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Keeping Recession-Resistant

4/11/2009 2:00 AM Eastern

Cable companies have invested heavily in plant upgrades and services, and seek to maintain recent gains in revenue per subscriber. Consumers, reeling from financial uncertainty, are decreasing spending. Is a collision inevitable? Or can these opposing forces find common ground?

Cable's “recession-resistant” position faces a perfect storm: an unprecedented confluence of economic, competitive, regulatory and technological realities. Shrinking income and battered housing markets have sent consumer confidence plummeting, while changes in Washington, D.C., and at the FCC create regulatory uncertainty and risk.

Through it all, technological change keeps adding choices in how consumers can access the content they crave. As options abound, uncertainty persists regarding providers' ability to earn targeted returns on investments necessary to deliver more HD, increase video-on-demand, distribute DVRs throughout the home and accelerate the Internet.

Recent customer research conducted on behalf of PricewaterhouseCoopers provides additional insight. The most vulnerable services for cost-conscious consumers are landline phones and cable television, followed by cellphones and Internet service. The research also suggests that longtime subscribers are irked by introductory offers that give new customers lower rates (yet customer loyalty programs can put downward pressure on margins).

Here are three strategies companies can employ in these challenging times:

1. Disciplined Execution. As companies target cost reductions, prioritization is critical. Cutting strategic talent or projects could weaken competitive positioning and derail key initiatives. Think strategically about sustainable cost reduction over time, and avoid abrupt short-term reductions that “cut muscle” and endanger the development of strategic capabilities. Stabilize first (focusing on transparency and accountability), then transform for the long term with a focus on lean processes and a total cost-management view.

2. Customer Trust. Consumer expectations of privacy and data protection continue to rise. Identify your most strategic threats and vulnerabilities, avoid gathering and storing data you don't need, increase monitoring of sensitive data and regularly test your security controls.

3. Superior Customer Experience. Long hold times, dropped calls, poorly trained agents and late or missed service appointments are customer confidence killers. The superior experience can be from you, or your competitor — but either way, it will likely be the catalyst for a switch. Consider providing high-value customers with care options that reward loyalty. Attract, train and deploy technology-savvy staff that can help subscribers unlock the full value of their household investment in consumer electronics.

Tough economic times and periods of change create unique opportunities. Value-minded consumers are examining their relationships and making decisions. The right strategy can cement long-term relationships that will drive the sustainable returns providers seek while delivering the compelling value consumers demand.

 

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