Comcast: Poor Customer Service

Issue 2: Poor Customer Service (Short-Term)

In 2007, Comcast ranked third on MSN Money’s Hall of Shame for customer service. Poor customer service can not only tarnish Comcast’s brand reputation, an extremely valuable intangible asset, but also hurt its financial strength. To remedy this issue, Comcast can flex one of its sustainable competitive advantages identified in Section 4 and form a strategic alliance with a customer service firm. If no action is taken, revenues can decline, hurting both the net profit margin and asset turnover ratio, major components of the DuPont analysis.

A strategic alliance with a customer service firm would be mutually beneficial for both parties involved: Comcast would improve its customer service and the

Although there may be some upfront costs associated with forming an alliance with a customer service firm, such as increased employee pay, severance packages for employees let go, and overall fees paid to the customer service firm, the offsetting increase in RGUs and ARPUs should more than offset the extra expenses incurred. More importantly, Comcast’s brand reputation can increase with its current and potential customers. This should be the main goal of the implementation plan. A scalable monetary award could be given to the new and existing employees of the customer service department if metrics improve by predetermined

Cable companies spend billions of dollars each year on items such as infrastructure costs, programming costs, technology development costs, mergers and acquisitions, and interest costs (mentioned in Section 3). Typically, the cable markets companies have no choice but to pass on the costs to consumers. However, as identified in Section 2, the demand for cable industry products is elastic, stemming from the fact that consumers are extremely price sensitive; increasing costs could hurt Comcast’s growth and ability to remain retain customers.

Programming costs alone have grown 115% from 1996 to 2002, increasing an average of 23% per year. Cable network providers usually charge a fixed contract cost as well as variable fees depending on how many subscribers purchase their programming. This price increase has been passed on to consumers by the cable markets companies. As a result, demand for substitute products and services such as Hulu, iTunes, and Netflix have grown