Why Don't Cell Carriers Care About Loyalty?

When was the last time you got a call from your cell phone service provider telling you that it values you as a subscriber and therefore has a special new plan that could save you money? Or that it would like to make you a special offer for an equipment upgrade because it values you as a subscriber? Only in your dreams.

Cellular providers spend most of their efforts luring new customers into switching from some other service, offering only a few breadcrumbs for their loyal subscribers. Since the average cost of acquiring new subscribers is anywhere from $100 to $300 you'd think they'd want to rethink this strategy.

I was reminded of this maddening practice just this week when I lost my T-Mobile BlackBerry Pearl, just seven months into my latest two-year contract. Not to make T-Mobile the bad guy, because all the providers are all guilty of the same practices, but here's my illustrative tale.

Originally I paid $149 for my phone when I renewed my T-Mobile contract. I've been with T-Mobile for almost five years—and that includes the other four members of my family. We feed them a big chunk of change each month. When I called up to get a replacement for my lost phone I was informed I'd be charged $350—top price. I offered to take another two-year extension on my plan if they'd honor the same price given to new members. The answer was no. I was a royal nuisance on the phone, so I was ultimately offered one at $250 ($100 off of the normal price), but who wants to live life as the squeaky wheel?

Airlines have frequent flier programs to provide an incentive to stick with them. Hotels offer perks for frequent guests. I've got my various store discount cards for places I shop frequently like Barnes and Noble. Even my nail salon has a loyalty program with a free manicure after every 10 paid. The world runs on loyalty. Isn't it time for the cellular service providers to join the rest of the world?

What can customers do to take advantage of the current, less than favorable,environment?

1. Research: It's tempting to take advantage of special offers like this week's from Verizon that gives you a free camera phone with a two-year contract, but remember that two years is an eternity in the cell phone world.
2. Use sites like cellreception.com that tell you how well the carrier provides service in your zip code area. At least that way you'll know how the phone provider stacks up your geographic area.
3. Take advantage of test-drives: Most providers have a clause that lets you get out of the contract within the first 14 days.
4. Know how to get of a contract. Ironically, one of the best ways to get out of your contract is to be a nuisance. For example, if a customer calls tech support excessively the provider sometimes cancels them. Here at Yahoo! Tech we've got some other thoughts on getting out of your contract.
5. Look at churn rates: How many people are stable customers and how many leave their current provider? According to the studies I've seen Verizon's churn rate is lowest in the industry.
6. Refer a friend: Today, the some of the best customer loyalty options revolve around getting your provider new members. So you might as well get your referral fee.
7. Look at prepaid or month by month options. You may get better incentives on equipment when you buy a long term contract, but if your needs change or your life is in flux it might be better for you to pay a bit more on prepaid or month by month but not have to pay a cancellation fee.

Meanwhile, you service providers—start thinking of innovative ways to retain loyal customers. A few thoughts:

1. Give an upgrade voucher every year to loyal customers so that they can stay current. Currently when you sign up with Verizon for two years of service on a digital plan of $34.99 or higher you qualify for a free phone or a credit up to $50 or $100 when you renew.
   
2. Make one-year contracts the norm for getting special promotions. Two years is one year too long.
3. Let your customers know if you have a new plan that will save them money. In the long run, when they're still with you, you'll be happy you did.