Innovation, new competitors and a changing industry are both a threat and an opportunity. Something I call the “sticky-bundle” is helping existing companies hang onto and stabilize their customer base as their industry transforms around them. Let me explain how and why the sticky-bundle works and why it is something every competitor needs to understand and implement.
As the industry continues to change, existing leaders need to focus on both hanging onto their existing customer base and winning new market. This is both a threat and an opportunity.
The sticky bundle has been successfully used by the telephone companies since the 1990’s and still is today. The idea is simple. A customer using only one of your services can switch to a competitor quickly and easily. That’s a risk.
However, when a customer uses two of your services, and they work together, and they get a discount for bundling, that customer becomes sticky. When a customer uses three or four or more of your services, and gets more discounts and benefits from the bundle, they become even more stable.
Sticky customer stays put, which is why it is a killer marketing strategy
That’s the goal of every company that uses the sticky bundle of services. They want to create a sticky customer. It’s really that simple and that powerful a business tool.
The sticky customer stays put. That means it is a winning marketing strategy. After all they don’t want to risk losing the extra discounts and other benefits from bundling.
It started with the phone companies in the 1990’s. Back then there were seven baby bells and three long distance giants. Each sold either local or long distance. They were not competitors at that point.
Then both sides started to sell each other’s services. Suddenly they were competitors. Suddenly there was a loud and raucous marketplace battle taking place, local vs. long distance.
The local phone companies won that battle. The long-distance giants faded away and the local phone companies eventually acquired them.
AT&T, Verizon both successfully use sticky bundle
In the years since, wireless and the Internet were the next two services that joined the sticky bundle of services. That’s one important reason companies like AT&T and Verizon won big time in the wireless and Internet wars. T-Mobile and Sprint were wireless only and they remained much smaller players. Between local, long distance, wireless and Internet, AT&T and Verizon had a competitive advantage. Then they started to offer pay TV as well, which put them into competition with the cable TV industry.
Cable TV was next. The cable TV industry has been changing over the last 15 years. Prior to that, there was not much choice. Prior to that the cable TV industry didn’t seem to care much about customer satisfaction. Why should they worry? After all, the customer had no other place to go.
However, over the last several years, competition has been moving into pay TV and changing everything. Suddenly pay TV is growing and expanding over the Internet with something called IPTV. They had cable TV in their sites.
Competition is growing in pay TV
AT&T Uverse and Verizon FiOS were two new competitors to the space. Suddenly, customers had choice. Next, AT&T acquired DirecTV, created DirecTV NOW and introduced wireless pay TV which uses the AT&T Mobility network to deliver signal to the smartphone or tablet anywhere in the country. Now AT&T also has WarnerMedia.
We have also seen Netflix, Hulu, YouTube TV and so many others entering this pay TV space in recent years. These companies are also transforming the space.
Next, wireless pay TV will rapidly grow in coming years as 5G becomes reality all over the country.
Like with the telephone, wireless and Internet providers over the last couple decades, the changing pay TV industry poses both a threat and an opportunity. Every existing player in the pay TV space will face this challenge. And every player, new and old will face an incredible growth opportunity. If they know what to do next.
Comcast Xfinity Mobile was first sticky bundle in cable TV
That is why we see the cable television industry changing in recent years. Now, they are focused on building relationships with their customer base. Now, they say they now understand how they didn’t treat the customer fairly in the past. Now, they are bound and determined to do better going forward.
Over the last several years, most cable TV providers were losing market share to new competition. That was a threat they needed to answer. They also needed to grow. So, what would be the best strategy to accomplish both goals?
The sticky bundle is the path they have chosen, and it seems to be working. When a customer just had cable TV, they could easily switch away. However, when a customer uses multiple services like high-speed Internet, telephone and wireless, they become sticky-users.
Charter Spectrum Mobile, Altice Mobile creating own sticky bundle
The sticky user is what every cable television company is now trying to create. Over the last couple decades, the sticky-bundle has been a success story for AT&T, Verizon and Comcast. I expect it will continue with Charter, Altice and other cable TV competitors, large and small.
Over time, every industry face change and transformation. Technology, regulation, new competition and innovation all contributes to a changing marketplace. Every company needs to adapt and stay with the growth wave. If they don’t, that growth wave will pass them by, leaving them behind.
Existing industry leaders all face the same challenge and opportunity. How do they hang onto their customer base and grow when new competitors and innovation are changing everything around them?
That’s where the sticky-bundle comes into play. It is one very important and powerful strategy to create a sticky customer. This let’s existing companies hang onto their customer base while they focus on growth as the industry changes all around them.
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