Charter 2006 Annual Report Download - page 23

CHARTER COMMUNICATIONS, INC. 2006 FORM 10-K
Each division has a divisional president and is supported by corporate office and our field offices, which make local decisions
operational, financial, legal, customer care, marketing and engi- as to when and how certain marketing programs will be
neering functions. implemented. We monitor customer perception, competition,
pricing, and service preferences, among other factors, to increase
CUSTOMER CARE our responsiveness to our customers. Our coordinated marketing
activities involve door-to-door, telemarketing, media advertising,
Our customer care centers are managed centrally, with the e-marketing, direct mail, and retail locations. In 2006, we
deployment and execution of care strategies and initiatives increased our focus on migrating existing single service custom-
conducted on a company-wide basis. As a result of facilities ers into multiple service bundles and launching our telephone
consolidations that occurred in 2006, we have seven customer service.
care locations, compared to the thirteen locations at Decem-
ber 31, 2005 and have launched technology and procedures PROGRAMMING
resulting in the seven locations being able to function as an
integrated system. We believe that consolidation and integration General
of our care centers will allow us to improve service delivery and We believe that offering a wide variety of programming
customer satisfaction. influences a customer’s decision to subscribe to and retain our
We provide service to our customers 24 hours a day, seven cable services. We rely on market research, customer
days a week, and utilize technologically advanced equipment demographics and local programming preferences to determine
that we believe enhances interactions with our customers channel offerings in each of our markets. We obtain basic and
through more intelligent call routing, data management, and premium programming from a number of suppliers, usually
forecasting and scheduling capabilities. We believe that through pursuant to written contracts. Our programming contracts
continued optimization of our care network we will be able to generally continue for a fixed period of time, usually from three
improve complaint resolution, equipment troubleshooting, sales to ten years, and are subject to negotiated renewal. Some
of new and additional services, and customer retention. program suppliers offer financial incentives to support the
We are committed to making further improvements in the launch of a channel and/or ongoing marketing support. We also
area of customer care to increase customer retention and negotiate volume discount pricing structures. Programming costs
satisfaction. Accordingly, we have certain initiatives underway are usually payable each month based on calculations performed
targeted at gaining new customers and retaining existing ones. by us and are generally subject to annual cost escalations and
We have increased efforts to focus management attention on audits by the programmers.
instilling a customer service oriented culture throughout our Costs
organization, and to give the customer service areas of our Programming is usually made available to us for a license fee,
operations resources for staffing, training, and financial incentives which is generally paid based on the number of customers to
for employee performance. whom we make such programming available. Such license fees
We have agreements with three third party call center may include ‘‘volume’’ discounts available for higher numbers of
service providers. We believe these relationships further our customers, as well as discounts for channel placement or service
service objectives and support marketing activities by providing penetration. Some channels are available without cost to us for a
additional capacity to respond to customer inquiries. limited period of time, after which we pay for the programming.
We also utilize our website to enhance customer care by For home shopping channels, we receive a percentage of the
enabling customers to view and pay their bills online, obtain revenue attributable to our customers’ purchases.
useful information, and perform various equipment troubleshoot- Our cable programming costs have increased in every year
ing procedures. Our customers may also obtain support through we have operated in excess of customary inflationary and
our on-line chat and email functionality. cost-of-living type increases. We expect them to continue to
increase due to a variety of factors, including annual increases
SALES AND MARKETING imposed by programmers and additional programming, includ-
In 2006, our primary strategic direction was to accelerate the ing high-definition and OnDemand programming, being pro-
rate of revenue growth by increasing our investments in vided to customers. In particular, sports programming costs have
marketing, sustaining these higher investments throughout the increased significantly over the past several years. In addition,
year, and implementing targeted marketing programs designed contracts to purchase sports programming sometimes provide
to offer appropriate bundles of products to the appropriate for optional additional programming to be available on a
existing and potential customers. Marketing expenditures surcharge basis during the term of the contract.
increased by $38 million, or 27%, over the year ended Federal law allows commercial television broadcast stations
December 31, 2005 to $180 million for the year ended to make an election between ‘‘must-carry’’ rights and an
December 31, 2006. We expect to continue to invest in targeted alternative ‘‘retransmission-consent’’ regime. When a station opts
marketing efforts in 2007. for the retransmission-consent regime, we are not allowed to
Our marketing organization is intended to promote interac- carry the station’s signal without the station’s permission. Future
tion, information flow, and sharing of best practices between our demands by owners of broadcast stations for carriage of other
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