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Virgin Media's impressive customer advocacy turnaround

At last week's Net Promoter conference in Europe, Virgin Media CEO Neil Berkett described the NPS journey taken by his company.  It is an impressive story, and one worth paying attention to for anyone considering heading off on such an odyssey.
Starting life as 42 different cable franchises, Virgin Media was formed through a series of mergers and acquisitions over many years.  The company’s NPS journey actually began back in 2005-2006, when Berkett was COO of the latest combination – what was then called ntl:Telewest.  Working with a team from Bain & Company on a series of issues related to the mergers and cost reduction, Berkett was introduced to the Net Promoter concept and approach by the Bain team and became fascinated.  As COO, he determined that he wanted to start measuring Net Promoter Scores in all the company’s businesses.  Moreover, he wanted to implement the Net Promoter approach to closed loop feedback to make it more than a metric and introduce it as an operating discipline.


The core problem he was attacking:  In a business that had been growing largely through consolidation, organic growth was becoming harder and harder to achieve.  While the company had an outstanding network and cable infrastructure with significant potential cost and quality advantages, net growth of subscribers was becoming more and more difficult to achieve in a profitable way.  The economics of the business were under extreme pressure.  “Our number one problem was that we didn’t keep our customers long enough.  We used to lose 1.8% of our customers each month.  At that rate it is incredibly hard to grow,” he said at the Net Promoter conference.

Unfortunately, Berkett didn’t have the full support of the CEO and the rest of the management team for addressing the churn and customer advocacy issues he had identified.  While metrics and measurements were successfully put in place with help from Satmetrix, operational changes, policy changes and the other actions required to make a dent in customer churn rates simply were not prioritized.  Berkett was frustrated.  The lesson he learned was simple.  “If the drive to improve advocacy is not from the very top, you will fail.  I was COO, and my boss didn’t buy in.  We only made progress once I became CEO.”

The capstone in NTL’s growing cable empire was put in place in 2006, when NTL completed the acquisition Virgin Mobile and the Virgin brand.  In early 2007, the company rebranded all its services under the much more recognizable and aspirational Virgin brand.  On the day after the rebranding, with no changes in the operations of the business beyond new signage and advertising, the company’s customer feedback scores dropped precipitously.  Customers, it seemed, had much higher expectations for anything branded Virgin than for the old conglomeration of cable brands.

Neil BerkettOnce appointed CEO in 2008, Berkett re-dedicated the organization to pursuing customer advocacy after the acquisition had been consolidated.  “We decided NPS was the appropriate tool at the heart of our balanced scorecard.  There is a direct relationship between NPS and revenue growth and lower costs.  But you can’t just measure.  You have to fix,” he said.  "Just implementing NPS doesn't change the way you are running the business."

The results have been impressive.  Churn has been almost cut in half, to an industry leading 1.1% per month.  And the company is on firm financial footing.

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