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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% churn rate.

 

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 plumbing."

 

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.

 

Hostedware Corporation is a pioneer in providing online software solutions for research, education and performance improvement. Hosted Survey and Hosted Test are used by human resources professionals, market researchers, education and training organizations and membership associations worldwide.

 

 

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