2CC: How expensive can it get for the Cable companies to improve Customer Experience?
Netflix set this contest in Oct 2006 to challenge the best of statisticians / predictive modeling gurus worldwide to better its movie recommendation system by 10%. Well, this should qualify as one of the largest globally outsourced projects -- the contest drew tremendous response with over 44K entries from 5K+ teams in 180+ countries. More information on the Netflix contest at http://www.netflixprize.com/...
Netflix believes that a 10% improvement on the current predictive model could significantly enhance value to its customer experience. For my weekend doses of movie titles, I could hopefully use the new / improved Netflix’s prediction system (based on my preferences), to help decide if I should rent Taken ahead of The International.
While this post is not about Innovation / collaboration and how Netflix may implement the winning solution, let’s look at how Cable companies can learn from Netflix’s experience. Traditionally, Cable companies have figured at the bottom of the Customer Satisfaction scale. Let’s look at some data points:
-According to the recent ACSI (American Customer Satisfaction Index) Q1’09 scores, Cable & Satellite industry is rated at 63, whereas the National Customer Satisfaction Index is 76. Rating is done on a 100-point scale.
The difference between the Cable & Satellite and national average is over 1300 basis points. This is a huge gap. Even amongst its peers, the Cable MSOs lag behind the Satellite providers by 500 to 1100 basis points.
- Now, compare Cable & Satellite providers with an innovator like Netflix, whose score is around 85.
Cable MSOs have a mile to cross to get their customers excited about TV experience. What does Netflix initiative tell us? Are Cable MSOs engaging their subscribers?
Will the Tru2Way initiative help drive Customer Experience by engaging both the subscribers and 3rd party developers? What about the new tools and applications that can improve customer experience? As the VOD library grows, how will a MSO deliver content based subscriber’s preferences? Interesting times for the Cable industry as they try to bridge the gap. Will be back soon with more thoughts…
Comments
Interesting post, Balajee. Talking about the low scores for the Cable industry in the ACSI, I feel it is the steep price increases that is gutting the customer. In an earlier posting, I had wondered if a-la-carte pricing was a nice option. Cable companies have traditionally opposed it and argue that they are providing more channels and the average price per channel had gone down!
Commented by: Narayan Balasubramanian | September 28, 2009 7:02 AM