I have read that customer churn in the wireless telecom industry ranges from 10% to 67% with an accepted industry average of 35%. If this is true then the average cell phone customer stays less than three years with their carrier. The same source says wireless carriers have new customer acquisition costs of $300 to $600. If this is accurate, then I have saved T-Mobile almost $1300 by remaining a loyal customer over the past 8 years.
Here’s another way to look at this:
This “loyalty bonus” T-Mobile gets from me equals about 27% of what I pay them every month. That’s pretty good when you realize their net income is less than 6% of revenue.
Of course these numbers are estimates. I’ll never know for sure what customer churn costs companies like T-Mobile or what they might save if they increased customer loyalty. But these figures suggest there is a lot of upside for them.
As I mentioned above, I have been with T-Mobile almost 8 years. That’s roughly three times as long as the industry average. And whenever I talk to one of their customer service people, they make a point to tell me how much they value my loyalty. They even say they would “hate to lose me as a customer”.
But they are dangerously close to doing just that.
This post starts a short series describing my experience with T-Mobile as I try to upgrade to a new phone. As a customer, my goal is to get a better phone without paying more than a new customer would. If T-Mobile really does value my loyalty, they should gladly give as good a deal (or better) than they would give a new customer.
But if they don’t, well that says something about how they do business, doesn’t it?
Round 1: The Setup
I began my upgrade quest by going to the T-Mobile website. Their website made it obvious how I could upgrade my phone: Click where it says UPGRADE PHONE. Score a point for T-Mobile.
The next page was a bunch of phone images, making it easy for me to pick a phone I might like. This was helpful. Clicking on an image gave me the option to see more details about each phone. Not all of them had details but the phone I was interested had the information I wanted. One more point!
And they all had prices clearly shown. This earns them a third point.
So, round one clearly goes to T-Mobile. They made it easy and convenient for me to learn what phones I could upgrade to. They offered a reasonable amount of information about them. And they showed pricing very clearly. I didn’t have to waste time hunting for anything. They earned three fast points and did everything well. Nice work!
Stay tuned tomorrow for Round Two: The Change-up