Customer Relationship Management

In today’s wireless industry, customer retention and customer loyalty are more important than ever

By Allan Pulga

Before everybody and their dog had a cell phone, customer acquisition was priority number-one for wireless carriers and retailers alike. But now, after carrier mergers have created huge, amalgamated subscriber bases, customer retention is taking centre stage.

Naturally, keeping customers is important because attracting new ones is expensive, reports Margo McCall of Wireless Week. However, maintaining wireless customer satisfaction is especially expensive – they demand good coverage, a variety of calling plans, top-notch service and a selection of the newest devices. “And don’t forget that periodic handset upgrade,” adds McCall.

Still, broader market shares afford carriers a couple of bonuses: rising penetration rates and data offerings. Experts predict carriers will put more emphasis on “farming” their current base of customers for additional revenue instead of “hunting” for new subscribers.

With the massive subscriber bases of the three largest U.S. carriers (around 50 million each), economies of scale can be realized – carriers can spread costs over a larger number of subscribers.

Bear Stearns predicts retention costs will increase over the next two years because customers demand handset replacements every 18 to 24 months. Most carriers upgrade 5 to 7 per cent of their customers each quarter, with subsidy levels often reaching $100 or more.

Nevertheless, demand for hot new products, like Motorola’s Razr handset, compel carriers to offer higher subsidies, as well as offer more competitive replacement plans.

Meanwhile, the jury’s still out on the effect of local number portability (LNP) on customer retention. Industry churn has remained stable despite carriers offering multiple services, but its full effect may not yet be felt.