The Adelphia Story

A communications company leverages its relationship with a local sports team

IT’S HARD TO BEAT HOCKEY FANS’ relentless devotion. New York Rangers fans still use an unprintable chant about defenseman Denis Potvin, who retired from the rival New York Islanders more than a dozen years ago. Detroit Red Wings fans have been hurling boiled octopi onto the ice since 1952; the eight tentacles commemorate eight playoff games hockey teams needed to win to get the Stanley Cup at that time.

In the cable arena, consumers’ approach to loyalty seems almost diametrically opposite. With an industrywide annual churn rate of 25%, defection is often as imminent as the customer’s next billing statement.

Adelphia Communications Corp., a Coudersport, PA firm, offers cable, local and long-distance phone, Internet and home security services, among others, to 5.2 million subscribers in the Great Lakes, New England, mid-Atlantic and Florida markets. But the Rigas family, which controls Adelphia, also owns the Buffalo Sabres hockey franchise, allowing top-level executives to see both ends of the customer loyalty spectrum.

The trick, as Adelphia’s Buffalo-area regional vice president of marketing John Cimperman sees it, is to attach the customer emotionally to a product. Cimperman is also executive vice president of marketing for the Sabres. As a result of his wearing these two hats, he decided to create a program that appeals to customers of both Adelphia holdings.

“You never see a return on fan card programs,” he says. “The best teams only have 10,000 season ticket holders. The economies of scale aren’t as great when you’re talking about that quantity. We can amortize this [program] over a million and a half people. “

Cimperman developed Adelphia Awards, a marketing program begun in January 2000. It’s helped the company realize three goals: reducing churn, gaining a larger portion of each customer’s wallet, and building a marketing database that would contain customer profiles and demographics, as opposed to the billing file the firm had been using.

Adelphia appended a dozen household-level demographics, such as presence and ages of children and ownership of a satellite dish, to its marketing database. This allowed the company to build a model, based on household income and the services each home uses, that predicts upsell potential.

The cable provider figures that it has between 40% and 50% of any household’s share of wallet for all the services it offers. Since monthly service charges can range from $20 for basic cable to nearly $100 for a full suite of options, an increase of a few percentage points among all its members represents a substantial revenue jump.

Adelphia Awards is a points-based rewards program, with a magnetic strip card serving as the main recording medium. Rewards include branded merchandise, such as Disney toys, attendance at invitation-only events like fashion shows, or luxury suites at sporting events.

Members can earn points by purchasing services, responding to offers, or through raffles. Because Adelphia has tied the program to Buffalo’s HSBC Arena, where the Sabres play, it can collect activity data through the card.

Carlson Marketing Group, the Minneapolis firm that designed Adelphia Awards, placed eight kiosks around the arena. Awards members can swipe their cards at these booths, earning points; they also receive instant printouts promoting cross-sell and upsell offers.

While the kiosks are not online, they do contain data banks that are updated every two or three days from Adelphia’s marketing database. This reduces the likelihood that a customer will receive a solicitation for a service he or she has already used.

Adelphia can also employ the booths to capture behavioral data throughout the year as the arena hosts a variety of programs, such as concerts or “Disney on Ice” shows.

If an Adelphia Awards member swipes the card at several Buffalo Sabres games but isn’t a season ticket holder, the marketing database will eventually print out a solicitation for a limited season ticket plan, which is sent to the individual.

For customers who return to the arena on subsequent days, the kiosks can be programmed to make different offers, such as changing services presented or rewards offered, even if the booth hasn’t been updated. This way, the company can capture the most appealing offers (such as free phone cards, extra points or sweepstakes) on a person-by-person basis.

The kiosks will also display the Sabres’ buffalo head logo with steam coming from its nostrils if a customer tries to swipe the card more than once in a single visit.

“The kiosks are a nice way to reach people without being intrusive,” says Jon Von Rentzell, Carlson Marketing Group’s director of account development in the loyalty division.

Portable versions of them were featured at the Erie County Fair, which draws between 1 and 2 million people to Hamburg, NY – right in the heart of Adelphia’s service area. The fair allowed the company to obtain behavioral data, and proved an effective marketing vehicle for its services.

Because the magnetic strip carries individually identifiable data, the kiosk’s display panel can welcome members to the arena by name when it tells them how many points they’ve earned. According to Von Rentzell, program members have a positive reaction to being personally recognized.

Among the half-million Adelphia subscribers in the Buffalo area, 170,000 are Adelphia Awards members. Of these, 120,000 were automatically placed in the program based on their level of service use, or the fact that they subscribed to any Adelphia service. Six thousand Sabres season-ticket holders were added as well.

The other 50,000 people have either asked to be enrolled or had some sort of contact with the company, either by swiping their card or calling the customer service department.

Adelphia refers to these members as “engaged.” They demonstrate a higher rate of return on the program. According to Cimperman, those who were automatically enrolled spend, on average, 50 cents more per month than those not enrolled. But engaged individuals spend 80 cents more.

They’re also less likely to churn. The customers the company auto-enrolled who aren’t engaged still break their relationship with Adelphia at a 20% to 25% rate. Engaged customers who’ve had any communication with Adelphia are half as likely to leave. Furthermore, those who have swiped their card at least once are half again as likely to churn out as engaged customers who haven’t.