Industry estimates show that 3.5 to 4 percent of all wireless subscribers switch carriers each month, a significantly higher number than found in similar industries like Internet or cable services.
Posted Aug 11, 2003
The wireless telecommunications industry has consistently been one of the most highly competitive industries, as technical advancements lead to increased service offerings including video phone services, multimedia messaging services (MMS), and short messaging services (SMS). With multiple carriers offering services in each market, competition to retain existing customers is as high as competition to obtain new customers. The recent FCC decision to force carriers to allow customers to keep their phone numbers even if they switch service providers will only increase competition and customer churn.
It is believed that dedication to a specific phone number--not brand loyalty or service excellence, has been the leading reason more customers do not switch wireless carriers each year. As it is, industry estimates show that 3.5 to 4 percent of all wireless subscribers switch carriers each month, a significantly higher number than found in similar industries like Internet or cable services. As the industry gears up for the new phone number mandate, which will take effect in November 2003, the industry has to embrace enhanced customer service in order to increase brand loyalty and ensure customer churn does not increase.
Technically advanced services (often referred to as 2.5G or 3G services) like Web access, the ability to send and receive photos, and SMS are no longer carrier differentiators in and of themselves. Most carriers can or will shortly offer these services. Reception in most markets has increased so significantly over the past few years that network service is also no longer a strong differentiator.
In the past the high churn rates within the wireless industry had forced many carriers to focus on attracting new wireless adopters, or stealing customers from other service providers, a smart plan when the wireless industry was young. Today, the Cellular Telecommunications and Internet Association (CTIA), estimates that there are 140 million U.S. cell phone owners, about half the U.S. population, leaving little room to attract new customers. The near-market saturation, widespread availability of "cool" technology, and upcoming legislation impels carriers to focus on growing brand-loyal customers. The large carriers must look to customer service as the most important way to build brand loyalty among cell phone users. Effective, fast, and accurate customer service will ensure that customers do not jump service providers, and take their phone numbers with them, just to get 500 more minutes and save $5 a month.
Building the Brand Loyal Customer
According to industry figures, more than 75 percent of Internet users own wireless handsets, linking the two groups closely, and making the Web the front line of customer service for wireless carriers. Industry figures show that the Web is the most cost effective form of customer service. Online self-service costs pennies per transaction, and email less than $2, while phone support costs upwards of $15 per transaction. Not only is it cost-effective, it is also the preferred method of accessing customer support for many Internet savvy wireless customers. As a result, a complete, accurate, and effective online customer support system is key to building a successful customer relationship in the telecom industry.
As service offerings are continuously enhanced, and special offers are created almost weekly, its important that customers, both new and old, can find accurate and up-to-date information via the Web. This is increasingly difficult for carriers to ensure, as they often rely on third-party 2.5G service providers for their value-added offerings. To ensure the most accurate information from these partners can be accessed online, carriers must allow the partners to update and manage the content in the knowledge base directly. By using a customer service knowledge base that can pull information from any existing system into a single interface, the customer is able to tap the expert resource directly, without ever leaving the carrier's self-service site. If the information is not easily accessible via the Web, the customer will abandon the support site, and the frustration will lead to customer churn.
Adoption of SMS services is rising rapidly in the United States. The excitement around text messaging makes it an obvious marketing tool for carriers seeking to get new messages out to customers. It's unobtrusive, easy-to-read, and targets a captive audience. The important thing for carriers to ensure is that the same message or offer that is made via text message is also available when the customer logs into his personalized online portal for support. This level of closed-loop, multichannel marketing ensures the customer sees the same message from the carrier, consistently, making it another key to ensuring brand loyalty.
As wireless carriers gear up for the increased competition that will result from the upcoming legislation, customer service will stand out as the only differentiator among carriers. Complete online customer service, rather than expanding costly call centers, will ensure that carriers can continue to offer competitive service plans coupled with exceptional customer service, and turn uncommitted customers into brand loyal users.
About the Author
Chris Hall is the director of Industry Solutions at KANA.
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