Wireless carriers must nurture existing customers, not just focus on attracting new ones.
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Few industries can get consumer blood boiling quite like the wireless market. With acquisitions, including AT&T Wireless/Cingular Wireless and Sprint/Nextel still fresh in the minds of wireless watchers, industry pundits are examining where consolidation leaves customers.
Sean Hackett, a senior analyst at Yankee Group Research, states that internal integration issues following a consolidation hamper a provider's ability to service customers. "You can almost expect a year or two of them trying to figure how these two things work before they really get out in front of the customer."
Compounding the problem is number portability, which has heightened competition among wireless carriers. According to Mike Couture, vice president of marketing at Amdocs, carriers are responding with a new, more customer-focused strategy. "We are seeing a major shift toward integrated customer management with the goal of building an agile business, aligned across services and channels, thereby winning the battle for the customer by creating the best experience," he says. "Carriers that achieve this first will win and keep the best and most profitable customers."
A major sore spot for customers, however, is the industry's focus on growing its customer base rather than developing existing relationships, according to Martha Rogers, Ph.D., founding partner of Peppers & Rogers Group. Part of the problem, she says, stems from wireless providers' incentive structure centered on rewarding agents for bringing in new customers and not keeping existing ones.
Consequently, "almost anybody that has a customer base will tell you that it's cheaper to retain a customer than it is to acquire a new one," says Charles Golvin, principal analyst at Forrester Research. And while he says that Sprint has been fairly aggressive in trying to appeal to existing customers with initiatives including price reductions on new phones as contracts approach expiration, mobile phone users "see very heavy promotion around new phones and new capabilities marketed toward nonsubscribers, but if they want that new phone they have to pay the full [rate]." According to Couture, carriers are moving from an emphasis on new additions to a more balanced approach where keeping and growing profitable customers is a central goal.
Lisa Pierce, a vice president at Forrester Research, maintains that with greater focus on customers the major providers will begin to appreciate how important customer retention and satisfaction are to generate profitability. "The light is slowly beginning to dawn."
J.D. Power and Associates releases its latest findings on the popular (and growing) side of the telecommunications industry.
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