Complainer's paradise

It was not among the inalienable rights mentioned by our founding fathers in the Declaration of Independence, but the right to complain certainly must rank right up there with “life, liberty and the pursuit of happiness.” Or, at least wireless users act like it should be.

Customer relationship management (CRM) has never been among the strongest attributes of the wireless industry. Wireless started out as a truly innovative but imperfect luxury service, and even as networks were built out over the last two decades and coverage became much more reliable, CRM wasn't always as top of mind as signing new customers and building market penetration. Long-term customer contracts were the norm, and the lack of number portability made it a hassle for customers to switch service providers once they had signed up.

Thus, users had reason to complain about poor customer service, but otherwise couldn't do much about it.

About 18 months ago, the advent of wireless number portability changed all that. With portability, customer complaints took on a new weight and importance. A complaint was no longer just a complaint, but the first step in an increasingly quick process of a carrier losing a customer to one of its competitors. But portability wasn't a sudden, overnight occurrence, and carriers had months or years to plan for the eventuality.

“Wireless number portability dramatically increased the focus on customer care,” said Lance Zingale, chief operating officer of StarTek, a Denver-based vendor of business process outsourcing solutions for wireless carriers. Zingale also spent 17 years working for AT&T's customer service operation before coming to StarTek.

He added, “Portability was a big event, but it has sort of calmed down.” Indeed, portability so far has failed to live up to many early predictions that it would be widespread and push customer churn to record levels.

Part of the reason, said Zingale, is that “carriers have changed the nature of their contracts and have done other things to create stickiness,” such as the introduction of news services, better prices and more flexible calling plans. They also have begun to streamline billing and customer service processes that were the root of many customer questions and complaints.

“About 75% of all customer service calls are billing-related questions,” said Scott Kolman, director of product marketing for Amdocs.

Internal operational efficiency, rather than customer focus, was a main reason for undertaking these projects, but carriers also have begun to realize that CRM solutions improve their ability to organize customer information and divide their customer bases into more specific market segments.

“We saw a lot of engagements with carriers that were timed to number portability,” Kolman said. “Carriers were trying to create more streamlined processes for managing portability to improve the customer experience.”

Despite the increasing attention and resources being allocated toward improving customer service in the age of number portability, the fact remains that customers continue to complain to their service providers about a variety of issues, including billing problems, service quality, porting of phone numbers, details of contracts and other issues.

According to recent findings by the Consumers Union, the non-profit organization that publishes Consumer Reports magazine, these complaints not only continue to occur, but also continue to increase.

The Consumers Union consulted FCC records and found that the total number of complaints from consumers about their wireless service providers increased from 21,357 in 2003 to 29,478 in 2004, a jump of nearly 38%.

Cingular Wireless and AT&T Wireless, which formally integrated their operations during 2004 as a result of Cingular's acquisition of AT&T, had the highest record of customer complaints, about 289 complaints per 1 million customers.

Among the national wireless carriers, Verizon Wireless had the fewest complaints, about 76 per 1 million customers, but regional carrier U.S. Cellular received even fewer complaints, about 39 per 1 million customers.

For Chicago-based U.S. Cellular, the strong showing is the culmination of an effort initiated more than three years ago by President and CEO John Rooney.

“The rating shows the culmination of all our efforts to become more customer focused,” he said. “But it isn't really a measure of customer service; it's more a measure of customer satisfaction. It starts with how you manage the customer relationship at your stores, and how you manage it through your customer service organizations.”

Still, while U.S. Cellular can tout its top ranking, the overall number of customer complaints across the industry is fairly startling, given that the overall effect of number portability on customer churn has so far been more muted than expected.

“Customer complaints in the wireless industry are like unemployment — there will always be some out there, but it's a question of how you manage it,” said Bill Zimmer, portfolio manager of worldwide business support solutions for Hewlett-Packard's network and service provider solutions unit. “The complaints are good in some respects because they will keep the service providers motivated.”

If the introduction of new services and other improvements hasn't mitigated the volume of complaints from consumers, it might also suggest that users aren't terribly encouraged by the choices they currently have in the landscape of wireless service providers.

That landscape is shifting rapidly, as new service providers appear on the scene via the mobile virtual network operator (MVNO) model, and existing companies change their shape through mergers and acquisitions designed to give them greater competitive potential and market leverage.

The trend in the arrival of MVNOs in the market may still be in its earliest phases. For the last few years, companies such as TracFone Wireless, Boost and Virgin Mobile have been successfully carving out niches in the wireless market that were underserved or not served well by the major wireless carriers. Retailer 7-Eleven is a more recent market entrant, but many industry watchers expect the real impact of MVNOs to be seen in the next year or so, as companies from outside and inside the wireless industry chase both broad and somewhat narrow segments of the market. These companies include, among others, sports entertainment powerhouse ESPN, Internet giant EarthLink, cable TV player Time Warner, content provider SmartServ, distribution specialist InPhonic, media conglomerate Cisneros Group and Amp'd, the latest youth-focused venture from the team that launched Boost.

Some industry watchers see a potential for 75 or more different MVNOs to launch in the next few years, with at least 10 to 15 of them being offshoots of major brands.

The vendors providing CRM solutions believe, to a varying degree, that the MVNO trend could be a factor that pushes incumbent wireless operators to renew their focus on building and maintaining strong relationships with their existing customers.

“As more MVNOs come into the market, we will start to see the effect of CRM as the incumbent carriers try to retain their existing customers by segmenting their audiences into MVNO-like niches,” said Curt Champion, senior director of product marketing for Convergys.

Before and since wireless number portability began, some service providers have been more aggressive than others in deploying CRM solutions such as Convergys' Infinys and Amdocs' CRM 6. From a technical point of view, Champion said, carriers should be looking for systems that make it easy for them to pull data out and analyze it.

“It's what the industry used to call data warehousing,” Champion said. “You will also need a very flexible and adaptable system because flexible pricing and discounting will be keys in a more competitive environment.”

Amdocs recently began a major CRM system upgrade project for Nextel Communications that will help the carrier follow through on its vision for “integrated customer relationship management,” said Amdocs' Kolman.

“Nextel tells us that they want to differentiate themselves in the market based on the customer experience. It's not just about the technology in the call center but what gets accomplished when you get to that channel,” he said. “It goes back to the influx of alternative MVNOs and how carriers are realizing they have to put a renewed focus on the customer experience.”

However, the long-term effect MVNOs might have on the relationship between major carriers and their existing customers remains to be seen. StarTek's Zingale said the four largest wireless carriers in the U.S. market are much more concerned about competition from one another than they are about MVNOs that will do their work mostly in the margins of the general consumer market.

Also, though MVNOs want to make sure that the experience customers have with their wireless service reflects positively on the overall brand they are bringing into wireless, much of their ability to provide a quality service depends on the network they choose to supply the capacity for their MVNO.

“MVNOs don't really look at billing and CRM until sometime after deciding what network they will use,” Zingale said.

MVNOs also have some disadvantages when they get around to choosing CRM solutions because they often lack volume and have to outsource CRM to a single vendor.

Ultimately, U.S Cellular's Rooney doesn't see how MVNOs can provide that much better of a customer experience than incumbent wireless providers can.

“‘MVNO’ is just another word for ‘reseller,’” he said. “Okay, maybe it's a reseller with a marketing plan, but the quality of the service that they offer can be no better than the quality of the networks that they are leasing.”

Yet, customer perception of quality of service (QOS) is a variable that can be altered or moved in one direction or another, simply by the power of the brand behind the service, according to Amdocs' Kolman. He alluded to a QOS study conducted last year in the U.K., involving users of different wireless services. Virgin Mobile was found to have a better QOS rating than U.K. market leader Vodafone — even though Virgin's service rides on Vodafone's network.

In addition to the emergence of MVNOs, industrywide carrier consolidation is another trend that will create CRM pains for some carriers and competitive opportunity for others. Mega-mergers create huge customer bases and great potential for the companies involved, but they also tend to create customer confusion of which competitors can take advantage.

“There is a merger-related opportunity that we have been availing ourselves of for a while now,” said U.S. Cellular's Rooney.

Amid the consolidation of carriers — such as Cingular and AT&T Wireless, Sprint and Nextel, and Alltel and Western Wireless — potential customer confusion isn't the only problem. These deals present the companies involved with the technical challenge of integrating their already complex back-office structures, including existing billing and CRM systems.

“Carrier consolidation can add a lot of back-office complexity because you end up with legacy systems from two organizations now in one,” said Kolman. “Independent of how a newly merged company's back office is organized, you still have to look like one company to the consumer.”

As carrier consolidation is happening, even more complexity is coming to back-office structures through the constant addition of new devices and new calling packages.

“Back-office consolidation is a major key in network operator consolidation,” said Champion, of Convergys. “It can affect the cost of providing service, and it also can affect the perception of the carrier if that back office is difficult to navigate and if service cannot be activated in a timely manner.”

Even if back-office systems consolidation is properly handled, there are still no guarantees that this will lead to universally positive customer relationships. The remaining piece of the puzzle is the one-on-one interface between the customer service agent and the customer.

Rooney reiterated that positive CRM is less about technology and systems and more about people.

“You can have all those ‘woofie-wowsers,’ — the new services and gadgets — but people might not buy them,” he said. “The most important people we have in our business are the ones who touch the customer. We're very selective about choosing them, and we put them though rigorous training. There is a lot of knowledge inherent in those positions.”

Other carriers may be starting to think the same way. For example, Verizon Wireless has begun to open new call centers in states such as Arizona and North Carolina and has been hiring hundreds of new customer service employees. T-Mobile recently opened a new customer call center in Maine. It's possible that these carriers are realizing that while they can't seem to quiet customer complaints, there is still an opportunity to keep the customers from turning to churn.