Marketers at Time Warner Cable turned heads in November 2002 when the company announced a unique initiative with Pioneer Electronics Inc.
The Pioneer-Time Warner Cable pitch to consumers: Buy a Pioneer HDTV set and get a $500 cash rebate plus six free months of Time Warner’s HD programming package. It marked the first time that a major cable operator had teamed up with a consumer electronics vendor to market a video-program service in a campaign, and it also gave Time Warner a presence at national retailers such as Best Buy, Circuit City, Comp USA and Sears.
“The minute we went out with the Pioneer promotion, our phones started ringing off the hook for additional opportunities,” recalls Time Warner senior vice president of marketing Brian Kelly.
Among those who called Time Warner to discuss the promotion were officials at the Cable & Telecommunications Association for Marketing. The organization’s CEO, Char Beales, says the Time Warner promotion with Pioneer became a model for national promotions that CTAM organized this year for other operators with Samsung Consumer Electronics America Inc. and Panasonic Consumer Electronics.
The Pioneer marketing strategy is just one example of how Time Warner is teaming with retailers to drive sales. Over the last two years it has struck other agreements to display video and high-speed data products through retailers — an area that key rivals DirecTV Inc. and EchoStar Communications Corp. have focused on since their inception.
Several Time Warner systems, including those in Albany, N.Y.; New York City; and San Antonio have cut deals with local retailers to display HD set-tops on their shelves, and in some cases, for local retailers to install the cable gear when they deliver the new televisions to consumers.
Nationwide, Time Warner has agreements with Best Buy Inc. and Circuit City Inc. to display its video and high-speed data on store shelves and allow consumers to order Time Warner services from kiosks.
“HD was the strategic path that we took to pry open the retail channel,” says Time Warner Cable chief marketing officer Chuck Ellis. “What we have done in order to build the relationship in retail — where we have both video and high-speed data — has been really quite phenomenal. And the overarching industry HD promotions just fit into that overall strategy, and that is [to drive home the point] that the cable industry has a strategic advantage versus satellite. Every promotional opportunity we can take and every retail distribution opportunity we can take to leverage that — we need to do it.”
Time Warner’s next push into retail may involve its Digital Phone product, a new service that the MSO plans to make available on every system nationwide by the end of 2004. Ellis says that the company has received inquiries from retailers that are interested in helping to sell the telephone product, which relies voice-over-Internet Protocol technology.
Time Warner has rolled out its Digital Phone service in about half of its systems. Sam Howe, senior vice president of marketing for the voice product, says about 75% of Time Warner’s telephone customers also buy the company’s video and high-speed data products. Of the remaining customers, about 20% subscribe to a video and telephone bundle, while a small percentage subscribe only to high-speed data and telephone.
Time Warner charges $44.95 per month for Digital Phone, which includes unlimited local and domestic long-distance calls. Customers who also take its video and high-speed data services pay $39.95 monthly.
While cable customers that take all three products in the bundle may pay Time Warner $150 or more monthly, Howe says sticker shock hasn’t been a problem, because the MSO’s marketing materials emphasize the cost for the telephone product compared to what customers currently pay their local phone company — not the cost for all three Time Warner products.
While Time Warner has offered its customers bundled discounts since the late 1990s, when it launched Road Runner, the company has never marketed its triple play of video, high-speed data and voice in a single TV ad. Ellis says that will change this fall, when the MSO will launch a series of branding spots that tout the bundle and emphasize the Time Warner brand.
“All the products are about one brand, and that one brand is Time Warner Cable,” Ellis says. “The strategy we’re playing out is to make sure it’s clear in the customer’s mind that our brand is one with those products.”
The one exception to that uniform brand is Road Runner. Time Warner officials say their research found that Road Runner, which debuted in 1996, was an established brand, and that it wouldn’t make sense to change the moniker.
“If you look at the overall goal of having a clear brand message with each of the product lines, talking about one company that delivers them all, Road Runner is already an established brand, so certainly there can be an equity back to Time Warner Cable,” says Greg DiPaolo, Time Warner senior vice president of high-speed data.
Unlike most other cable operators, which market a single high-speed data brand, Time Warner Cable offers its customers access to Earthlink’s high-speed data service and some regional Internet service providers. It’s not by choice. As a condition of Time Warner Inc.’s merger with America Online Inc. in 2001, the Federal Trade Commission required that the MSO offer consumers access to at least two unaffiliated ISPs.
DiPaolo says the “vast majority” of Time Warner Cable’s high-speed data customers are Road Runner subscribers. He says he doesn’t believe that the FTC’s open-access requirement has hurt the MSO’s cable-modem subscriber count.
RESEARCH IS KEY
Ellis says Time Warner spends several millions of dollars annually on consumer research across all three of its product platforms, including ethnographic research designed to gauge how Time Warner Cable subscribers use its products and how it affects their lives; customer service tracking; focus groups; and competitive intelligence research.
He says some of the best insight Time Warner picked up through ethnographic research came 18 months ago, when it queried video-on-demand users and found that the best takeaway from the service was how it allowed users to enjoy their “real life” without having to be constrained by a TV schedule.
The core message, which Time Warner has incorporated into its marketing of video-on-demand services and digital video recorders, was “that you can live your real life, and you can live your entertainment life the way you want to, and those things aren’t in conflict any more,” Ellis says.
Some of the research Time Warner conducts yields surprising results. For example, Howe says the company discovered through focus groups on its Digital Phone service that consumers wanted a straightforward phone package rather than a litany of calling features.
“We really learned they don’t want that many features. They want a core set that are important [such as caller ID and call waiting], but they don’t really care to have some really esoteric 15 or 18 features, and that’s something we didn’t really know, and research highlighted that,” Howe says.
Rather than offer several a la carte phone options, Howe says Time Warner opts to sell its Digital Phone customers a core set of features, such as caller ID, call waiting, call forwarding and anonymous call reject. Voicemail will cost extra.
Ellis says the MSO distributes all of the research findings it generates in the corporate office to all of its cable systems. “In some cases, if the research is critical enough, we’ll conduct outreach programs via [Web seminars] or conference calls to go through what the key findings are. Every key initiative that we have deployed has had a lot of research foundation to it,” Ellis says.
CSRs AS MARKETERS
Time Warner executives say they are relying more and more on customer service representatives to market their services, noting that their local presence offers a key competitive differentiator over satellite.
The company’s Cincinnati operation is testing a new “interactive sales assistant” computer system that automatically gives CSRs detailed information on products a subscriber already has and services the CSR could pitch the subscriber during the call. “The aids and the tools and the data availability for our folks on the font line, along with training, is something that we’re devoting a tremendous amount of resources against,” Ellis says.
Earlier this year, Time Warner opened a national retention center, which is staffed by CSRs from Convergys Corp. and located in Canada. Ellis says subscribers that call the company to disconnect or downgrade service are greeted by CSRs trained specifically to keep them as customers.
It’s a type of service that wasn’t necessary 10 years ago, before Time Warner faced competition from DirecTV and EchoStar in the video business, and from telephone companies in the high-speed data business. Ellis says he expects the competition to grow fiercer in the coming years.
“This is trench warfare, and it’s as competitive today as it has ever been. I can guarantee you that a year from now it will be far more competitive than it is now, and it will never end,” Ellis says. “The world will never go back to the point at which we can think customers are going to fall in the door.”
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