In the Temkin Group’s 2015 Experience Ratings Industry Snapshots, Internet Service Providers were ranked last out of 20 different industries. It’s no surprise; few people love their cable or phone provider, and among the least beloved is Comcast.
Comcast announced recently that it will be putting a massive effort behind changing its customer service. The announcement will come as welcome news to many Comcast customers. In the last few years, Comcast has become the poster child for terrible customer service provided by a faceless corporation with captive customers. Its poor customer service ratings have been magnified and made archetype by a succession of viral customer service stories like this one about a recorded call with a Comcast phone rep and this one a few months later.
Comcast, like its fellow cable providers, has enjoyed a coveted market position: it could give bad customer service and still remain highly profitable. Each industry is different, but oligopolistic firms who are absent competitive pressure and that have customers who are captive or have significant switching costs can get away with poor customer service–in the short term.
In fact, the succession of bad customer service stories seems to have impacted governmental attitudes towards Comcast’s now abandoned move to acquire Time Warner Cable, a consolidation that would have given the new company control over half the United States broadband market. How big a factor this was in the government’s decision to slow-kill the deal is questionable, but the commentary around the event showed that people intuitively understood that an even larger organization with less competition would have almost no reason to provide good customer service.
Does Cable Need Saving?
In many industries in which there has been mass consolidation or which have historically been subject to a few dominant players — banking and mobile phone providers, to name a couple — technology is changing the status quo. The same is true of cable.
In the past few years, Hulu, Netflix, and Amazon have already begun chipping away at the programming side. Satellite has had its impact on the transmission side. Cable companies are seeing their competitive advantage reduced to controlling the cable itself, and little else.
But how long before that is at risk? How long before someone figures out a wireless or other technology that makes cable the old tech? The challenge with captive customers that are treated like captive customers is that, when afforded the opportunity, they tend to escape captivity as quickly as they can.
Why Cable Needs Great Customer Service
Cable providers will need to do two major things to survive in the long run: adapt to technological changes and provide great customer experiences.
Cable companies are technology companies. They must be constantly focused on innovating their products, staying ahead of technological change, and keeping prices competitive. One only need to look at Blockbuster and Netflix for what happens when these principles are ignored.
Yet, cable companies must dedicate themselves to a customer-centric approach–one that creates a customer base that is happy, that sees no reason to switch. Because try as they might to lead technologically, there is no guarantee that broadband providers will be the ones at the forefront of every change. A loyal customer base is the best protection.
Every customer base will have its non-loyal component. Those that will switch to save a dime a month or because the technology didn’t work for five minutes one day; it is when most of your customer base would rather be somewhere else that you are in danger.
If I led a cable company in the year 2015, I would do everything I could to become not only the service leader in my industry but a service leader across industries.
I would make sure that doing business with my company was such a pleasure that when competitive pressures from rapidly shifting technology arose, my customers would have no incentive to switch.
Cable company leaders must invest in a customer-centric culture. They must sacrifice a few quarterly earnings reports for the benefits of long term sustainable advantage. It is not easy to do, but it must be done. Comcast is taking the first step.
While many will criticize the path Comcast took to get to this point, I applaud Comcast’s new effort. If it works, it will benefit both customers and, in the long run, investors. In the end, whether it’s Comcast, Time Warner, or another company, I think that customer service can truly save cable.
Next week we will take a look at changing a customer service culture–and how hard it is.
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