This week, the CEO of Eircom resigned.
We have not been told why, but the media have speculated that it is because Herb Hribar was unable to deliver a successful IPO for Eircom. The Irish Times on 20th & 24th September speculated that the IPO was postponed because Eircom, despite an aggressive approach to cost reduction but they have also fundamentally failed to grow revenues. While the IPO may have been the reason, I agree with the Irish Times that it may have been because for two years Eircom failed to grow revenues.
So why have Eircom not grown revenues? Could it be that Eircom’s marketing has not delivered? While it might seem unfair to single out marketing, when we look at the role of the various functions within a business, it is the role of marketing to make money for the business. This is common sense and it is not just my belief, but it also supported by Prof. Byron Sharp author of How Brands Grow, Dunn and Hallsall in their book, The Marketing Accountability Imperative and Les Binet and Peter Field in their reports Marketing in the Era of Accountability and The Long and the Short of it.
I have watched Eircom reduce the pricing of their bundles from €45.00 (broadband and home phone) to a current price of €24.00 and still their revenues have continued to slide. So if reducing prices is not working and despite the use of TV, Radio, DM and door to door sales to support these reductions, why aren’t Eircom’s revenues growing?
If Eircom has some underlying problems with its product offering then that might explain it, but that can only be discovered by customers, once they have bought it. If revenues are not growing, even with the price reductions and new product offerings, it is because people just don’t want Eircom.
The question then is, how will Eircom persuade customers to want them? If I were to try and answer this, it would be pure speculation and as Sherlock Holmes said “to speculate without data is a capital offence”. So does the answer reside in the data that Eircom has gathered over many years? I believe so and I also believe and that it is also in their messaging.
So, now that the Herb Hribar has resigned, will the interim CEO take his marketing function to task and ask them to guarantee that Eircom’s marketing spend will grow revenues and deliver profitability for the company? If he’s not prepared to do this, then he too might reign over a further decline in Eircom’s revenues or he could change things and cash in his share of the €35 million that has been set aside for the group’s senior executives to share under the terms of a management incentive plan.