Lesson 2: Obsess over the customer

I've spent a bit of time this week thinking about what it means to obsess over the customer and targeting the right segment for your business.  One area that I follow a lot is the cable industry.  As a cord-cutter, I fall in the camp that doesn't think the $150 I had to pay for AT&T U-Verse each month was a good value, no matter how many channels I received.  I use U-Verse as an example, but I've compared every offer I get in the mail almost daily and they seem to be close in price regardless of company.  We haven't had cable for several years now and rely on OTA HD broadcasts for the networks and Redbox for movies.  We still have to pay for broadband internet though.

The rallying cry for the cord-cutters is 'give us a la carte pricing and we'll save a bunch of money'.  I'm not sure that's the case, but it sure seems like there is a sizable market out there who are all feeling the same way.  I'm wondering why no company has come up with a model to serve this segments needs.  Who really wants to be hostage to renting the equipment monthly too?

Comcast is trying to merge with TWC, which I am absolutely against.  The link below discusses how some people think the merger will give the combined company the leverage it needs with ESPN and other content providers to finally get prices down to where they can offer a la carte programming.  Whether or not this occurs, I spent more time thinking about whether I am the customer Comcast and all the other cable companies are even trying to serve.  Southwest Airlines was successful because it had a unique value chain with decisions that supported low costs, like no meals or pre-assigned seating, while offering point-to-point service instead of using a hub-and-spoke system.  Herb Kelleher once wrote a letter to a customer who habitually complained about such choices, "Dear Mrs. Crabapple, We will miss you.  Love, Herb" (I think this was in the book Understanding Michael Porter).

Kelleher knew that the toughest decision is how to stand by your choices of whom not to serve.  Cord-cutters are perhaps the most price conscious out there.  Maybe we simply aren't who the cable companies want.  An argument can be made that the cable companies are just being product focused though, and not consumer focused.

They are standing pat knowing there are some key external factors that indicate a shift in the market.  The trend is that people want access to everything on-demand, and will continue to watch sports live most likely.  Additionally, the trend is that people perceive the value they get for cable is sub par.  With streaming capabilities, this market is changing rapidly too.  They may be safe as long as they also provide internet service, because cord-cutters still have to pay them to get entertainment through the computer.  Nevertheless, there sure seems to be an opportunity out there for some company to obsess over us.

http://www.newyorker.com/online/blogs/elements/2014/02/the-real-problem-with-the-comcast-merger.html