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November 2014

Jeff Kagan, Wireless, Telecom and Tech Analyst

Because many customers have been using wireless technologies for years and have grown up with the industry, the connection to the network, quality of service, quick and satisfying resolutions to any problems, and price are becoming increasingly important. Kagan says customers want every feature but are feeling abused by runaway prices on services like wireless, telephone, television, and Internet.

"Customers are paying much more than ever before on all these services, and in today's economy, they can't afford this any longer," he says. "Companies have responded with little creativity and minimal offerings to customers who need to pay less, and this will hurt them in the long run. As competition increases, customers will develop opinions about companies. The companies who are there for them will win. Companies who are in it for themselves will lose."

Clear communication is also important, as Kagan notes that customers who walk into a carrier store or watch television commercials about wireless data services seldom find that reality is as described-"unlimited" often does not live up to its name, and this is beginning to hurt the performance of major carriers.

When evaluating the customer experience, Kagan says companies are often overwhelmed with the amount of data and lack the tools to adequately sort through and analyze it, so customers' needs often remain unmet.

"When a customer doesn't feel taken care of or cared for, there is no brand relationship. And when there is no brand relationship, the customer can switch carriers quickly and easily, and they often do," he says. "A customer with a good relationship often overlooks minor nuisances. Other customers see every nuisance as a major problem."

While Kagan notes that some carriers actually have good performance and relationships with the customer, most do not. Customers typically think prices are too high and service quality is too low, and they don't feel valued by the company. As a result, Kagan believes prepaid services will continue growing and taking business away from major carriers.

"Customers are increasingly willing to trade down to save money," he says. "If the iPhone was available on prepaid networks like some Androids are, I think the migration would be much quicker. But it is happening."

Kagan views pricing as a moving target, with expectations rising as the marketplace matures. As new services and technologies are introduced, carriers find themselves trying to lead by changing prices.

"A number of key factors are continually changing, which brings about a need to find the right price; however, even if nothing else changed, pricing would continue to change just to keep the industry moving," he says. "Now that data usage has taken off thanks to Apple and Google, carriers are using the opportunity to get ahead in the marketplace instead of as a way to get closer to customers and build long-term relationships. Carriers who see their customers as numbers and manipulate the system to win actually lose in the long term."

In terms of developing personalized packages and bundles in the future, Kagan doesn't believe the industry is ready. He says carriers first must become friendly with customers and cultivate those relationships to better understand and cater to their needs.

"I think companies are now reacting with one goal in mind: improving their business. While that is good, it does not satisfy the customer," he says. "They need to focus on the customer. Once they have a good relationship, then all their other goals will fall into place."

Visit jeffkagan.com to read more about Jeff Kagan.

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