Sky’s retention strategy drives revenue uplift

BSkyB says its strategy to focus on retention over acquisition now it has reached the 10 million customer landmark has effectively helped it reduce churn and increase revenue.

Sky Go
Sky Go

Its continued efforts helped reduce churn by 0.2 percentage points year on year to 10.9 per cent in the three months to 30 September, as customers took up an additional 533,000 extra products quarter on quarter.

Revenue in the period rose 4 per cent year on year to £1.7bn, while profit rose 5 per cent to 310 million.

The company hit its 10 million customer target in 2010 and has since focused on introducing new product innovations, rolling out more product-specific ads than brand campaigns, and increasing its levels of service to encourage its customers to take up more of its products.

Sky added 102,000 broadband subscribers in the quarter to 4.1 million, inching its total broadband subscriptions just ahead of rival TalkTalk’s 4.05 million base to make Sky the third largest broadband provider in the UK. The company has used its “Broadband Happily Ever After” fairytale campaign series to promote the product since 2010, which won a Marketing Week Engage Award last year.

The company’s “triple-play” base – customers which take up TV, broadband and a phone line – grew 19 per cent year on year to 3.5 million, or one in three of its customers. Average revenue per customer was up £15 year on year to £550, but up just £2 quarter on quarter.

Sky launched its second pay TV brand, the Now TV streaming service in the quarter, but has not yet revealed user figures. The company says awareness of the brand is increasing as it focuses its marketing on movies in the run up to Christmas. It adds that it will also introduce content from Sky Sports by the end of the year.

Mobile TV service Sky Go grew unique users by 75 per cent year on year to 2.8 million, driven by its sport channels’ broadcast of Europe’s victory in the Ryder Cup.

Jeremy Darroch, Sky’s chief executive, says the company’s investment in “high quality content” and “innovative” services has helped it deliver its high levels of customer loyalty.

He adds: “Looking forward, whilst we continue to see a challenging consumer environment in the UK and Ireland, we are well positioned to execute our plans for the year.”

Elsewhere, Sky’s rival BT reported a 9 per cent revenue drop year on year to £4.5bn in the three months to September. The company says it was impacted by “tough conditions in Europe and the financial services sector, regulatory price reductions and lower revenue from calls and lines”.

Average revenue per customer in its retail division grew £5 quarter on quarter to £355 as more customers chose to take up its premium fibre broadband services.
Profit rose 7 per cent year on year to £608, owing to a 12 per cent drop in operating costs.

BT is currently preparing to launch a new sports channel, BT Sport, which will air live football and rugby from next summer.

Ian Livingston, BT’s chief executive, says: “We have delivered another solid quarter of growth in profit before tax despite the economic conditions and regulatory impacts. We continue to make significant investments in the future of our business and we are again accelerating our fibre rollout.”

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