Wireless carriers should specialize in profit, not perplexity

The confusion conspiracy: Wireless carriers should specialize in profit, not perplexity

Eddie Hold

The superficial clarity of the wireless services market masks a deep conspiracy theory–that the market is controlled by a cartel of major carriers whose goal is to maintain an underlying level of complexity that will keep the customer locked in perpetual confusion.

Sounds far-fetched? Explain then, why to answer a call, many unsuspecting customers need to press a button labeled “Send” on their phones (not that we, in the industry, like to call them phones when we can call them equipment, handsets, wireless devices or other less customer-friendly names).

Even when making a call, “send” doesn’t make much sense to most customers, but then again, little else about wireless does either.

ROAMING RIP-OFFS

For mobile newcomers, purchasing wireless service requires running a gauntlet of confusing terms, conditions, and prerequisites that they have never needed to face when buying landline telephone services. Customers are required to determine how many minutes of service they need before they start using the service (the underlying threat being that if they get this wrong, the monthly bill will be as painful as a punch in the stomach). Customers also must decide if they need local, regional or national service. And let’s not forget that when talking about nationwide plans, most carriers don’t really mean nationwide any more, but instead are referring to the nationwide, on-network plans, the coverage of which can be clearly seen on brochures that offer the promise of being completely inaccurate and with absolutely no guarantee that the customer won’t get hit by expensive roaming fees (another punch in the gut) for seemingly no reason whatsoever.

BAD FOR BUSINESS

The shroud of confusion covering wireless is not just perplexing for the customer–it’s bad for business and increases the carrier’s related costs. The more confusing wireless is, the longer it takes for a salesperson to explain, and the more likely a customer will walk away with the wrong solution and a bad taste in their mouth. End result: lots of sales effort, but a customer who is almost guaranteed to churn as soon as the contract is up.

The cost-per-customer acquisition for most carriers is in excess of $300 and most carriers cannot recoup this “investment” in the first year of subscriber service. As a result, two things have to happen: Keep the customer happy longer and reduce acquisition costs. Reducing the complexity of the calling plans ensures that customers stand a better chance of understanding what they have just signed up for, while also requiring less intervention from the carrier’s sales team to close the deal. That means fewer salespeople per store, fewer support calls questioning the validity of charges and so on.

All of this can be achieved, while still allowing the carriers to earn a healthy per user revenue shares–in addition to improved margins. For example, in the local calling plan arena, carriers should consider offering an unlimited calling plan for just $60–including long distance calls. The landline market has proved the popularity of these services, even for customers who don’t talk on the phone long enough to actually justify buying the plans. But because the plans are simple to understand, and predicable from a monthly cost perspective, customers buy into the scheme. If the wireless carriers can learn the simplicity lesson from their landline rivals, perhaps the wireless subscriber base will not only grow, but grow more profitably too.

Eddie Hold is vice president of Telecom Services at Current Analysis. To respond to this article, send a message to lettertoeditor@advanstar.com

COPYRIGHT 2004 Advanstar Communications, Inc.

COPYRIGHT 2004 Gale Group