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Comcast Corporation Just Wants To Be Loved

By Leo Sun - May 10, 2015 at 7:20AM

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Can the “worst company in America” fix its customer service problems?

It wasn't surprising when The Consumerist named Comcast (CMCSA 1.18%) the worst company in America last year. After all, the cable giant tried to kill net neutrality, throttled and blocked streaming services, discouraged cancellations with zealous customer service reps, and renamed customers with expletives in bills.

Comcast also nearly acquired Time Warner Cable (NYSE: TWC) in a failed bid which would have given it a 57% share of the U.S. broadband market and a 33% share of the pay-TV market.

Comcast Center. Source: Pixabay.

Comcast is the only company to win The Consumerist's dubious award twice. After it was first named the worst company in America in 2010, Comcast actually begged its own staff to vote "with your heart to tell America that we are proud of our company."

Since that clearly didn't work, Comcast recently introduced a sweeping new plan to fix its tarnished image. First, it announced the creation of 5,500 new customer service jobs as part of a "multi-year customer experience transformation" and said it would give out $20 credits to customers when technicians arrive late. Last November, Comcast also introduced a "tech tracker" app that enables customers to track the location of a technician and rate the experience. Will these new initiatives fix Comcast's disastrous customer service record, or are they too little, too late?

Comcast's core problems
Comcast has several big problems. First, the company is too big to simply "turn around" with new hires and initiatives. Comcast Cable CEO Neil Smit readily admitted that a turnaround would likely "take a few years."

Even without merging with Time Warner Cable, Comcast remains the largest broadband Internet and cable provider in the U.S., which means it doesn't have to worry too much about competition. When big companies don't have to compete aggressively against hungry rivals, there's less incentive to treat customers well.

Unfortunately, there also isn't much incentive to treat employees well. On an "Ask Me Anything" session on Reddit in 2012, a Comcast employee claimed the company had "greedy, manipulative salespeople" and was crippled by "technicians that blame dispatch and a dispatch that blames technicians." Last year, another Comcast employee stated on Reddit that sales reps, who had low hourly pay, depended too heavily on monthly incentives -- based on sales and retention rates -- which produced overzealous employees.

On employer ranking site Glassdoor, only 58% of Comcast employees would recommend employment at the company to a friend. If both customers and employees are dissatisfied, Comcast's entire customer service experience naturally breaks down.

Why Comcast doesn't care
This isn't the first time CEO Brian Roberts declared Comcast would improve its customer service. He made the same promise in 2008.

The sad fact is that being named the worst company in the U.S. hasn't hurt Comcast's finances at all. For proof of this, simply look at the revenue growth of its cable business (which consists of its video, high-speed Internet, and voice services) between fiscal 2010 and 2014:

 

2010

2011

2012

2013

2014

Revenue

$35.3b

$37.2b

$39.6b

$41.8b

$44.1b

YOY growth

5.6%

5.4%

6.5%

5.6%

5.5%

Source: Comcast annual reports.

However, the recent collapse of Comcast's merger with Time Warner Cable was at least partially attributed to poor customer service at both companies. In the University of Michigan's American Consumer Satisfaction Index of 230 household brands last year, Time Warner Cable's ISP ranked dead last with a score of 54 out of 100. Time Warner Cable's TV service and Comcast's ISP barely ranked higher with respective scores of 56 and 57.

In that context, Comcast's pledge to improve its customer service with new hires and initiatives makes more sense. No one wants two companies with terrible customer service to merge, but regulators might let a company with average customer service acquire one with a spottier track record.

Another reason Comcast should improve its customer service is the rise of cord cutting and pure broadband services such as Google (GOOGL 5.11%) (GOOG 5.20%) Fiber. If Comcast doesn't treat its customers well, they might replace their pay-TV plans with streaming-only services.

The key takeaways
Investors should remember two things about Comcast's customer service ordeals. First, poor customer service and bad PR have not weighed down top-line growth at its cable unit at all. Second, Comcast might be taking steps to improve customer service, but it's probably only doing so to improve its reputation for future mergers and to convince potential cord cutters to stay.

 

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