SBHD: A huge telemarketing operation, promotions and ads seem to be paying off for BSkyB.
BSkyB’s interim results, announced last week, will have made good reading for Rupert Murdoch. The satellite broadcaster reported a Ãº55m pre-tax profit. Subscriptions were up almost 480,000 to 3.96 million. And churn – the drop-out rate for satellite viewing against which BSkyB has long struggled – was down to an all-time low of ten per cent in the half year to December 31, 1994. But is the battle to retain subscribers any closer to being won?
Churn has been a problem for BSkyB since its launch – and it is a factor onto which critics and competitors have latched. Almost three years ago, BSkyB’s churn rate was estimated at 18 per cent in a study conducted by Carat Research. Today, BSkyB director of customer marketing Chris Townsend says the figure was nearer 30 per cent.
“Our subsequent reduction is incredibly significant,” he says. “If it had continued at 30 per cent, at today’s figures this would equate to a loss of 900,000 subscribers a year. We have now effectively reduced this by 600,000.” The key to reducing churn is building customer loyalty, he explains. And this is being done in a number of ways.
At the heart of BSkyB’s strategy is its subscriber management operation in Livingstone, Scotland, claimed to be the largest telemarketing operation in Europe. With 1,600 staff, it has 1,200 telephone operators.
An outbound telemarketing department with 144 operators deals with cancellations and upgrades – encouraging subscribers not to disconnect and urging others to trade up. Subscribers wishing to cancel must write to or call Livingstone, where they will be encouraged to reconsider. If this is unsuccessful, details are fed into the predictive dialler system; operators call back within 48 hours.
A second department employs 260 operators fielding inbound calls such as enquiries; “quick starts” – where new customers request their system is switched on; pubs, clubs and other businesses wanting to install the system, and those taking up Sky on its travel promotions. A third department houses 260 operators handling incoming calls including credit enquiries, tuning problems, cancellations and telephone offers through BSkyB’s promotional tie-up with BT.
The Livingstone centre is already reaching operational capacity, says customer services manager Kay Mitchell. In an average day it will handle between 30,000 and 31,000 inbound calls – peaking at around 45,000 a day in the run-up to Christmas – and about 8,000 outbound calls.
Although the Livingstone operation was launched five years ago, only in the past three years has it worked closely with BSkyB’s London-based marketing department. “Now we know whatever campaign, special offer or promotion is being marketed,” she says.
Subscribers considering cancelling are told in detail about what they will be missing, and new special promotions on offer. As a result, she claims, between 30 and 40 per cent of people considering cancelling are persuaded not to. `To achieve this all operators must really know the product. A lot comes down to educating the customers. Those having difficulty paying are encouraged to downgrade, others to try other channel packages.”
There are many reasons a subscriber will want to cancel. Townsend says: “A significant factor is changed circumstances, such as redundancy, divorce, death, moving abroad and a small percentage who change (from dish) to cable. “These reasons account for around two thirds of the people who churn.
“Another factor is people failing to make the most of what’s on offer,” he says. Ensuring viewers can absorb the choice across 21 channels has become a priority.
Last autumn, BSkyB launched Sky TV Guide for its 2.9 million subscribers with dishes (a further 1 million subscribers use cable). The listings title, mailed to subscribers, carries details of all programmes and offers such as those with BT and Thomas Cook. It now plans to relaunch Sky TV Guide with a new design and a US-style listings format (See Media, p15).
Other attempts to build customer loyalty involve exclusive promotions. Although reluctant to divulge the number of subscribers who have taken up the BSkyB/BT offer of 15 and 20 per cent off selected phone calls, Townsend confirms BSkyB now expects to sell 20,000 holidays in the first year of its joint promotion with Thomas Cook. A joint promotion with Cellnet and Carphone Warehouse offers subscribers a Ãº40 discount on a Ãº59.99 Nokia mobile phone. Other subscriber promotions are under consideration, but the battle is far from over.
“Ten per cent churn is about as low as we can get,” he believes. “Our objective is to maintain this.” Which is why investment will continue to be made in promotional offers, through-the-line marketing, advertising and increasingly, the broadcaster stresses, on programming – for it is only the programmes which can drive its viewing share.