Wireless service providers who fell at the bottom of a J.D. Power and Associates
survey may want to call their customers to apologize for poor
service. The research found that dissatisfied cell phone users
were almost four times more likely to switch carriers, causing
them to lose their portion of the multibillion dollar revenue
pie.
According to the U.S. Federal
Communications Commission (FCC), the mobile telephone
sector generated more than $76 billion in revenues in 2002.
Nearly all (95 percent) of the total U.S. population live in
counties with three or more different mobile telephone
operators, and 83 percent of the U.S. population live in
counties with five or more operators competing to offer
service.
Stiff competition should inspire wireless carriers to
provide superior service, yet the J.D. Power and Associates
survey found that most hovered in the average range. The
study, based on the experiences reported by 16,800 wireless
users, found that only two of the evaluated carriers fell
below the industry average for customer satisfaction — ALLTEL
and Sprint PCS. Nextel and Verizon Wireless score highest in
customer care, followed by T-Mobile. AT&T Wireless and
Cingular scored slightly above the average.
“It currently costs wireless providers between $300 and
$425 to acquire each new customer, so the ability to retain
existing subscribers is increasingly crucial in this
industry,” said Kirk Parsons, senior director of wireless
services at J.D. Power and Associates.
| Wireless Customer Care Index Rankings, U.S. | |
|---|---|
| Nextel | 104 |
| Verizon Wireless | 104 |
| T-Mobile | 103 |
| AT&T Wireless | 101 |
| Cingular | 101 |
| INDUSTRY AVERAGE | 100 |
| ALLTEL | 92 |
| Sprint PCS | 86 |
| Source: J.D. Power and Associates 2003 Wireless Customer Care Performance Study | |
The study indicates that among those whose satisfaction
with the most recent customer care transaction is below
average, 26 percent report they are definitely or probably
likely to switch from their current carrier in the next year —
compared to only 7 percent who rate their customer care
experience above average.
The study also found that 55 percent of wireless users have
contacted customer care within the past year, and among those
who contact their carrier, 76 percent do so via phone; 21
percent through the carrier’s retail store; and 3 percent by
e-mail/Internet.
The average reported hold time before customers are able
to speak with a service representative is 5:36 minutes.
About one-third of those who said they waited 20 minutes or
more on hold indicate they will definitely or probably switch
providers. Switching probability drops to 12 percent for those
who waited less than 2 minutes.
“Wireless providers shouldn’t underestimate the influence
the customer care experience can have on retaining customers.
In most cases, this is the only time carriers have an
opportunity for personal contact with customers, and a good
customer care experience can actually raise satisfaction
levels and increase future loyalty above the level it was
before the call to customer service,” Parsons concluded.
Compounding the potential for customer attrition is a
report from The Management
Network Group, Inc. (TMNG) that says more than 50 percent
of those who experienced service issues in the past year said
they would switch carriers, with call quality and billing
problems topping the list of complaints.
Furthermore, 6 percent of wireless users would switch
wireless providers the day after wireless number portability
(WNP) was available, and another 27 percent said they would
switch providers as soon as they received a better offer.
WNP — or wireless-to-wireless local number portability
(LNP) — would allow mobile subscribers to keep their phone
number while switching carriers, giving customers more
flexibility and the ability to take advantage of competitive
pricing and incentive packages.
iGillottResearch Inc. says that
increased churn due to WNP could cost wireless
operators in excess of $20 billion over four
years.
“Nobody truly knows what the
effect of WNP will be in the U.S.,” says Iain Gillott, founder
and president of iGillottResearch Inc. “But few doubt that
churn will increase as a result. The question is how big the
increase will be and how the industry will react.”
TMNG’s study, conducted in May 2003 from 2,700 user
responses, also found that nearly 17 percent of the
respondents said they would definitely or probably switch
their current home phone number to a wireless phone if they
could take their home phone number with them. Similarly, Gartner, Inc. expects that
nearly 10 percent of wireline consumers will transfer their
service to wireless once they have the option to keep their
current wireline phone numbers. That is in addition to
customers that have already migrated from wireline-to-wireless
and are likely to do so despite the number portability
limitation.
“Delivering quality service remains the competitive
differentiator that determines who wins and who loses,” said
Rich Nespola, CEO of TMNG. “Wireless users also indicated a
higher propensity to retain their provider when additional
features like loyalty programs, push-to-talk and Web access
are included in their plans.
