Bundled Offerings, Better Retention? as Service Providers Expand Their Combined Multimedia Packages, Customer Service Requires Attention

By Musico, Christopher | CRM Magazine, April 2009 | Go to article overview

Bundled Offerings, Better Retention? as Service Providers Expand Their Combined Multimedia Packages, Customer Service Requires Attention


Musico, Christopher, CRM Magazine


The recession has had a dramatic impact on just about every imaginable industry vertical--but arguably none has suffered more than the telecommunications sector.

During a time in which most consumers are looking for the best deals possible while simultaneously satiating their need for cable, Internet, and phone service, service providers are scrambling to find the magic solution to keep customers from leaving.

Verizon, recognizing this problem after losing 96,000 digital subscriber line (DSL) customers last quarter, has once again tweaked the DSL bundling package it offers--reducing pricing and offering faster Internet service--in an attempt to reduce churn.

Anand Subramaniam, vice president of worldwide marketing for Mountain View, Calif.-based contact center solution company eGain Communications, explains that many of the telecom providers are shirking customer service simply because they feel they can.

In a study conducted by eGain, 45 percent of North American companies did not respond to emails within 24 hours, and 20 percent of those surveyed ignored emails completely. "Some think they can get by ... thanks to the switching barriers," he says, referring to penalty-laden contracts.

William Hahn, principal research analyst for industry-research firm Gartner, doesn't necessarily see it in such stark terms. "Customers will go where they want, instantly," he says, adding that some are essentially daring their providers to stop them. Most mobile contracts threaten to levy penalties if you shift, he says, but those clauses can't even be enforced anymore. "Unless you have tied that offer to an expensive piece of machinery like a personal computer, individuals can jump for a better deal."

Hahn goes on to explain that bundling alone is a Band-Aid solution to a long-term problem. "Price in and of itself is not a winning proposition," he affirms. "Bundling's very limited.... It's neither a savior nor a panacea."

Instead of transforming prices, Hahn urges companies to change the services they offer. In the consumer sector, he says, the new frontier is the so-called digital home, as people are accumulating more devices interconnected with the services they purchase from a telecommunications provider. While the devices themselves may have separate warranties, something that goes awry may not be the fault of one of the individual products but rather the manner in which they're networked. …

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