an hour is about 9.6 million dollars (plus whatever benefits you give them). Lets say the margin is an extra 60 per customer (not unreasonable given the flotilla of services they want to offer) 160k customers that could be at your lower price point. So unless that army of 500 can undo more than 160k customers they are loosing money on this and in the end raising the price on everyone to pay for it. If that margin is even lower the number of customers to be… Read more »
I am moving to an area (Buffalo, NY suburb) that has both TWC and Verizon FiOS. I priced both out on the Internet and found that 15Mbps a Triiple Play Bundle on TWC with 15Mbps Internet was $22/month higher than an equivalent FiOS bundle with 50Mbps. (15Mbps FIOS is only $10 cheaper – so the price differential there would be $32/month). Great way Mr. Britt to expand your customer base (NOT)!!