Treat your customers right or you'll lose them. That's the findings of a survey of mobile phone users released Thursday by J.D. Power and Associates.
In a study of 16,800 cell-phone customers, the research firm found that they were nearly four times more likely to switch wireless service providers if their carriers rated below average in customer care.
Among the seven largest wireless carriers, Nextel Communications and Verizon Wireless treated their customers the best, according to the survey, while Alltel and Sprint PCS were the only two listed as treating customers below the industry average for service. Sprint PCS had the worst rating.
The study found that 26% of the customers were "definitely" or "probably" likely to switch carriers in the next year if they rated their most recent service experience as below average. Only 7% of customers who rated their service experience as above average were likely to switch carriers.
J.D. Power found that getting a service representative to answer a customer's phone call quickly and minimizing the number of contacts needed to fix a problem were key factors in keeping customers happy.
About a third of the people who said they were on hold for 20 minutes or longer said they would "definitely" or "probably" dump their carrier. That percentage dropped to 12% for those customers who had to wait less than two minutes. The average hold time before customers speak to a representative is 5:36, the survey said.
Retaining customers is becoming critical for carriers as the price of acquiring a new customer rises. A wireless provider spends $300 to $425 to lure each new customer, J.D. Power said.
"Customer care itself--having a good experience--is critical to the carrier and critical to the customer becoming happier with the carrier than they were before they had a problem," J.D. Power analyst Kirk Parsons said. "Clearly, the data shows that when a customer calls customer service and has a great experience, it elevates their overall satisfaction even higher."
Wireless carriers are unique because service representatives often can't solve the problems reported by customers. For example, J.D. Power found that 54% of calls were to complain about poor reception on the network.
Carriers "have to manage expectations," Parsons said. Service reps have to assure the customer that the carrier is improving the network, and occasionally giveaway minutes to placate an angry caller.
"There's ways around (network quality issues) to please even the most hardened customer," Parsons said.
J.D. Power rated carriers' treatment of customers based on performance in four key areas. Listed in order of importance, the areas were service representative interaction, according to 44% of respondents; resolution contact frequency, 31%; automated response system processing and navigation, 13%; and hold-time duration, 12%.
Nextel and Verizon tied for the top spot in customer care performance. Nextel performed particularly well with its automated response system, and Verizon did an especially good job in having service representatives who understood customer issues and in shorter hold times, J.D. Power said.
"The biggest differences between the high-rated and low-rated carriers in terms of customer care is being able to get the calls through (to a representative) and handling them in a timely fashion," Parsons said.
Sprint, the lowest-rated carrier, said the study data was gathered before the company had made leadership changes within its customer-care division to improve service. "We're not happy with the ranking, but we have seen improvements and Sprint customers have seen a difference," a spokesman said.