Do Your Research - The $10 Billion Lesson
By John Leaver, for Hostedware Corporation
One of the most important challenges for large companies
is to stay in touch with their customers and markets. NTL
was one of many companies since the late nineties to fail
that challenge and pay a heavy price. Only by converting $10.9
billion of debt into equity has it emerged from Chapter 11
and won a second chance. So what are the lessons?
Before meeting Aizad Hussain, the Managing Director of NTL
Home - NTL's largest division, responsible for all internet,
broadband and internet TV services, I was expecting to hear
about initiatives for reducing costs and increasing margins.
I heard none of this. Instead, Aizad detailed an extensive
research and customer experience management project - the
main focus of his work.
Aizad had a clear picture of the problems which had almost
killed NTL. The company had simply grown too fast and lost
touch with its customers. "When I took over, 45,000 customers
per month were calling to disconnect," he notes - a 22%
Rather than cutting costs and lowering the quality of customer
experience further, Aizad has made a decisive decision to
listen more carefully to his existing and potential customers.
"When you're a manager trying to fix problems, you've
got to know where to look," he says.
Aizad has also chosen to conduct the majority of his research
online. "Most traditional consumer research is done in
very controlled environments, and that has its place... however,
it's not raw feedback. When you put it out on the web, rich
or poor, good or bad, you see it all."
During the past eight months, Aizad's web-based research
and customer feedback projects have helped to reduce NTL's
churn rate dramatically. The company isn't out of the woods
yet, but it's clearly heading in the right direction and Aizad
sees a 20% churn rate as "a realistic target." NTL
had a very close shave and the story of Excite@Home shows
what might have happened had NTL not made such a decisive
effort to reconnect with its customers and markets.
America's largest cable and internet service provider in
2001, Excite@Home was at the center of the dot-com boom. It
also led the online landslide of which it became a fatality
when it went out of business early last year. The company's
troubles could be traced back to the 1999 merger of cable
company @Home and the Excite portal. Though the companies
were based next door to each other, separated only by a small
pond, it was never a comfortable partnership. Giga analyst
Martha Bennet described the merger as "a clash between
creative dot come types and people who essentially provide
While subscribers rose to over 4 million, executive disputes
affected services and the company lost its focus on its customers.
Excite@Home ultimately lost the portal war and went into liquidation.
Originally acquired for $6.7 billion, Excite was sold off
for just $10million.
Imagine what a corporate climate survey might have exposed
prior to the merger. And how might the outcome have been altered
by a research initiative to re-focus executives on their customers?
Many conspiracy theories have arisen regarding how such a
large company was brought to its knees so quickly. Crucially
though, no one could have stopped Excite@Home if it had kept
in touch with its customers, who only disconnected once the
company had stopped listening.
Of course customer research and feedback projects don't just
aid retention - they also drive businesses forward. As a management
consultant I recently re-branded a software company which
urgently needed to boost sales. During initial analysis I
discovered that the company was collecting little or no information
on its customers and doing little or nothing with it. So the
first step was to implement a business intelligence program
to learn more about who was buying the product. We then used
that information to design a tailored image and marketing
plan for the company. It's hard to know how to move forward
when you don't know where you are.
Of course many companies struggle to find the time, resources
and skills to implement worthwhile research projects. Third
party research companies such as Hostedware (www.hostedware.com)
can often save time and money and deliver a superior solution.
Using its unique research systems and specialist expertise,
Hostedware has implemented solutions for a broad range of
companies and organizations including The US House of Representatives,
The US Navy and Weight Watchers as well as several universities.
The return on investment can be immediate, but the true value
of the service is in the competitive advantage and long-term
direction which it delivers.
Surely one of the key lessons to be learned from the recent
economic turbulence is that research should not end once a
company has launched. It is the bond that glues a company
to its market and is neglected at immeasurable risk. Clearly,
it doesn't matter how large or fast growing a company is -
the customer is still king.
John Leaver (www.johnleaver.com)
is a UK Freelance Journalist and Management Consultant. He
specializes in business and technology and writes for The
Times, The Telegraph and the FT newspapers.
Corporation is a pioneer in providing online software
solutions for research, education and performance improvement.
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