Sky cites marketing for profit lift

BSkyB has said a more efficient approach to marketing, product-specific campaigns and a focus on customer service helped drive the company’s record profits in the last financial year.

Bradley Wiggins
Team Sky: Tour de France winner Bradley Wiggins

For the year to the end of June, BSkyB reported a 14% lift in operating profit to £1.2bn. Revenues rose 4.5% to £6.8bn.

The company has focused on marketing additional services to its existing customers in the past year, having reached its 10 million customer milestone in 2010. The ongoing economic difficulties have also put some customers off buying into long-term contracts.

Sky cited its “Summer of Sport in HD” campaign and the launch of its Sky Sports F1 HD channel as key contributors to increasing its HD customer base by 121,000 in the last quarter and half a million additions over the year.

A campaign around its Multiroom service was also credited for a 24,000 uplift in Multiroom customers in the quarter to reach 2.4 million households.

The focus on existing customers rather than acquisitions has helped lift average revenue per customer by £10 to £548, while the number of customers who left Sky was down to 9.9%. By contrast, Sky says the average cost of acquiring a customer was up £23 year-on-year to £397.

As part of its retention strategy, Sky has also placed a “continued focus” on customer service. In the last quarter average calls per customer fell by more than 15%, while service visits to customers’ homes to fix a problem were “the lowest in eight years”.

The company shifted a large proportion of its advertisings spend to digital in the year to 30 June, which reduced costs by 13% year on year to £1.06bn. Sky says the move means online is now its single largest route to market.

Sky is, however, planning to launch a major integrated marketing campaign to support the launch of its internet connected TV service Now TV, which puts it in direct competition with LoveFilm and Netflix. The company has set aside £30m for support of the new product and the marketing push, which is set to take on a “more fun” tone than the parent brand.

Jeremy Darroch, BSkyB’s chief executive, says: “We have delivered record financial results after another year of strong operational growth. Our consistent approach of investing where it matters most to customers and improving efficiency behind the scenes is working extremely well.”

Sky also announced today (26 July) it has formed an agreement with TalkTalk, which will see the latter company offer its customer’s Sky’s entertainment, sports and movie channels on its YouView service when it launches later this year. It allows TalkTalk to offer a pay TV service and gives Sky the opportunity to extend the reach of its channels beyond its subscriber base.

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