If seems investors think losing customers is good news as long as you are losing less than anticipated. The shares of DISH Network rose after the satellite provider reported only losing 94,000 customers in first quarter 2009 – about 30,000 less than expected.
“But despite the better-than-expected numbers, there was plenty to be anxious about,” said analyst Craig Moffett of Sanford C. Bernstein. “Dish Network’s subscriber base is 1.7% smaller than it was last year. Their revenue growth is now a truly scary 2.1%; it seems likely that they will be a negative growth company soon.”
Dish Network is simply not building its business and, instead, is the victim of one of the worst offensives in marketing. Instead of creating preference for itself, DISH tries to create preference for its satellite TV category – which means the market leader will always win.
Take a look at DirecTV. It just reported 460,000 new net subscribers. That, coupled with DISH’s losses, proves the point. Selling the category is only helping DirecTV.
Quick quiz: Name the provider with the enjoyable and terribly funny commericals that feature the comic group from A Mighty Wind, Waiting for Guffman and Best in Show? OK, now tell me the provider with the spots featuring comic impersonator Frank Caliendo? Could you really tell the difference?
If you answered DirecTV to the comic group and assigned Caliendo to DISH, you’d be right. However, most of us mistake one set of spots with the wrong provider. (Personally, I like the DirecTV spots from an entertainment angle. I laugh my butt off.)
Selling category is a fine strategy for the market leader, but it does nothing to create preference for the rest.
Think about it this way. The beer industry is one of the worst at following the market leader. How many times have you mistaken a Miller ad for a Bud spot? We all have, and so we just believe Budweiser is dominating the market (it is) and, therefore, we choose Bud if we want a mainstream lager.
For their sake, market followers like DISH Network better learn to stop following the leader by the hand before it is too late. Otherwise, they’ll be led right off the cliff.