News

Putting the Customer First

8/22/2009 2:00 AM Eastern

DirecTV prides itself on quality service, landing top honors as the nation's highest-rated provider for customer service and satisfaction for six years in a row.

This year, the satellite-TV provider lost its top overall ranking to a pair of telco upstarts, AT&T's U-Verse TV product and Verizon Communications' FiOS TV. Still, it maintained a strong third-place ranking among consumers, well above the major cable MSOs included in the annual survey.

Nonetheless, DirecTV executive vice president of operations Mike Palkovic believes the company ranks among the best in customer service in the business and intends to make constant improvements to meet customers' expectations.

“Part of DirecTV's existence and mission is quality of service,” Palkovic said. “Fortunately, we have a quality product to support. But we are serious about making sure our customer service is at the same level of excellence as our product mix.”

Palkovic maintains the competition, particularly cable, isn't much of a challenge when it comes to quality customer service. “In general, it's never really been part of their DNA or their top priority,” he said. “Clearly, there are some operators — Cox Communications, for instance — that take customer-service seriously and they outperform their peers. But most operators aren't up to the level of service we provide and customers recognize that.”

Companies like DirecTV — and now AT&T and Verizon — perform well in consumer-satisfaction surveys because customers feel they made a choice in subscribing to those services, said Leichtman Research Group president Bruce Leichtman. Many consumers think of cable as the utility company, and so expectations are different.

“Consumers always like the idea of being able to make a choice,” he said. “That is why new competitors tend to do well in these surveys. They feel they have more choices.”

To be sure, cable has closed the satisfaction gap with satellite in recent years. In 2004, 53% of cable subscribers were happy with their service, according to Leichtman research, while 70% of satellite customers were satisfied with theirs. Last May, Leichtman found that 62% of cable subscribers were very satisfied with their service, while 66% of satellite subscribers said they were very satisfied.

And, for the first time in almost a decade, DirecTV wasn't at the top of J.D. Power & Associates' annual customer-service satisfaction rankings. Still, DirecTV customers appear to be happier with service when churn is compared. Cable churn averages between 2% and 2.5% annually, according to Stewart Collins analyst Tom Eagan. Satellite-TV rival Dish Network's churn is about 1.85%.

During DirecTV's second-quarter conference call, interim CEO Larry Hunter said churn for the company was 1.51% — up from the average of 1.47% a year ago, but still lower than its competition. To be sure, there is voluntary churn and involuntary churn, and DirecTV's voluntary churn is lower than its competitors, Eagan said.

“DirecTV has been able to add value to its product and it now has a strong deal with AT&T, which also helps,” Eagan said. “But their churn is lower for a couple of other reasons, as well. For one thing, they are considered the best provider of high definition and they have fewer customers who aren't paying their bills or losing their houses.”

Palkovic credits some of the low turnover to customer service, which isn't easy given the company's scattered national footprint and mix of contractors and retail dealers. DirecTV has about 15,000 call center agents answering phones every day in 34 call centers scattered in the Philippines, Mexico and the U.S. About one-third of the company's call volume goes to the six owned-and-operated call centers operated by DirecTV, Palkovic said.

The rest of the U.S. calls are handled by three call-center vendors, he said. The numbers are similar for the tech side of the business. DirecTV has purchased some outside installation companies in recent years, but Palkovic said the goal isn't to take everyone who answers phones or installs and fixes equipment in-house. Rather, he wants to make sure the same level of excellence is applied across all the vendors, contractors and in-house personnel.

All vendors and retail dealers must adhere to specific metrics in their service agreements with DirecTV. There are charge-backs if they miss those objectives, which are tied to the company's in-house metrics. That makes it all the more important for company-owned call centers and tech outfits to outperform the industry average, Palkovic said.

The satisfaction rates for the tech side of DirecTV's business among customers runs in the high 80% range, Palkovic said. The goal is to be above 90%. The call center business is a bit different but the goals are similar.

“When you are talking about satisfaction among customers with their installers and techs, it's generally a positive experience,” Palkovic said.

Call-center satisfaction rates among customers runs in the low 70% range and Palkovic wants to raise that to the high 70s.

Palkovic also takes pride in the longevity of DirecTV's customer-interaction workers. Staffers are constantly and rigorously trained and DirecTV tracks what it pays its call-center agents and installers to make sure it's on par with or more than the competition's compensation.

“We tend to keep people around for a long time,” he said. “When you have happy employees, that tends to translate well and customers end up happy, too.

September