Care packages

Customer care, the often-ignored yet crucial element of every wireless service package, may finally be earning a new reputation as a churn-busting weapon of differentiation

At least as far as existing wireless subscribers go, customer care often appears tantamount to customer carelessness.

According to analysts, carriers across the country have been spending more time acquiring new clients than focusing on keeping their existing customers happy.

Customer care rates low in many wireless user surveys, but experts say it is destined to become the key differentiator as consumers encounter increasingly similar pricing plans, coverage and quality among the six to seven carriers competing in each market. What's more, customer care is destined to pave the way for consumer acceptance of more complicated wireless data products, which in turn complicates the customer care process itself.

Figure 1 Why do customers churn?
Employer made the decision	2%
Moved cities	5%
Better customer service	6%
End of service contract	6%
Wanted digital/more advanced services	8%
Better coverage/reliability	15%
Better deal from another provider	31%
Don't know/no answer	8%
Other	19%
Source: The Yankee Group

There is no question that customer care will differentiate carriers in the industry,” says Scott Weismiller, vice president of customer care for Telecorp PCS. “Customers are really demanding, and customer tolerance for non-performance has really gone down (Figures 1 & 2). The customer's ability to go to other carriers has been accelerated, making it more important for carriers to solve issues on the first call and anticipate issues that can be presented to customers through new product offerings.

No longer is customer care viewed as just a way to handle complaints operators are realizing that it should be approached in an integrated fashion, incorporating customer relations, churn and product management. Companies such as Convergys and Amdocs also are working to educate carriers, offering customer retention programs, customer life cycle management and predictive monitoring programs to identify which consumers are flight risks.

Richard Siber, partner and head of Accenture's global wireless practice, says carriers spend about $500 to acquire a customer they know nothing about, hoping they'll stay with the company because they signed a contract. However, the break-even point on that user might be two to three years away, which is why Siber says that money would be better spent on convincing an existing customer to stay.

Figure 2  Churn rates for March 2001 for a typical carrier
Dallas	6.9%
Los Angeles	2.8%
San Francisco	2.1%
New York	1.9%
Chicago	1.5%
Philadelphia	1.2%
Boston	1%
Source: Telephia

Who cares?

When Antonio Castanon, senior vice president of customer solutions for Sprint PCS, was hired about five months ago, he combined the company's loyalty group and customer care groups to serve user needs from end to end.

“It's pretty radical from a customer care perspective to bring together marketing strategy, loyalty, retention, usage and how we improve the experience to cross-sell within the operating arm,” says Castanon.

He suggests one key is educating the customer. Sprint PCS' research indicates that within the first 30 days of a purchase, many customers have questions about how to use their phone and take advantage of its features, so the company sends proactive direct mailings that offer helpful starter hints and outline the various functions of the phones. As customers mature and their needs begin to change, Castanon's teams also send newsletters describing unique features such as voice command.

Fellow carrier U.S. Cellular boasts one of the lowest customer churn rates in the industry. Its 1.8% churn rate is sustained with a customer-focused strategy, says Linda Baker, vice president of customer service. “One of our strategies is to be proactive with customers and identify their needs, analyzing a lot of customer information,” says Baker. “It could be a product, rate plan or any point of interest. We want to be proactive.”

U.S. Cellular established what it calls the Power Club to give high-revenue clients a dedicated customer service representative who goes beyond the call of duty to resolve issues. The company also contacts customers once a year to offer new rate plans based on their usage patterns and propensity to churn to another carrier.

Back to basics

As carriers begin to think about an integrated approach to customer service, they also are aware that basic customer care needs improvement (Figures 3 & 4). The Yankee Group's annual survey of wireless customers in 2000 showed that the average subscriber called customer service an average of 1.6 times during the year, and 77% were at least somewhat satisfied with the way their inquiry was handled. However, 18% came away dissatisfied with the experience.

Figure 3  We have contact Likelihood that subscribers will recommend a carrier to others or switch to a new carrier based on the number of contacts required to resolve a customer service issue
	Those who would recommend carrier to others	Those who probably or definitely will switch providers within the year
Issue resolved on first contact	77%	13%
Issue resolved on second contact	64%	17%
Issue resolved after three or more contacts	47%	25%
Issue unresolved at time of survey	32%	46%
Source: Telephia

 

Figure 4  What promotes loyalty among wireless users? Percentage of respondents citing as one of three things their wireless provider could offer to keep them from switching to another provider
Reduced price	62%
Improved coverage	43%
Phone upgrade program	34%
Loyalty program	28%
Bundle package of enhanced services	18%
Imprpoved sound quality	18%
More enhanced services	14%
Single bill for wireless and wireline	6%
Other	6%
Don't know/no answer	11%
Source: The Yankee Group

Castanon says Sprint PCS' subscriber growth in the last several years required hiring a number of individuals to handle customer care calls, adding too many layers between the customer's needs and the company's ability to handle consumer questions.

“We realigned the organization, flattened it and created a new structure that supports the critical front line functions. Clearly we're not where we wanted to be, but we're making tremendous progress.”

Seventy percent of Sprint PCS' customer calls are now handled by its automated voice system, and the company has also heavily invested in its Web site: About 2.5 million new customers visit the site each month to view and pay bills, activate phones or change rate plans. That means standard calls about billing and rate plans can be offloaded so that customer care agents can handle more complex issues. Today, Castanon says Sprint PCS customer care agents solve 70% of customer care problems on the first call. No wonder the company was recently named No. 1 in customer care in Fast Money magazine.

Analysts say the challenge for carriers is satisfying complex users cost-effectively. “Self care is so important because it definitely reduces the number of calls coming into the contact center,” says Rick Findlay, director of wireless industry solutions for Convergys. “Carriers just have to worry about meeting and exceeding basic measurements like answering calls on time and minimizing extended wait times. The more that can be pushed to another channel, the better.”

U.S. Cellular and Telecorp are studying Web-based customer care: “We're running the business cases, and we know it's a significant cost saver,” said Telecorp's Weismiller. The company receives a lot of requests for payments on the phone, he said. “We think we can offload this on the Web. It probably results in a quarter of the cost structure for online customer care vs. doing it via the phone.”

Future care

Wireless operators plan to offer high-speed wireless data services within months, but with those offerings come more complex devices and service problems that carriers will have to solve.

“The level of sophistication increases dramatically as the level of the device increases,” says Accenture's Siber. How will carriers handle questions about Web phones that will incorporate cameras, MP3 players, video players and location-based services? How can they answer questions geared more toward the Internet and content players than wireless services? Carriers say they are studying these issues.

“[Carriers] are going to have to take a bigger role in managing the value chain, the different applications and services,” said Gemini Waghmare, director of marketing for Amdocs. “They are going to have to charge on behalf of partners. They need a strong value chain management system than can broker relationships between subscribers and the telecom company.

[Carriers] are going to have to take a bigger role in managing the value chain, the different applications and services. --Gemini Waghmare Amdocs

Telecorp's Weismiller says Web-based and automated customer care tools will become critical when carriers approach wireless data. By minimizing inappropriate calls, they can focus on more technical questions involving wireless data concerns.

“We are very concerned about what technical elements wireless data presents,” he says. “There will be an evolution in terms of their knowledge and comfort level.”

Telecorp recently purchased a diagnostic tool it uses for voice services that Weismiller believes will help the company answer data questions. The knowledge-based system called ServiceWare shows customer care representatives how to best approach customer technical problems, coming up with a series of possible solutions.

Castanon says Sprint PCS will launch new self-service offerings in the fall to further free up customer care representatives to answer complex questions about wireless data. Sprint PCS is launching 1X CDMA services in the fourth quarter.

“We are forming partnerships on the service end with some of the data providers out there today to make sure we have the right service models,” says Castanon. “We're looking at models of software manufacturers to develop the right servicing strategy.…We're spending a lot of time defining what the model is to stay ahead.