Customer confusion over wireless rate plans and services is costing wireless operators $3 billion per year due to increasing customer churn and harmed brand relationships, according to a consumer survey from brand strategy company Siegel & Gale. The survey, which was part of the company’s latest Perplexity Poll, found that major wireless companies’ communications generate confusion, lack of clarity and simplicity, and test poorly for comprehensibility.
“Wireless companies waste billions of dollars as a result of confusing communications and marketing practices,” said Alan Siegel, chairman of Siegel & Gale. “There is a huge ‘clarity opportunity’ for a wireless company to gain significant market share by providing clear and simple information about their calling plans, billing, pricing and services.”
The survey included 1,050 respondents aged 18 and over and asked them to respond to questions after reviewing images and calling brochures from Cingular Wireless L.L.C., Verizon Wireless, Sprint PCS and T-Mobile USA Inc.
The survey found that roughly one-fourth of wireless customers rated the information produced by carriers “below average” or “poor” for being easy to read and understand. The survey noted that 25 percent of respondents who changed wireless plans this year cited “confusion” over calling plans, bills and services as their primary reason for switching. Nearly one-third said they “will not” or “might not” stay with their current wireless provider when their contracts expired due to “confusing information,” while 69 percent said they “would never sign up with another wireless phone service provider that does not provide information that is easy to read and understand.”
The survey also found that 75 percent of respondents claimed to have contacted their wireless providers to obtain information, assistance or to resolve a problem, with 38 percent of them citing “a question or problem related to their phone bill.”
Sprint PCS garnered the most criticism with 56 percent of those surveyed saying they “would definitely or probably not subscribe to Sprint” after viewing the calling-plan brochure. Just over half of those surveyed came to the same conclusion for Verizon Wireless, while Cingular and T-Mobile USA turned off 39 and 38 percent of respondents respectively.
Sprint PCS did much better in customer comprehension of its pricing plans with 68 percent of those surveyed correctly answering the test question, followed by 57 percent for Verizon Wireless, 46 percent for Cingular and 33 percent for T-Mobile USA.
“These results crystallize the problem facing wireless companies,” Siegel explained. “While there are factors that might influence the responses, such as previous experience as a customer of one of these companies, the fact remains that large percentages of people rejected these wireless firms based on what should be their easiest-to-understand communications piece.”
Siegel added that carriers need to work on simplifying their offerings by reducing the number of options that are offered to customers, noting that seven or more calling plans with numerous services and features create “paralyzing, not helpful, choice.” Siegel also recommended that carriers “eliminate buzzwords and contrived marketing jargon,” citing “adjustable anytime minutes” and “within network” as not intuitive phrases.
In addition, the survey noted that carriers should translate calling-plan costs into unit pricing that allows customers to easily compare the cost per minute under each plan within and across companies, and summarize a customer’s service profile in a monthly bill to remind the customer of the features and parameters of the calling plan.
“The lesson from the Perplexity Poll is unequivocal: Wireless companies that provide clear and simple information will establish meaningful brand differentiation, create stronger and longer customer relationships, decrease churn and increase revenues,” Siegel said.
