Monday, April 26, 2010

It's only just begun

To date, analyists and stockholders have appreciated that RCI has been able to generate ROI. This is understood to be a result of a number of factors, among which is the position of being the sole nation-wide GSM carrier. This position has provided a competitive advantage that has served the stockholder well. And, it's about to evaporate. Will it take profits along with it?

Bell/Telus' entrance into the nationwide GSM space was highly anticipated, providing a new faucett of supply to a thirsty demand.

The fundamental questions that are being asked are
  • do Rogers wireless customers choose Rogers because they want to, or because they must (in order to get GSM)?
  • when wireless customers can get nation-wide GSM service from somewhere other than Rogers, will they stay with Rogers or explore other GSM service opportunities?
  • would Rogers current reputation prompt a non-Rogers customer to try Rogers if there are alternatives?
I think the answers to the above question pose a serious problem for RCI stockholders. If my reading of the2008 Annual Report is clear, Wireless represents over 55% of revenues and nearly 70% of operating profit. If Rogers' market share is slashed by 40%, what will that do to the bottom line?

It is time Rogers took very seriously the issue of its poor brand image and customer service.
Rogers is a telecommunications company purporting to be a leader in the field. For a company that makes its living in the telecommunications sector, Rogers should be bringing industry leading technology and functionality to the consumer in a way they can understand. Using Rogers on-line services is an exercise in frustration - just ask the many customers who don't bother, and choose rather to subject themselves to the abhorrent service on the phone.

If customer dissatisfaction is not motivation enough, at what point does professional pride compel Rogers to step up and take the lead in more than just generating revenues out of a disenfranchised customer base?
Pricing, features, PR and customer service are all areas that can become selling points to attract and retain customers - on these points, frustrated customers are looking to the competition in hope for available alternatives.

It is unfortunate that such an initiative would appear to be put in place as a reaction to the impending competition and dilution of supply. Brand care and customers service should be a pro-active part of any company's expression of appreciation for the customer base; if in fact showing appeciation to the customer is a priority.
This cannot be a band-aid, short term, narrow approach. Company-wide, Rogers needs to shift sufficiently that jaded customers can tangibly feel a marked improvement in how they are treated, as well as what procucts and services are available.

It is time for Rogers to adapt. The challenge is to refocus the company to a position of strength not propped up by competitive advantage due to a lack of competition. Strong companies thrive in the midst of competition by being better than the competitors, not by being the only game in town. Now that there will be other offerings, Rogers should see this as an opportunity to show what makes the Rogers offer better. If you've turned off your customer base, they won't even be able to hear you when you tell them, so you've got to show them. Show them clearly, consistently, passionately, sincerely.

We are living in times when companies who previously enjoyed stability and market share crumbled beneath our feet (I need not cite examples, you folks are bright and read the news). It is incumbent upon Rogers, as leaders, to humbly recognize that "IT CAN HAPPEN TO EVEN YOU." One of the mistakes these companies invariably have made is living under the delusion that they were "too big to fail". Such is not truth, neither for them, nor for Rogers.

Maybe the angle of attack is to slash pricing to stabilize the market - the new guys need to make a return on their investment; if you use some of your cash to make offerings rock-bottom priced, you'll keep a decent share. You've got the cash, this may be the right time and right way to use it. However, if customers are leaving regardless, dropping prices won't about dropping prices on existing customer agreements...? Yeah yeah, you've got a contract. So, how do you add value to existing customer based out of cash reserves/war chest?

One recent update to Rogers strategy is to add distribution, by selling through Shoppers Drug Mart. What I find particularly interesting is this move is ostensibly in response to "customers telling us they want more choice in where they acquire Rogers and Fido products." Of all the things Rogers decides to listen to from customers, it's more choice in where to acquire products? Yeah, right, that's a real priority for all the customers who already have a phone and just want decent service. Sheesh.

This isn't fooling anyone - it's merely an attempt to boost new subscriptions, to retain that precious market share. But it doesn't speak to the issue of customer service at all.

Last observation - it was quite easy to find all kinds of coverage of this big news of selling through Shoppers Drug Mart. Finding news on the profit drop or the drop in new subscriptions (adding a mere 109,000 new contract subscribers last quarter, down from prior year's 158,000 and even below analyst's expectations of 145,000 additions).

This would be like GM adding new dealerships to try and maintain sales. You know GM, the company that lost over $60 billion dollars in an 18-month period before finally declaring bankruptcy? For a number of reasons, this shouldn't happen to Rogers...but then, look what happened to Bell.