The Doorway to The Abyss...

Exceeding Expectations? How to do the Absolute Opposite – and where will it take Virgin Media?

Virgin Media customer loss continues in Q2
Published: Wednesday 8 August 2007 ; TelecomPaper

“UK cable operator Virgin Media reported a continued loss of customers in the second quarter, reducing its total by 70,300 to 4.7 million. The company estimates it lost some 40,000 customers in the period due to Sky removing its channels from the Virgin platform in March. Average revenue per user also fell, to GBP 42.16 from GBP 42.75 in Q1, hurt by lower telephony use and more retention discounts. Growth in broadband subscribers slowed from the previous quarter to 45,800 net additions, while both the mobile and fixed telephony activities showed declines in customer numbers.”

And before that both its predecessors, NTL and NTL Telewest also reported massive customer losses – and even more spectacular financial losses, totalling billions eventually. They have had a lot of practice at losing customers (on one occasion the then Chief Executive reported that they “expected to lose lower value customers”).

“NTL, the cable group that merged with Sir Richard Branson’s Virgin Mobile to form Virgin Media, was twice targeted by private equity players. The merger was supposed to transform the group, which was plagued by a reputation for poor customer service, into a major media and communications player.” May 10, 2007; The Times.

Virgin Media now claim that they are losing customers because of their falling out with Sky. It is just another excuse – they are losing customers because they are treating them with arrogant contempt – because, and their history proves it, it is the only thing that they know how to do.

I have just switched from Virgin Media after 7 months of progressively deteriorating broadband performance and experiencing the same sorts of dispiriting, cynically money grubbing, contemptuous and economical-with-the-reality service transactions that you can find for yourself if you Google “ Virgin Media Service”. As a final inconvenience, I will now lose my personal email address for the last 10 years – “we don’t do that (let you remain on a different deal) anymore”.

What a “perfect result” for Virgin Media – they really have got rid of a “low value” customer - it is difficult to imagine what else in Customer Retention they could have done worse.

Now Sky have gained a high value customer – Virgin Media have scored a total own goal.

What we say from a Competitive Strength point of view is:-

This experience was full of illustrations that typify what happens when a business becomes CONSTRAINED.

• You make counting pennies more important than Customer Satisfaction.
• Your performance standards slide, and keep falling.
• You expect your customers to do your Quality Management for you
  and in this case, even to pay you through the nose to do so!
• You seek to evade accountability as your basic response.
• You stop being honest with your customers.
• You deny initiative and responsibility to your customer facing staff
• You isolate your Customer Complaints department from customers (of course, why doesn’t everybody else do that?)
• You “lose” key Directors with a proven track record in Good Customer Service
  and
• You play repeated claims about your Amazing Customer Service to your customers while they wait more than 20 minutes for you to reply to their call!!!!!!
  You could not make this last item up – it beggars belief – it happened!

Based on this experience, Virgin Media as a business appears to be in the CONSTRAINED condition of Competitive Strength and that means that it is approaching The Abyss – and there will lie failure, again.

• This means that its shareholders, employees, suppliers and customers all face the possibility of serious disappointment in the foreseeable future - again.
• This means that Sir Richard Branson’s promise that everything would be to the “Virgin” standard by the time it was in use has proved worthless – and that diminishes both him and the brand.

We say, please look at the Competitive Strength web site. Please see the frightening difference in both financial strength and business resilience there is between the Constrained and the Excellent. Please see just how deeply temporary and precarious is the position of the Constrained business.

Then, if you have any stake in Virgin Media, please do a serious risk assessment of the implications of that for you and your business now, before you have an unpleasant surprise - just like a series of stakeholders in NTL had in the past and sadly it now appears that nothing has changed..