Cover Story : The Customer's Keepers

With a ramped-up loyalty and retention program, Charter Communications is having positive, measureable churn reduction results

December 2008 By Heather Fletcher

multipage

The maven of mean, actress Shannen Doherty, slapped good luck into Charter Communications' churn reduction efforts with one stroke of her lip gloss. Back in June 2007, when the St. Louis-based cable company was testing what's become its flagship loyalty program, "Live It With Charter," the company discovered that the face of loyalty strategies could be covered with star-struck offers unique to the industry, such as Doherty's "Kiss Them Goodbye" berry lip gloss. Those type of offers then joined Charter's product and service giveaways, as well as the travel and electronics prizes that most loyalty programs include.

The discovery came as Charter continued ramping up its churn reduction strategies and bolstering its loyalty programs, which began enjoying major attention in 2005. Like other cable companies, Charter worries about losing its 5.8 million customers to satellite and fiber-optic providers. So, starting with sign-up and working its way through quotidian matters, the company labors to ensure that its customers stay happy every day. For those who need extra incentives, Charter introduced loyalty programs that uniquely speak to television fans.

Specifically, when NBC Universal bought Oxygen, the merged network dumped a 34-count cache of lip gloss from "Breaking Up With Shannen Doherty." Even though "Live It" was only in its trial stage—in the eastern region of Charter's 29-state service area—viewers snapped up the prizes in a single day of the three-day redemption period.

"The branding of the prizing and the connection to the programmers and to the stars and the channels is really, I think, what has set ‘Live It' apart and makes it succeed," says Paul Belle Isle, Charter's senior director of loyalty and retention.

Cable Churn
In the cable industry, churn takes on two distinct forms: voluntary and involuntary.

To qualify for the latter, customers simply stop paying their bills and end up disconnected, says Tim Doolittle, Charter's vice president of marketing science. The cable industry, in general, sees 25 percent to 40 percent of the "overall churn pie" meet this fate each year, says Charter consultant Eric Schmitt, executive vice president of Allant Group of Naperville, Ill.

However, Charter tends to see involuntary churn closer to the 25 percent mark because the company thoroughly vets its subscribers and takes fewer risks than other cable providers, Schmitt says.

Customers composing the rest of the churn pie contend with competitive offers, need pressing service issues resolved, or are considering disconnecting or downgrading service because of the volatile economy.

• MORE ON
• DATABASE & CRM