Subscribing to Broadcasting Success

all the channels on Sky TV Making a major They can now choose from a menu of Strategic implications BSkyB market channels and programmes, which more Chelsea go in A strategy outlines the direction an impact on lifestyles closely reflect their preferences and against Aston Villa demographics lifestyles. organisation has elected to follow. It Sport Family & Kids Documentaries and BSkyB will primarily be remembered BSkyB continues ongoing research as part of BSkyB’s must be communicated and understood General Interest as the company which changed the face which enables it to focus on consumer In this context, we have moved towards live Premiership throughout the entire business, in order of UK broadcasting, through reflecting requirements, particularly in terms of a customised service, in which sports football, aquired to ensure effective implementation. our changing lifestyles as we move programme development. fanatics can enjoy nearly 200 hours of at the start of the This was a major consideration for towards the 21st century. BSkyB also top sporting action every week. Movie 1992/93 season BSkyB and incorporated: created a new Multi Channel television The most valuable markets, where high fans can indulge by watching a industry through new technology and spenders can be identified, are best previously undreamed of selection from Exhaustive customer market innovative marketing. In under seven ¥ summarised as: classic British television movies and research, in order to clearly years, BSkyB has become a great international movie masterpieces. Operating profits increased understand customer behaviour ¥ Young males 16-34 years old. British success story and has entered Children can tune into a number of significantly to £170.1 million in 1994, and requirements. ABC1 Socio Economic groups. the FT100 Index as one of the top 30 ¥ Movies dedicated kids channels. The choice and £245.2 million in 1995 and £315.0 companies. BSkyB is also the world’s Examination of the reasons ¥ Families with young children. variety is endless. million in 1996, against losses of £47.0 ¥ largest and most successful satellite customers cancelled/terminated million in 1992. BSkyB was listed in The age composition of the typical pay television operator. or downgraded subscriptions. the FT100 Index Top 30 companies and satellite household differs from the A brief history in October 1996, with the share price The business sees itself as a Television ¥ Understanding acceptable and population as a whole. Children constitute standing at around £7.00 from a launch Broadcaster and technology and In less than seven years, BSkyB has unacceptable reasons for nearly 25% of the occupants in a of £2.56, the company was valued at marketing innovator. This case study established itself as a key part in the cancellation/termination. satellite home versus 17% in all homes. fabric of many people’s lifestyles. Sky £11.0 billion (up from £4.0 billion). However, at the other end of the scale News and Business concentrates on BSkyB’s new customer ¥ Development of a new focused strategy, which has been currently has over five and a half only 14% of satellite television viewers million subscribers in the UK and Eire One of the issues related to the number communications strategy to are over 50 years of age, compared with Total Entertainment developed to manage subscriptions to of people taking subscriptions for a manage and prevent its satellite TV channels. and there are very few people who have 28% of the UK population. not “popped around to a friend’s house” short period and then letting them lapse. cancellations/terminations due In the satellite business this is known as to unacceptable reasons. The younger household profile is clearly Satellite television provides the to watch a Premiership football match the “churn rate”. In June 1992, BSkyB’s reflected in the proportion of satellite opportunity for millions of viewers to or a brand new blockbuster film. annualised churn rate was 35%, which An example of an unacceptable reason households with children - 42% have receive movies, sports, entertainment meant the company could potentially for cancellation would be a customer children, compared to 29% in the country and news directly to their own homes, The story began in 1982, when News lose about half a million subscriptions declining to continue subscriptions, as a as a whole - an obvious attraction to from a variety of satellite TV channels. International acquired the majority Music shareholding in the Pan-European Sky per year from its subscriber base of 1.5 result of not watching enough satellite many advertisers. Satellite television provides a television million households. This became a television. In other words, problems service that is essentially “customer Channel. In June 1988, the concept of Sky Television for the UK was major priority for resolution. created by the subscribers lack of The demographic profile of satellite focused”. Viewers no longer have awareness of BSkyB’s full proposition. owners also differs from the to select from the limited choice of announced and in February 1989 Sky TM composition of the UK population. terrestrial TV stations. Television launched its DTH (UK Strategic subscriber Direct To Home) service with four marketing review Strategy There are slightly more women than channels via the Astra Satellite. These implementation men nationally (53% Vs. 47%), whereas four channels were: Sky One, Sky The review, undertaken in 1992, was in satellite homes the position is News, Eurosport and Sky Movies. designed to ensure that one of the BSkyB identified three core areas for reversed (49% Vs. 51%). Sky Movies was the first subscription business’s key performance indicators, management focus. These were: In September 1996, 5.65 million UK channel. namely reduction in churn rate, was homes could receive satellite and cable achieved. This study focuses on this ¥ Maximising customer loyalty by television, equivalent of a 23.8% In November 1990, Sky and British critical area. increasing the viewing of channels Satellite Broadcasting (BSB) merged to (i.e. programming and educational strategy). penetration of total TV homes. form British Sky Broadcasting (BSkyB). The principal objectives of the strategic Furthermore, according to the BARB However, by the end of 1992 BSkyB marketing review were to minimise: ¥ Maximising customer turnaround total, from Satellite Homes-Universe in had accumulated operating losses of £11 via the prevention of cancellation, September 1996, 70% of these homes million per week and it was clear that ¥ Subscription cancellation. termination and downgrade receive their extra channels delivered to (i.e. marketing strategy). them by satellite dish. a new corporate strategy was required ¥ Accounts System termination to turn operating loss into profit. (i.e. direct debit payment termination). ¥ Maximising subscription UK Population Downgrades renewals and upgrades Major programming acquisitions, ¥ (i.e. subscription to fewer channels). (marketing strategy). 17% 27% 28% 28% were made, including exclusive live coverage of Premiership football that and maximise: These were enormous challenges 4-1516-34 35-54 55+ contributed towards the turn round of ¥ Upgrades. when viewed against the customer 22% 32% 32% 14% the company and the successful global and financial losses being experienced Subscription renewals. Satellite Population floatation in 1994. ¥ in 1992.

BSkyB It has 1 million more readers than the Maximising subscriber BSkyB’s Subscription Packages Radio Times and a staggering 1,750,000 Continuous improvement more than the TV Times. The Sky TV renewals and upgrades BSkyB is the leader in a dynamic, TASKS & ACTIVITIES All 3 Premium Channels Guide has helped to increase viewing expanding industry and constantly Sky Movies, The Movie Channel, Sky Sports 1 & The Sky Multi-Channels package BSkyB has engaged in a significant At the Edinburgh television very close relationship and and loyalty and has clearly helped to ongoing Direct Marketing campaign. strives to achieve innovation and Plus 4 Premium Bonus Channels festival in 1996, John Birt, understanding with its customers. communicate the choice and variety Direct Mail packs have been sent to a improvement. New initiatives in recent 1 Sky Movies Gold, The Disney Channel, Sky Sports 2 & Sky Sports 3 available. times include: director-general of the BBC said: Your report should be 500 words long database of ex-subscribers together "BSkyB now stands poised to be the and presented in newspaper format 2 Premium Channels with postcards targeting upgrades to ¥ The creation of new customer dominant financial force in our using a desktop publishing package. Plus 2 Premium Bonus Channels and the Sky Multi-Channels package Maintaining the lower tier subscribers, thereby benefits such as a credit card and industry by the turn of the decade - encouraging subscriptions to new Sky marketing impetus financial services. and thereafter, possibly, the dominant Carry out some market research Sky Movies or The Movie Channel channels. ¥ The development of a new cultural force as well." Do you agree However, to perpetuate momentum 4 with a sample of 20 BSkyB Plus the Sky Multi-Channels package sophisticated marketing database or disagree with the above statement? BSkyB has continually sought to subscribers to discover what factors These campaigns have been accompanied of customers. State your arguments together with The Sky Multi-Channels package increase choice and value for customers have persuaded them to choose by a series of “on air” promotions. ¥ The creation of a customer profile supporting information outlining your by adding new channels, as can be seen satellite television. These promos have been produced for database. This involved distributing reasoning. from the dramatic growth of channel Premium Sky all major Movies, Sports and Multi- a customer questionnaire to all Premium availability. Channel events. Cross promotions have The case study highlights the Bonus Multi-Channels subscribers, in order to create the The BSkyB case study Channels been targeted to appropriate audiences 5 marketing strategy that BSkyB Channels Package most sophisticated profile possible, provides an object lesson in Growth of channel availability and special phone numbers have been 2 has engaged in to reduce its “churn which enabled the company to target successful marketing, planning and rate”. Produce a report for the Sky Movies Sky Movies Gold Sky 1, Sky 2, Sky News, Sky Soap, Sky Travel, used to make it easier for customers to customers on an individual basis The Movie Channel & The Disney Channel TLC, QVC, The Discovery Channel, Bravo, MTV, 1989 •••• 4 implementation, focusing on marketing director of BSkyB setting Sky Sports 1 (available when you subscribe VH-1, CMT, The Family Channel, Granada Plus, respond and subscribe to new channels. - thus creating a strong bond of 1993 •••••••••••••• 14 developing a close relationship with out two new schemes for reducing the to both Sky Movies & UK Gold, UK Living, TCC, Nickelodeon, relationship marketing. The Movie Channel) Fox Kids Network, CNBC, EBN, The History Channel, 1994 •••••••••••••••••••••••• 25 its company’s customer base. Explain churn rate which fits its marketing The Computer Channel, The Weather Channel, Sky Sports 2 Measuring what each of the following business strategy. Granada Food & Wine, Granada Home & Garden, 1995 ••••••••••••••••••••••••••••••••• 32 & Sky Sports 3 Granada TV High Street, Granada Health & Beauty, Conclusion terms mean in the context of the case (available when you subscribe 1996 ••••••••••••••••••••••••••••••••••••••••• 40 the success rate to Sky Sports 1) Granada Talk TV, Granada Men & Motors, study: The Sci-fi Channel & The Paramount Channel. This study shows how an innovative Why do you think that BSkyB These channels serve a variety of Every company needs to operate in a company, which has been instrumental has its existing customer strategic way. It begins by developing customer focused 6 consumer market segments including in changing the lifestyles of many á operating costs demographic profile? What new In important target audiences, such as Maximising Soaps, Travel, Science Fiction, History, the strategy, supported by market people, has engaged in a sophisticated channels could be developed to target young adults, children, men and research and then developing the á operating profits Racing and many more. By December marketing strategy, in order to á operating margin new and substantial groups of housewives with children and ABC1s, customer loyalty 1995 Sky reached five million UK implementation plans. maximise benefits to its customers. customers? the penetration levels are much higher á performance indicators It was clear from market research that homes and satellite channel viewing BSkyB has gone much further than á market research survey and Sky’s viewing profiles match the key to stemming subscription now regularly exceeds 10% of all The success of BSkyB’s Subscriber simply providing the service customers What other unacceptable types many advertisers’ target groups. This Management and Marketing Strategy á demographic profile cancellation and downgrading lay not television viewing in the UK. want. It has gone out of its way to á churn rate” 7 of cancellations would BSkyB is evidenced by the May 1996 BARB only in the provision of additional can be quantified by the following create a personalised relationship with have identified? (there are eleven in figures, which show that nearly 14.4 highlights achieved between 1994 and á objectives channels, thereby giving more choice, Maximising customer its customers, to encourage them to á relationship marketing total). million individuals aged four plus but also through direct marketing, on 1996. state their individual preferences and now have satellite television in their á communications strategy air promotions and educating viewers turnaround requirements. The case study is a Why do you think BSkyB has homes, representing 26.5% penetration á customer loyalty how to make the best use of the quality In order to prevent cancellation, 1. The annualised “churn rate” was classic in relationship marketing and been so successful in reducing its of the UK population. Coverage of á customer benefits 8 and wider coverage of sports, films termination and downgrading from reduced to 12.9% in 1994, from successfully making sure that “the big “churn rate”? some key socio economic categories á Direct Mail campaign and children’s programming. It was one tier to another, BSkyB created a 35% in 1992. ideas” - i.e. the strategies, are converted is over a third higher than overall á Telemarketing essential to maximise their use of these sophisticated telemarketing campaign into effective operational activities. á “on air” promotion What do you understand by the satellite penetration. channels. This success story will help BSkyB to entitled ‘Turnaround’, with the aim 2. The Turnaround Telemarketing team á administration costs term “after sales service”? What steer its way into a future which will 9 ‘Fighting to keep every customer’. All made over half a million outbound á bad debts sorts of after sales activities do you BSkyB continued to launch new channels, see many changes and provide many Sky viewers do not just watch the customer service telephone operators telephone calls, which resulted in á continuous improvement think BSkyB should engage in to thereby improving its customer more exciting opportunities. programmes, they are also formidable were trained with new skills in handling over 200,000 subscribers being á marketing database maintain customer loyalty? proposition and in September 1993, consumers, with their weekly expenditure customer issues or problems that could retained in 1994. á on groceries being 14% greater than the Sky Multi-Channels were launched, potentially result in cancellations. Digital broadcasting consisting of 14 channels, 9 of which Imagine you are a business What business lessons can national average. Additionally, they are journalist, writing for a well other companies learn from the responsive to advertising and want to were new. The result was staggering In the past, customers relinquished their 3. The launch of Sky Multi Channels - a major opportunity 3 10 with over 500,000 new subscriptions led to 250,000 new subscriptions known newspaper. Explain to your way in which BSkyB has developed try new products. They are 19% more subscriptions without being asked why The introduction of digital technology being secured in three months. and 500,000 upgrades. readers how BSkyB has ensured its its customer management and likely to buy products seen advertised they had done so. Now, the company presents a major opportunity for customer marketing is based on a marketing strategy? (Source: BARB). ensures the customer maximises the use BSkyB. Digital broadcasting offers Sky TV Guide of all the channels and the wide range of 4. The promotion of Sports and Movies greatly enhanced channel capacity and programmes, so preventing unnecessary helped to create 200,000 upgrades The growth in popularity of satellite and Market research showed that customers the ability to introduce new features cancellations. This clearly demonstrated from existing subscribers. cable television is expected to continue were having difficulty in obtaining such as pay per view and interactive to the customer that he/she was valued well into the next century. By the programme and listing information, services, which include home banking and appreciated. year 2000 over nine million homes covering all Sky channels seven days in 5. 80% of subscribers pay by and shopping. BSkyB is well advanced are expected to receive satellite and advance. Direct Debit, which is a factor in its plans for digital services in the Additionally, 150 outbound telemarketing cable television (Sources: Zenith Media, in maintaining customer loyalty UK and has designed its own electronic In order, to rectify this situation the Sky operators have been recruited, who are Goldman Sachs and Kleinwort Benson). coupled with the minimisation of programme guide. This electronic TV Guide was launched in September trained to call back customers within 24 administration costs and “bad debts”. programme guide will provide 1994 by Sky Television and sent to all hours, after cancellation or termination. programme listings and information on As satellite television is particularly ‘Direct To Home’ subscribers, as This has been hugely successful leading 6. The ongoing customer focus the television screen. The company is popular with younger householders part of the subscription package. The to a significant turnaround rate. also in discussions with a number of and men, it is projected that by the Sky TV Guide has been enormously Cancelling customers are offered an and developing marketing communications strategy over the interactive service providers. In 1996, year 2000, two thirds of adults under successful with a current circulation of alternative subscription package and the company acquired transponders on 34 years of age, almost three in five 3.5 million and readership in excess of 6 where direct debit payments have past four years has resulted in the cancellation rate dropping further a new Astra satellite, which will children and 53% of the nation’s men million, making it the widest read failed, customers are notified of provide the platform for a UK digital will have access to Sky. in 1996 to 11% monthly magazine in the UK. termination. service to be launched in 1997. 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