Sprint_1 versus Cingular

Is your contract up with your cellular carrier? Don’t renew it, cancel it.

That’s how you can get the best deal from your current provider. At least, that’s what I learned when I attempted — unsuccessfully — to renew my contract with Sprint, my now former cellular carrier.

The lesson unintentionally taught me is that consumers get a much better deal from the “Retention” department of a large subscriber-based corporation than they do from the “Sales” department. Its not just Sprint — but they were the company that taught me these things. It turns out to be the case not only from mobile service providers, but other entities, such as ISPs — AOL is notorious in this regard.

We are also former customers of credit card provider Capital One, for the very same reasons: The deal they offered to the public was unavailable to us as customers. Over the years, their rates crept up on my (triple A credit) wife’s Master Card to 15%. They advertise a 10% card all the time. When they would’nt offer the same deal to us, it was buh-bye Capitol One (we got the preferred rate elsewhere). I suspect its true for a slew of other subscriber services.

I learned valuable lessons, and I share them with you, dear reader, in the belief that you will profit from my experiences. I also harbor the irrational hope that just maybe someone from one of these outfits will see this, and wise up.

But I am ahead of my self. Our quaint little story begins Christmas 2002, when we purchased a pair of Samsung N400 phones from Amazon. $200 each, plus a $200 rebate. (You may recall that I wrote how rebates sucked, and after much huffing and noise, we eventually got our cash. But that experience soured me on rebates, and I swore off rebates forever. I have stayed true to that oath).

Anyway, our contract expired in January. We got a marketing letter from Sprint to re-up. However, the deal they offered us, as their present customers, was far, far less attractive than the one they seemed to be spending billions of dollars advertising more or less nonstop on every media outlet available to everyone who is not their customers.

This is rather annoying. Perhpas they thought that we, as their exisiting customers, wouldn’t see those ads. It really didn’t matter, because they are competing with everyone else, who runs of their competitive services. (That’s called competition in the marketplace).

Over the ensuing months after the contract lapsed, our phone bills went up: My wife never uses her minutes, and I (who occasionally use the phone for business) often does. It was apparent our present plan had become inadequate.

Between the expiration of the contract and yesterday, we made repeated attempts to renew with Sprint. The problem was that their offerings to us (as current customers) were lousy — vastly inferior to the parade of deals we saw advertised everyday.

Now, before anyone from Sprint wants to call me up and tell me how wonderful their netowrk is, let me stop you in your tracks: All cellular networks are more or less the same to me. Mobile telecom has become a commodity product. Even if the network were an issue, in the NY/LI region, Verizon has the best reputation.

No matter. The issue at hand is customer retention. You might think that as a customer, you could get a better deal to stay a customerzero acquisition costs! — than the marketed offers made to potentially new customers.

But, alas, you would be wrong.

Here’s how the bizarro modern world of corporate customer retention/churn works: When you speak with just about any service provider as a current customer, you get routed into either a service or a sales process. The structure appears to be based upon profitability first (margin), and customer retention last.

As a month-to-month customer, one would think that retention was a priority. Forget it: Despite the fact that you are a present patron of the firm, it appears (at least in my experience) that you get offered much less competitive deals than what total corporate strangers get offered.

THis is, in my opinion, bad business. Its a short term approach; I suspect it contributes to “churn;” It certainly lowered the total customer experience, as far as me as a consumer was concerned. So for me, Sprint is now finito, a write off, kaput. I doubt I would ever use them again — at least, not until I have been alienated by all the rest of the carriers (a process I expect will take about 10 years).

~~~

Now here’s where things start to get interesting: Call up and cancel your account. You will get transferred to a “Retention Specialist.” The woman I spoke with at Sprint was very nice; She offered us all sorts of lovely deals to stay a Sprint customer.

“Too late” I told her. We had just switched that morning from Sprint to Cingular — despite my repeated attempts to stay with Sprint (if for no other reason than I loved the N400 Samsung phone). We had already gone to Cingular, ordered the new service, got new phones, and went merrily on our way.

“Well,” she asked, “what sort of deal did you get from Cingular for the 2 lines?”

I told her we got 2 Motorola V220 camera phones for $29 (I could have gotten them for free — $200 plus a $200 rebate, but you already know my thoughts on THAT).

Our plan is 850 Minutes @ $60 /mo for the 1st line, 10 bucks for the second. No roaming or long distance charges, free nights and weekends, free mobile phone to phone calls, and our unused minutes rollover to the next month. Overages at 35 cents a minute. (Did I mention no roaming? You guys kill us with roaming all the time).

Sprint then offered a plan that was comparable — not quite as good, but close — figure 90% or so. Had they offered that to me prior to the switch, we would have, in all likelihood, stayed with them.

Oh well, too late. We had already invested an hour or so in Cingular, plus I was halfway through the Motorola manual. Cingular actually transferred my Samsung address book to the new Motorola phones (imperfectly, I may add — but it was a big leg up).

There are lessons to be learned here, for both customers and carriers:

For customers: Cancel. That is your best negotiating stance. The caveat is you must be prepared to follow through and go elsewhere.

For carriers: Rethink your retention policies. If you treat your customers worse than you do your non-customers, is it any surprise that customer loyalty is nil? Churn awaits you . . .

Next up — we will revisit this issue when we get out final month billing cycle:

USA Today reports that customers who leave get charged all sorts of cancellation fees, odd charges, and are often not appropriately pro-rated — meaning they get billed for the full month (I canceled on 9/12 and expect to pay no more than half a month.)

Category: Finance, Web/Tech

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

16 Responses to “Customer Acquisition versus Retention: A case study in costs”

  1. paperwight says:

    I had pretty much the same experience. I’d been a Verizon customer for years (since the days when they were GTE Cellular in NorCal), and I tried like the dickens to get them to match AT&T’s deal for me, but they wouldn’t.

    So I switched. It’s just dumb. It’s also SOP for corporate America. How much work do companies put into retaining good people on a daily basis, rather than just trying to recruit good people, then panicking when they quit?

  2. brian says:

    barry, the reason why companies do not offer their existing customers the deals that rivals offer is because these deals are loss-leader incentives ascribed to lifetime customer value. It’s like Pepsi offering its 2 liter bottles for $.89 in a promotion while Coke sells its sodas for $1.19. While Pepsi is trying to get you to switch if your a Coke drinker, Coke makes a calculation that your “loyalty” has been bought already when you decided a while ago to drink Coke-branded soda and has no need to match Pepsi’s price.

  3. dole says:

    barry, you hit the nail on the head. i had the same experience with verizon after they gypped me on a kyocera phone. piece of crap.

  4. Hans Rudolf Suter says:

    In the current issue of Harvard Business Review there is an interesting piece about Customer-Centered Brand Management. With Trust ecc.’s Customer Equity Model you can actually calculate how these stupid deals influence Customer Equity Value, a calculator can be downloaded (20MB!) at http://www.rhsmith.umd.edu/ces/books/Customer%20Equity.html

  5. dj says:

    A man after my own heart.

    I’ve dealt with this kind of crap for years.

    In fact as I’ve canceled things I’ve had the reps offer me special incentives to not cancel. To which I reply “you mean I could have had these savings all along and you didn’t bother?!”
    DirecTV is a prime example. Anyway, off topic.

    One exception to this. We just made a change with our cellular service as well. We ended up switching plans with our existing company, Alltel, and they gave us the same deal they give anyone and everyone. Which was the best deal/value for what we use that we could find.
    There was never a question or an issue. We didn’t have to beg, ask, deal, or negotiate to be treated like we were eligible.

  6. No Loyalty – No Need

    I’m a regular reader of Barry Ritholz Blog (The Big Picture). The other day he had an article that hit very close to home on a topic I’ve dealt with regularly for years. A lack of customer loyalty by companies….

  7. David says:

    I’m with you on the rebates. I won’t do them unless absolutely necessary.

    Case in point: i bought a new computer setup for my girlfriend’s son for his birthday from Circuit City—an HP PC, printer, etc. The rebates came to over $300. But to get them, you had to cut out large pieces of thick cardboard from the boxes and match them with pieces of paper that were hidden away in all the junk they stuff into the boxes these days.

    You only had 30 days to comply. Since we live in Calif and the son is in Minnesota, it took a couple of weeks to manage this process. It was down to the wire. We finally got our rebates but it took months.

    The rebate process is completely consumer-unfriendly and just yet another reason why I (and i assume others) are thoroughly cynical about American business and look for every way possible to eliminate promotional/commercial/sales clutter from my life.

    I don’t really see the point to all of this. I assume HP just wanted some demographic info on me so they could sell me something else down the road. But if they send me junk mail (or spam), i simply delete it or dump it without opening. They could send me a check for $100 and I wouldn’t even know it because I automatically toss everything that looks like commercial correspondence these days.

  8. niq says:

    I’m not an expert or anything, but I am fairly certain that credit card companies are required by law to give you the same rate as they advertise to new customers [this may have changed given Clinton-Bush deregulation that has occurd].

    Also, cell phone companies have “retention programs”. You can call them and say “I am thinking of switching to so-and-so; can we make a deal” and they will knock down their prices to some extent.

  9. Why Everyone Hates Their Wireless Provider

    Barry over at The Big Picture, which is the best business blog in the whole universe, discusses customer acquisition vs. customer retension in the cell phone business. You think politics is nerdy? Try marketing. Barry concludes that cell phone companies

  10. Why Everyone Hates Their Wireless Provider

    Barry over at The Big Picture, which is the best business blog in the whole universe, discusses customer acquisition vs. customer retension in the cell phone business. You think politics is nerdy? Try marketing. Barry concludes that cell phone companies

  11. Why Everyone Hates Their Wireless Provider

    Barry over at The Big Picture, which is the best business blog in the whole universe, discusses customer acquisition vs. customer retention in the cell phone business. You think politics is nerdy? Try marketing. Barry concludes that cell phone companies

  12. Where is it?

    First Up… The Carnival of the Capitalists is up. So not only is it not news until someone with a column-writing contract reports it, but that column has now been syndicated to a couple of sites and linked by Neal…

  13. Where is it?

    First Up… The Carnival of the Capitalists is up. So not only is it not news until someone with a column-writing contract reports it, but that column has now been syndicated to a couple of sites and linked by Neal…

  14. Where is it?

    First Up… The Carnival of the Capitalists is up. So not only is it not news until someone with a column-writing contract reports it, but that column has now been syndicated to a couple of sites and linked by Neal…

  15. sprint specialist says:

    the retention department si created to save customers, so make us our work more easily, lets call asking for better plans and let us win a save:)

  16. Customer Loyalty Nonexistent With Wireless Carriers

    Thats what Barry Ritholtz thinks in his post titled, Customer Acquisition versus Retention: A case study in costs. I must agree that yes, there is no such thing as customer loyalty in the wireless industry. Talk to just about any…