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.
|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 email/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.
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