MONTEREY, Calif. -- In the ultra-competitive world of wireless communications, where customers switch services at the slightest provocation, new federal rules regarding wireless number portability are going to change the way providers do business.
The rules, which take effect Nov. 24 in the nation's largest markets, give customers the ability to switch providers but keep their cell phone numbers. It has an industry that suffers from massive churn rates looking for ways to retain and attract new customers.
Those with a deep focus on CRM are going to be best positioned to take advantage, according to Dennis Francis, vice president of information technology for Nextel Communications Inc., the Reston, Va., wireless provider.
Speaking at the CustomerThink Executive Summit last week, Francis said Nextel's commitment to CRM has enabled the company's rapid growth in the competitive market and will help it deal with WNP ramifications.
"Our strategy is [that] CRM is a journey, and it will always change," Francis said. "WNP is our first major test to making that change. The customer side is where it's going to be won."
Customer churn rates in the wireless industry are among the highest anywhere. On average, providers lose one quarter of their customers on an annual basis, 2.2% each month. Nextel has limited its monthly churn to 1.4%, thanks to its CRM strategy, Francis said. The cost of replacing customers on a monthly basis for the six major wireless providers totals more than $1 billion.
Francis said that Nextel identified three major areas to "outflank" the competition: technology, customer management and a new customer touch point strategy.
The company invested heavily in a solid technology foundation, outsourcing call center management, operations and billing to organizations with deep CRM experience, as well as overhauling its ERP system. Additionally, Nextel focused on customer management by identifying high-value customers through data analysis and then ensuring that their needs were met. It implemented a customer touch point strategy that encompassed all areas of the organization: sales, activations and provisions, and billing and collections.
"The one place you touch a customer the deepest is in their wallet, and you do that once a month," Francis said.
"High-value" customers differ significantly from Nextel's traditional customer base of small businesses, such as contractors. With 5,000 to 10,000 phones each, large customers didn't want a separate bill for each number. For medium-sized customers, Nextel sent out bills on a CD-ROM; for the largest, it transferred billing right from its own IT system to the customers'.
Nextel turned around service and repair, an area where it was losing money, by offering more options rather than less, like an insurance program that promised overnight delivery of a new phone with the same number should a customer lose or damage an existing phone.
Nextel created the position of a chief service officer, one of few in the industry. That executive is responsible for making sure the company remains focused on the needs of the customer throughout the organization, Francis said. For example, the CSO spearheads campaign management projects across all areas of the business.
"You can't be everything to everyone; you've got to have focus," Francis said. "The landscape will be changing fast, and we need to make not only daily adjustments, but hourly ones."
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