Free Stuff: Loyalty Programs from Cablecos, Telcos?

By Bob Wallace September 12, 2013

What exactly do you get from pay-TV providers for being a loyal customer? Nothing? No, less than that. Current customers get to stand by while your providers take the “sold-and-old approach” and spend their time pitching better offers and sales deals to non-customers.

It’s this stark market reality that has cable and telco TV providers hemorrhaging customers, “cord not yets” wondering why people subscribe to pay TV services in the first place and the rest of the consumer products industry racing ahead with loyalty programs that help keep customers in place.

Loyalty programs could help stem defections to competing providers. They won’t address the overall problem but can slow the rate of departure, freeing providers to put their eyes on the real prize: offering pay TV packages that customer want and that don’t break the bank.

Loyalty programs are hardly new and pre-date frequent flyer programs from the now no-frills, pay-frills airlines which have fallen on tough times. Even a buy 10-get-one-free punch card is a form of loyalty program. Consumers love the idea of getting something for staying with a merchant. Even car dealers provide loyalty bonuses on new car purchases. Supermarkets let you earn discounts off gas for your car.

What if video service providers gave customers something they really wanted, had value and was free of strings attached/fine printing that keeps consumers from using the blizzard of sales specials that hit them from all sides seemingly every week?

Changing Stripes?

Loyalty program represent a 180 for an industry that was once America’s most wanted (when cable TV first came to town) and is now vying for least wanted status.

“Loyalty (in pay-TV) doesn’t exist,” a 28-year old cable-subscribing friend told me last week. “They are all about sales and raising prices. There’s no reason for me to stay loyal and when I can switch I will, in part out of spite for having been taken advantage of for so long.”

This chilling admission comes from a subscriber that claimed he “got addicted” to cable TV early on when it offered a wide array of channels that hadn’t previously existed. Because you can now get a boatload of channels from most anyone, the addiction has work of for this consumer.

The Perfect Partnership

If supermarkets can partner with gas stations, why in the name of skyrocketing content costs  can’t cablecos and telcos, each with local ties through franchise fees and seemingly fulltime presence, partner with local businesses to offer something beyond channels that consumers value in their lives??

Cablecos borderline brag about their strong presence in local communities and occasional charity/public service efforts. I’d rather see them help themselves by helping out local business be they sole proprietor ships, local chains or national product and service merchants.

It sure seems simple. Look at what products and services are most coveted by gender and demographic and partner with the companies that sell them. What things other than lower prices and better customer service do subscribers want from their providers?

Even competitive car insurance firms are offering “accident forgiveness” and “vanishing deductibles” to market better and get folks to forget their longstanding shortcomings. This is a great example of an all sales industry thinking beyond rates and discounts.

Beyond Coupon Clutter

Whatever the offer under the loyalty program – which note helps both sides – it’s important that the item be of value, not just a coupon for something that’s not a good deal and is actually a veiled sales pitch for the merchant.

“They are always trying to sell me more things,” the cable customer lamented. “It seems they are a sales-only operation and I’m sooo tired of that.”

With direct mail coupon mailer/flyer bombing at an all-time high, it’s fast becoming clear that consumers are becoming burned out on offers of free estimates from home repair and maintenance firms and flat out no-value marketing pitches. No item free here…

It’s pretty clear what consumers treasure and what they trash. Cablecos and telcos have developed sales force strength, now they need to build marketing muscle with their eyes trained on consumer products and services outside their industry.

A Notable Effort

The cable and telco industry is not without efforts to please customers, though they fall short of a full loyalty program. Many small operators think loyalty to keep customers away from far larger providers.

Worthy of note is an offer some years ago by Comcast which mailed a free pay movie coupon with invoices. It got my attention but sadly was not repeated or built upon. Baby steps? Perhaps. Items like these can have a dual purpose of pleasing subscribers and awakening customers to a library of pay movies on demand.

Given the endless stories I’m hearing of consumers not paying for once “movie channels,” combined with climbing use of Redbox, such an effort may warrant a second – and longer - look.

The Bottom Line

Loyalty programs won’t stop cord cutting. Free stuff, points redeemable for cash, perks with local businesses and other forms of creative marketing used elsewhere may not even put a big dent in departures of those headed to more affordable programming alternatives.

However, loyalty programs, done right, can help with customer retention, especially among those thinking of jumping to a rival that feel that cablecos and telcos are simply sales and rate-raising machines that forgot them the instant they were signed up.

That perception has permeated the cable industry in particular – and combined with long-running customer service weaknesses – needs to be changed if these companies expect to keep subscribers in place and actually bring on (and hold onto) new customers in a broadband economy.

Edited by Ryan Sartor

VP of Content

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