Responding to customers in the digital world

Transcription

1 THE CLOUD RETAIL WEEK CONFERENCE Responding to customers in the digital world Thank you Declan. I m delighted to have the opportunity to speak to you this morning, and in particular to follow Marc. How to respond to customers in the digital world is a question that has been central to our thinking at Sky for a number of years. It has fundamentally changed the way we offer our products, the way we sell them and the way we engage with our customers. I ll explain how in a moment but first, I thought I d set out our own retailing credentials. Sky may not be the first retail brand that springs to mind but I d argue we re one of the UK s biggest retailers, with over 10.5 million households subscribing to our services and a daily footfall to our channels of over 22 million individuals. We ve actually never thought of ourselves as a broadcaster in the traditional sense. What makes us unique is the direct retail relationship we have with the customers who use our services. Unlike channels like ITV whose clients are its advertisers, our customers are made up of individual households making a positive choice every single day. And we compete against the very broadest range of entertainment choices whether that s picking up a DVD with the supermarket weekly shop, buying a new ipad or a family night out at the cinema. So like any retailer, we compete on the basis of the range, quality and price of the services we offer. Compared with many, we re a pretty young business. I don t know if you remember what it was like back in 1989, when Sky first started. 1

2 Four terrestrial channels. News bulletins were only at six or nine o clock. A few films, interrupted by adverts or sometimes split either side of the news. And there was the occasional bit of live sport in fact, in the whole of the year before Sky started showing Premier League football, just 11 matches were shown live on TV that s less than one a month. We were alone in our industry in believing that consumers wanted, and would pay for, more choice. And that same retail mind-set of wanting to give our customers the very best TV experience has meant that we ve continued to get better every day since. So we were the first to bring the higher quality digital TV to the UK. We allowed our customers to take control of the schedule when we introduced Sky+. We invested early in high definition because we saw its potential to substantially improve the viewing experience. And along the way, we took the chance to transform broadband and telephony, becoming the UK s fastest-growing home communications provider. So we ve never settled for the status quo. We understand that the biggest risk to our business is complacency. For us, Believe in Better isn t just a marketing slogan; it s fundamental to the way we run our business. One of the measures of our success is that we ve now sold almost 27 million subscription products. To give a sense of scale, that s a rate of one every ten seconds over the last year. 2

3 So, to come back to the question of how we re responding to customers in the digital world, there are two areas that I want to cover: - the changes we ve made to the way we offer our products; - and the new ways that we sell to, engage with and understand our customers. Although what we offer at Sky has changed profoundly over the years, that s not to say that some things haven t remained the same. At our heart, we ve always been a content business. We never forget that the reason why customers choose Sky, and stay with us, is for a better choice of programmes. So, Sky Sports will always be the place to watch the best live coverage of the biggest sporting events from Premier League football and the Champions League to all of England s test matches and golf tournaments from around the world. Sky News is the UK s leading 24-hour news channel, as evidenced by recent awards for our coverage of Libya. Sky 1 combines award-winning comedy and drama with the best entertainment shows from the US. Sky Atlantic is the UK home to HBO and smart, quality dramas like Boardwalk Empire, Game of Thrones and, in under two weeks time, Mad Men season five. And our newest channel, Sky Arts, attracts more than two million viewers every month to watch the very best of the arts from here and around the world. A key part of our strategy is significantly increasing our spend on original, home-grown content. We re on track to increase our annual spend on UK programmes to 600 million by And by directly employing around 2,500 people purely in production and broadcasting 3

4 roles with thousands more employed indirectly we re making a significant and growing contribution to the UK creative industries. Now, just as the death of the high street is repeatedly overstated, so too is the death of traditional TV. Today, more TV is being watched than ever before. The average viewer still watches a record four hours and 2 minutes of TV a day. And even year olds are watching more than they were three years ago. More people are switching to Pay TV. And the UK recently crossed the point at which there are now more people watching TV via satellite than via an old-fashioned aerial. So we have an attractive and growing business. But we also know that to remain successful, simply doing what we ve done in the past won t be good enough. The advent of digital has seen a dramatic shift in the types of devices that our customers are using. If you look at a typical Sky customer s home today, it has an average of just under three TVs and in three quarters of those homes, the living room set is now high definition. The majority 57% - have at least one smartphone and 11% a tablet, with many more intending to purchase one this year. So, with more devices that have better screens and are connected to higher bandwidth, customers have never had more choice about how they consume content. We ve had to respond to these trends. So we ve made our set-top boxes broadband-connected to deliver an on-demand service that allows customers to watch their favourite shows whenever they want. 4

5 And we ve also introduced a new mobile service Sky Go that allows them to watch TV wherever they are on a smartphone, tablet, laptop or via a games console. Within six months of launch, over 1.5 million people are using this service every month more than the combined populations of Birmingham and Liverpool. And because mobile video usage is very bandwidth hungry, we ve partnered with the UK s leading Wi-Fi provider, The Cloud, to give users a better experience, as well as increasing the dwell time and average customer spend in a range of high street venues. Digital also allows us to do more with the content itself. This weekend, the Formula One season begins in Melbourne. It s a new sport for us and we want to give it the full Sky Sports treatment. So now, instead of 2 hours of live race coverage on a Sunday afternoon jammed between the BBC Politics Show and Songs of Praise, we ve launched a dedicated new channel Sky Sports Formula One HD. We ve put together a brilliant team including fan favourites Martin Brundle and Damon Hill alongside Sky talent Simon Lazenby and Georgie Thompson. Because the race is only part of the story, we ll show as many hours of live coverage from Melbourne as viewers were able to watch during the first five races last season. And to enhance the TV experience, we ve launched a new companion tablet app called F1 race control, which allows customers to immerse themselves in all of the action. We think it s a big step forward for F1 fans. So, I ve talked about how digital has changed both content and platforms. At the same time, we have changed and adapted the ways we sell to and engage with our customers in the digital world. 5

6 We ve long had our own retail presence in shopping centres across the country. We have almost 300 stands, passed by a total footfall of over 40 million a week. And this performs an irreplaceable role of being able to see, touch and experience a product first-hand, which is particularly important with products like HD and 3D. But we re also seeing a big shift to online. Online is consistently our largest sales channel, generating a third of all sales to new and existing customers. Last year, that meant over one million products were sold online. We ve applied digital to billing too, with over 99% paying electronically. And next month, we re launching a new customer service mobile web site, which will allow customers to view their latest bill and manage their Sky account from their phone. But the best illustration of our transformation is that when we launch new services, digital is now hard wired in at the design stage. So for example, the only way to set up Sky Go is online. As well as more digital transactions, the nature of the conversations we have with our customers has also changed. Customers increasingly want to use , social media and forums. That s a challenge as it makes communication so much more immediate and customers expect our responses to be just as quick. But it s also a great opportunity to improve our customer service by communicating in the ways that our customers prefer. We already use social media to connect with our customers and tell them about what we re doing. Just to give you one example, Sky Sports has over 1.3 million Facebook fans. We re also using Twitter and Facebook to answer questions about our services. 6

7 Over the past year, we ve seen a steady increase in the use of forums there are over million thread views every week. And after just five years, Ofcom ranked Sky as industry leaders for customer service in pay TV, fixed broadband and landline. Finally, one of the digital dividends is that we can develop a greater understanding of our customers. By increasingly engaging them through digital platforms, we can learn more about them and about their habits. Our customer insight department is called Sky IQ. It brings together data from hundreds of different sources, consolidates this in to a single, intelligent view of our market and then uses that knowledge in an effective way. And it means we can predict with a high degree of certainty which products should be promoted to which customers, as well as how and when to communicate with them. So that s how we re responding to customers in the digital world at Sky. While we re often still referred to as a satellite broadcaster, the truth is that, in the digital world, we now do so much more than that. It has changed the way we offer our products. And it has meant we re now selling to, engaging with and understanding our customers in different ways. I don t say that we re the best. We re still learning ourselves every day. But we re committed to it because we know that our ability to respond will be a crucial factor in our future success. Thank you. 7