For the past few years, the strategy for U.S. carriers looking to retain customers was simple: offer subscribers a slick new handset at no charge. But in today’s transitory market-where profit margins from voice services continue to thin as data revenues just begin to ramp up-giving away fancy hardware is a costly proposition.
So operators have dipped into their bag of tricks to find numerous other ways of keeping customers. Subscribers nearing the end of their term suddenly may receive calls or text messages dangling incentives to re-sign with their carrier.
Waiting until a subscriber’s commitment is nearly complete, though, often means missing an opportunity to retain that user, according to Scott Kolman, director of product marketing for Amdocs, a customer relationship management provider.
“Unfortunately, if you wait until 30 days of the time their service expires, they’re already gone, they’ve already made their decision,” Kolman said. “By the time you talk to them, basically they’re telling you they’re disconnecting your service.”
Instead, operators are trying to cozy up to their subscribers throughout the contract, improving customer care and working to build long-term relationships. And it seems to be working.
A recent study from In-Stat found the average churn rate for Tier 1 carriers dipped below 2 percent this year, marking an 11-percent reduction from 2004 figures. While lengthy hold times and unsatisfacotry call-center conversations continue to plague the industry, operators demonstrated marked improvements in customer-service staffers’ attitudes and in handling billing problems.
Indeed, In-Stat claimed that subscriber satisfaction with customer service “nearly mirrors” their overall attitude toward their carrier. “Customer-service efforts appear to be contributing both to churn-rate reduction-a key factor in company financial performance-and in the reduction of the relative complaint rate,” said In-Stat analyst David Chamberlain.
The improvements come none too soon for wireless service providers. With consolidation whittling the number of major U.S. carriers to just four, customer retention is more important than ever. Big-brand mobile virtual network operators (MVNOs) from Walt Disney Co., ESPN and others are sure to spend vast sums to lure subscribers, and Web giants America Online Inc., Google Inc. and Yahoo Inc. are joining start-ups like Vonage Holdings Inc. on the Internet voice services playground.
As competition heats up, customer service is likely to become more important than ever. Not only must carriers reduce call-center times and handle problems efficiently, they are working to get to know their customers better by tracking usage habits and mobile purchasing patterns.
Armed with such data, a carrier can entice text messagers with a bundled service package, for instance, or users who consistently fall short on their monthly bucket of minutes could be offered less-expensive calling plans. In exchange, users are asked to renew their contracts for another year or two, locking them in for an extended period even as they save money every month.
And instead of viewing subscriber calls to customer-care centers as a hassle, operators can use those calls as an opportunity to re-introduce themselves to their users. Representatives can tout the carrier’s offerings at the same time they handle customer complaints, creating the opportunity to sell new products and services. The two-pronged approach can be far more effective-and far less expensive-than a big-budget advertising campaign.
“What we’re seeing is the ongoing interaction the customer has with a service provider,” said Kolman. “(Carriers are) using every time they interact with you as a way to build their brand, not erode their brand.”
Not that operators are waiting for subscribers to call in with problems. Nextel Partners Inc. uses an automated voice system to reach out to new subscribers, welcoming them to the network. While the calls run the risk of being perceived as a kind of sales call, they can also head off complaints from users who might otherwise suffer sticker shock from their first bill.
“It’s a nice service. It can increase customer loyalty and satisfaction, but there’s a real business reason behind that as well,” said Kael Kelly, director of market management for Par3 Communications Inc., which powers the service. “(Nextel Partners) gets thousands of calls on an ongoing basis from customers who receive their first bill. … In doing the welcome call, what they really hope to do is set the expectation that there are going to be some additional charges.”
The key, according to Steve Tran, vice president of marketing for BeVocal Inc., is to realize marketing and customer service are often synonymous in the world of wireless. A California-based speech-recognition company, BeVocal powers a “Voice Store” for Cingular Wireless L.L.C. that is integrated with a customer-care service. Subscribers can call in to the store to buy insurance for their phones, upgrade messaging packages or check out other premium services.
With the number of U.S. mobile users nearing 200 million, operators have their work cut out for them when it comes to tracking demographics and customizing their sales pitches. But as more players crowd the wireless playground, carriers looking to ramp up data revenues while holding on to their subscribers must take customers by the hand as they offer new services, Tran said.
“Carriers actually have the ability to be creating 190 million advertising campaigns,” said Tran. “They’ve got a ton of user data, they have DRM systems to store all this usage data … but they very rarely tap into any of that.”
