Hello! And welcome to our Friday column, Worst of the Week. There’s a lot of nutty stuff that goes on in this industry, so this column is a chance for us at RCRWireless.com to rant and rave about whatever rubs us the wrong way. We hope you enjoy it!
And without further ado:
I always find it interesting when fantasy and reality meet. This includes both comic-based movies and the wireless industry.
This week’s clash was highlighted by reports from J.D. Power and Strategy Analytics looking at the increasingly common equipment installment plans domestic mobile carriers are offering up to consumers.
As a quick reminder for those in North America not up to date on their EIP knowledge: These programs allow customers to receive lower monthly rate plans in exchange for paying a higher price for their mobile device spread out over a period of months or years. For those not in North America, EIP is also known as “the usual.”
(As a side note, this move toward consumers paying full price for their mobile devices takes me back some 10 years ago to a tour of a Nokia store in Las Vegas during one of the many trade shows held in that city. During the tour, the Nokia representative had my mind in a blender trying to convince me that one day consumers would be open to paying full price for their mobile devices as well as the fact the store could not actually sell any of the devices on display to consumers and instead the “salespeople” would direct those customers to a carrier store to purchase the device at the then-standard subsidized pricing model with a two-year contract. No comment on any impact this might have had on Nokia’s future.)
The J.D. Power study, which was focused on customer care, found customers that have their device through a carrier’s EIP scored 15 points lower in customer satisfaction than customers with their device through an old-school device subsidy model. The survey also found EIP customers were more likely to contact their carrier with questions and that often resolving those questions took longer than what non-EIP customers experienced.
More interesting facts from J.D. Power:
• EIP customers waited two minutes longer for problems to be resolved in both walk-in channels and online channels.
• EIP customers provided “considerably” lower ratings to online channels.
• EIP customers were more likely to use online channels due to malfunctioning devices.
Also of interest is that of the nationwide “full service” carriers, T-Mobile US came out on top of the survey even though it was the first to launch an EIP and many assume has the highest percentage of EIP customers on its network. This leads me to assume that it’s the other carriers that are really screwing up their EIP-related customer care.
Another interesting angle is that EIP plans are also becoming the new normal. The Strategy Analytics report noted that at the end of the first quarter, EIP made up 54% of postpaid device activations, with expectations that the number would continue to grow. Thus, whatever issues are truly connected to what the J.D. Power survey found, well … just expect more of that.
Now, I will say that my mind goes crazy with questions whenever I read one of the J.D. Power surveys, though I try to temper my most critical commentary by accepting the fact that J.D. Power has been at the consumer survey game for quite some time and it seems that at least the companies that come out smelling like roses in those surveys give them enough credence to tout the accolades in their marketing efforts.
However, it would seem from looking at the numbers that carriers are purposely pushing EIP customers aside for those on contracts tied to device subsidies. But I thought the whole point of EIP was that it was better financially for the carrier and thus why would they discourage those customers?
So, perhaps the survey is showing that customers signing up for EIP are … how should we classify it … pickier? Or … maybe … the survey shows that those customers seem to think that since they don’t actually “own” their device that the carrier should be contacted for immediate remediation should anything out of the ordinary happen to that device?
It’s all very fascinating to dig into and I am sure with EIP becoming the new normal, the actual differences found in the J.D. Power survey will moderate over time. But, in the near term, carriers should probably look to bridge that gap as soon as possible as their fantasy of squeezing more money from consumers could hit the reality of that consumer walking out the door.
Thanks for checking out this week’s Worst of the Week column. Here is a quick, but satisfying extra:
Fight! Fight! Fight!
That’s all I could think this week as Sprint rolled out new family plans that looked to counter recent moves by T-Mobile US as well as a perception from the financial community that Sprint was on the ropes.
The new plans boil down to offering more for less, though also moves the carrier further down the road of de-emphasizing unlimited data plans, which I guess is theoretically offering less for less. Sprint targeted T-Mobile US in its press release, stating it was offering more than double the amount of data as similar plans from its (larger/smaller?) rival.
I know Sprint is a bit hit or miss when it comes to its perceived network quality (I guess you mostly need to avoid airports), but you gotta like the fact that the carrier’s willing to duke it out in terms of pricing, especially at a time when it looks like Sprint should be counting every penny.
However, the new plans make one significant mistake by going the overage route should customers use up their data allotment. I know Sprint does offer the option of increasing the data allotment for seemingly not much more money, and I am sure the company is banking (see what I did there?) on customers digging a little deeper into their pockets for that additional data, but to charge 1.5 cents per megabyte for overage seems a bit steep.
First, people still have no idea what a megabyte is. Second, no one has any idea what 1.5 cents is.
Nice try Sprint. You were so close on this one. Well, there’s always next week.
I welcome your comments. Please send me an e-mail at dmeyer@rcrwireless.com.
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