The cell phone provider wars have officially reached a new level. On Friday, AT&T announced a promotion to give T-Mobile customers up to $450 to switch to their service ($200 for transferring the line and up to $250 for trading in a T-Mobile smart phone). As far as I know, this is the only time a mobile service provider has specifically targeted another brand’s customers in media.
A little history. Two years ago, AT&T had plans to buy T-Mobile but called off the deal, according to Forbes.com, under the guise of the FCC who decided the merger wasn’t in the public interest as it would reduce the number of national carriers from four to three. AT&T said the decision would harm consumers and when the deal was over, AT&T ended up paying a $3 billion settlement to T-Mobile. Fast forward 9 months and T-Mobile appointed John Legere as CEO. Legere rebranded T-Mobile, eliminated contracts, reduced rates and made hefty international roaming charges disappear. There is also a rumor that T-Mobile will be making a big splash at the Consumer Electronics Show announcing a plan to steal AT&T and Verizon customers by picking up penalty fees for breaking long-term contracts. And so the war continues.
As I mention in my book, Brand Rituals: How Successful Brands Bond with Customers for Life, many of us have had far from satisfying experiences with providers of information-age staples like cable television and cellphone service. The various providers involved commit countless dollars to entice their competitors’ customers to switch. But once the providers have our signature on a new two-year contract, it’s like they do everything but holler, “Gotcha, sucker!” and turn away in pursuit of the next prospect.
Meanwhile, heaven help us if a new service configuration is introduced that offers a measurably better deal – more service for less money. When we were in the market, no promise was too heady for them to make. Now that we’re locked in, forget it, buddy. They could care less about taking care of you, let alone changing the terms of your agreement to reflect the better offer they’re now making to competitor’s customers. Guess you should have waited a little longer and resisted a little harder, huh?
For more than twenty years now, research on customer relationship management has documented again and again that it costs far more to attract a new customer than it does to keep a customer you already have. But the thrill is in the hunt, so businesses continue to essentially walk away from all the initial goodwill they’ve earned with their customers rather than building on it to create something not only more lasting and more dependable, but more likely to stimulate still more enthusiastic word-of-mouth communications.
The goal, for any brand, is to become indispensable. That takes work. Lose your focus now and you can end up with dour, disgruntled customers who just can’t wait to low-rate you to their friends, personal and virtual. Continue to treat them like they’re important, on the other hand, continue to pay off the brand promises you’ve been making and they’ll notice. And they’ll appreciate it. And they’ll tell people about it.
We’ll see if T-Mobile customers are lured to AT&T with this latest offer or if T-Mobile is the winner with its soon to be announced deal to buy out existing contracts. I predict T-Mobile will continue to win this battle with their innovative offerings like no contracts and reduced rates, but time will tell. Me, for now, I’m sticking with Verizon!