More than half of customers are not satisfied with the service from their carrier; providers are looking at a less-competitive space due to recent mergers.
Posted Jan 10, 2005
Wireless carriers are known for trying to attract customers with promises of better plans for lower prices than their rivals, but, according to Consumer Reports' annual cell phone report, the level of service that these providers are delivering is so low it misses the mark with customers. The overall satisfaction index increased just one percentage point in the past three years to 66 percent, and overall satisfaction levels for wireless carriers are lower than most of the other services that the publication rates, including hotels, retail outlets, and insurance.
According to the survey, which was conducted in September 2004 and is based on responses from more than 39,000 subscribers in 17 cities to the Consumer Reports Web site, less than half of the respondents--45 percent--said they were completely satisfied or very satisfied with their cell phone service. Nearly 70 percent of respondents who use a cell phone often have had at least one dropped call in the week prior to the survey, and almost 60 percent reported having a bad connection.
David Heim, deputy editor at Consumer Reports and editor of the study, credits the providers' poor showing to their focus on expanding their customer base instead of nurturing existing relationships. "The companies will have to start taking better care of the customers they already have, rather than focus just on getting new customers, because the cost of getting new customers will become too high," he says. "It's easier and cheaper to [keep the customers you have] than to spend a fortune on looking for new customers."
A mere 31 percent reported that their company's response to a service inquiry was very helpful, and just nine percentage points more reported that billing inquiry responses were very helpful. "When you look at customer relations 101 issues," Heim says, "the companies just aren't doing as good a job as they could." Perhaps even more worrying for the cell pone industry, 35 percent admitted to seriously considering switching carriers, and most of those customers who had already made the switch said they were in search of better service.
As it did in the past two surveys, Verizon Wireless earned the top spot in each of the 17 cities, but, in most of the cities, T-Mobile was just a few points behind or in a tie with Verizon. Verizon's top ranking, however, does not translate into headache-free service. "What our survey people tell me is it's not that Verizon is great, it's just that it comes up with somewhat fewer problems than the other carriers, and because of that it tends to rise to the top," Heim says.
Heim doesn't expect the recent spate of mergers to make customers' experiences with their cell phone providers any better. In fact, he says, the Cingular and AT&T merger and the upcoming merger between Sprint and Nextel are probably not going to be in consumers' best interest. "Fewer companies competing for your business corresponding [with] less competitive pressure to keep rates down to do a better job of taking care of customers is just less incentive to do those things," he says. "The cell phone industry has for years touted the highly competitive nature of that business as a reason why it doesn't need a lot of government regulation. Well, its not such a competitive place anymore, and so the industry is going to have to find a different song to sing."
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