Last week at CES, T-Mobile announced that they are going to cover customer Early Termination Fee (ETF) costs. This decision has far-reaching ramifications for the global mobile market, and presents an interesting dilemma for AT&T, Sprint, and Verizon. Should they...
- Follow suit – creating a market where switching barriers evaporate, and per-subscriber economics are significantly impacted (higher CPGA, lower ARPU, churn back to pre-share plan levels)?
- Stand their ground – risking a substantial reduction in subscriber growth, but with “as is” economics?
Regardless of their immediate decision, this move will drive a significant increase in high-quality contract customers headed for the exits. Around the world, mobile providers better make sure their retention strategies are world class. And that’s the rub – they’re not.
Here’s how I know: I decided to take T-Mobile up on their offer. The first representative I spoke to at my existing provider had this response: “OK I can help you with that”. Since helping me leave is not exactly a great retention strategy, I can only assume this front-line agent was incented to be helpful, drive first call resolution, and minimize handle time, and NOT incented to save my business.
So I essentially demanded to be forwarded to a ‘save group’, and, there, the agent was woefully equipped to make me an offer that matched the enticement of the ETF bounty. Her offer: a $150 one-time service credit on next month’s bill. This was completely “one-size-fits-all” and not at all personalized to the situation (My monthly bill is $300/month, I am willing to sign a new contract, and I have three young kids that are glued to their devices).
In this age of big data, why can't my mobile service provider make a compelling, personalized offer? Amazon knows what books I might want to read, Google tells me my flight is delayed, Waze tells me an alternate commute, my phone call connects from New York to Dubai at the speed of light, but all they can offer me and my $300-plus per month habit is a paltry $150 service credit to stay? Wow.
When I talk to the marketing and care teams of providers around the world I often get the admission that it’s hard to implement world-class retention. It’s hard to get IT to play ball. It’s hard to learn how to effectively analyze the data. It’s hard to drive agent adoption. I’m sure it is, but guess what? It’s worth it. One of our customers attributes over $0.12 in AMPU (NOT ARPU, AMPU) to retention improvement. Hello AT&T, are you listening? That’s $180 million per year in profit.
So come on guys, let’s get started. And then come on in, the water’s fine...