Thursday, January 26, 2012

Time Warner Cable's “Customer Appreciation” Blunder

Paul Lee, an intern at our firm, is the guest author of this insightful blog on the recent communications fracas between Time Warner Cable and Madison Square Garden (MSG).

On New Year’s Day, after failing to come to terms on a new contract, Time Warner Cable blacked out all MSG Network channels, leaving approximately 1.7 million Time Warner Cable customers in the Greater New York area unable to watch their beloved Knicks, Rangers, Devils and Islanders on television.

The public battle between the two parties has grown increasingly intense and, as usual, customers are being used as pawns in the fight for negotiating leverage. When faced with the threat of being blacked out, MSG immediately began airing commercials urging Time Warner Cable customers to switch television carriers. Time Warner Cable countered by airing retaliatory spots criticizing MSG’s steep contract demands. Then, MSG upped the ante by arranging Knicks and Rangers “viewing parties” at various restaurants and bars throughout New York City, which induced Time Warner Cable into committing an extremely costly blunder at a very critical time.

As part of an ill-conceived attempt to “one-up” MSG, Time Warner Cable launched a contest to send “10 lucky winners” to Charlotte, North Carolina to see the Knicks play the Charlotte Bobcats at the Time Warner Cable Arena. They went on an all-out blitz to promote the sweepstakes, airing frequent commercials on multiple channels and even running full-page ads in New York City newspapers.

Time Warner Cable officials described the sweepstakes as a “customer appreciation gesture,” but my recent conversations with numerous Time Warner Cable customers indicate that the contest made them feel less appreciated than ever. Customers described feeling antagonized and alienated upon seeing ads for the sweepstakes, and many even felt insulted. It’s not hard to see why. The contest — a raffle for tickets to attend a Knicks road game at Time Warner Cable's namesake arena — came off as a cheap and cynical attempt to buy customer loyalty and, unfortunately for Time Warner Cable, their carelessness has dealt a damaging blow to their credibility in a very sensitive situation.

There is a simple lesson to be learned from Time Warner Cable's customer appreciation blunder: never underestimate the intelligence of your customers – especially in the internet era – and never let the apparent brilliance of an idea blind you from seeing unintended negative consequences. When engaged in sensitive situations affecting a large number of customers — such as a contract standoff — it’s crucial for companies to make sure that their customers feel appreciated, but raffles and other cheap marketing gimmicks are rarely the solution.

Companies should stick to communicating openly and honestly with their customers. They should keep customers informed about their position, express a deep commitment to finding a resolution and find real, substantive ways to deliver value in the interim. These are the safest and most effective ways to sustain the confidence and loyalty of your customers in highly sensitive situations.

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