AT&T Broadband-formerly TCI Cable-lowered its disconnection rates by 10% and increased upgrades to digital TV by 18% since launching a rewards program in April 1998, said Doug Seserman, senior VP-marketing.
"I think it just speaks to the marketing power of direct marketing and loyalty programs," said Mr. Seserman, who helped launch the loyalty program, originally called TCI Rewards.
4 MILLION MEMBERS
Now being renamed AT&T Cable Rewards, the program every month gives its 4 million members points that can be redeemed for a variety of products tied AT&T TV stations, such as a Disney watch or a Showtime director's chair. Ryan Partnership, Westbrook, Conn., helped develop the program.
Adelphia Cable, Buffalo, N.Y., started a similar, pilot program in December, and John Cimperman, regional VP-sales and marketing, is confident he will see similar success.
Mr. Cimperman, who came to Adelphia from sports marketing, said he immediately realized it was important for the cable company to be seen as something more than a commodity.
Adelphia has 5.3 million subscribers nationwide and has about 2% churn a month, he said.
"We're a full-service communication company, and we're in competition for cable, high-speed Internet, long distance and in a few months will have competition for local phone service," Mr. Cimperman said. "Loyalty programs can make us much stickier."
The Adelphia Rewards program is initially being offered to 550,000 customers in western New York and northeastern Ohio. Like AT&T's program, it relies on the brand equity of TV network products as rewards-the first points redemption was an MTV T-shirt. But Adelphia Rewards also has an added attraction: professional sports.
Adelphia owns the National Hockey League's Buffalo Sabres, so it was a natural to tie sports into the rewards program designed and operated by Carlson Marketing Group, Minneapolis.
In addition to being able to redeem points for Sabres tickets, eight interactive kiosks at Marine Midland Arena allow customers to swipe their membership card to check points and get personalized coupons to use on cable products or at restaurants in or near the arena.
"We always struggle in a loyalty program with how do we communicate with customers," said Jon Von Rentzell, director of account development for Carlson's loyalty division. "Usually, it's phone or mail. The kiosks add another level of connectivity."
"I have asked the ownership of the company to give me four months to let this program seed, and at month four, we should start to see tangible results," Mr. Cimperman predicted. "We are looking for a 20% reduction in controllable churn and a 15% increase in incremental products."
Margaret Ross, director of e-commerce and database marketing at Cox Communications, is philosophically opposed to points programs and thinks a customer appreciation program needs to be seen as a serendipitous benefit, not an expectation.
In the Cox VIP program she designed, a core of excellent customers was mailed a simple letter stating on the envelope: "If you think it would be great if just once a company would acknowledge you with something other than a bill, take a look inside."
Customers who buy a certain package of services or reach a spending threshold on their services get the personalized letter, which thanks them and provides them with a special service number to call for assistance.
The VIP letter was initially sent to 100,000 customers in New Orleans; Orange County, Calif.; San Diego; and Phoenix, and was followed up a few weeks later with a phone call asking participants to answer questions to learn more about their interests, creating a more detailed customer database and helping Cox know what programs and services customers are interested in.
Cox contacts VIP customers every 45 days with a special offer such as holiday discounts on travel items or reminders of special programming personalized by customer interest.
"The whole thing is to put ourselves in the customer's shoes," said Ms. Ross, a former airline marketer. "This is the only [cable loyalty] program that is one-to-one marketing. Everything is totally customized."
Looking at the burgeoning options available to cable subscribers, AT&T's Mr. Seserman said: "Choice is good, competition is good. It puts more pressure on cable companies to be more sophisticated in their marketing techniques."
"Retention was not as high a priority until competition became intense," said Char Beales, president-CEO of Cable & Telecommunications Marketing Associations, Alexandria, Va. "You are much more likely to sell additional services to a current customer, so absolutely you want to repay them and sell them telephone service and high-speed cable modems."
Ms. Beales said cable company loyalty programs are a developing trend, and she believes companies that offer loyalty programs, like AT&T's, that are simple for customers will start to see impressive results.
Among the 191 telecommunications loyalty program participants contacted in a 1998 Loyalty Monitor survey commissioned by Carlson, almost 30% said they had signed up for additional services since joining the program and 53% said they were less likely to switch services.