Tuesday, January 8

Missing Customers: Verizon Tries Distress

While most cellular phone customers are savvy to text messaging, some are becoming all too familiar with distress messaging. Specifically, anyone who makes up the 27 percent of the smart phone market captured by the Apple iPhone, especially if they were a Verizon customer.

These folks, like me, are probably receiving distress message mailers. The latest from Verizon, sent about two weeks after I become an AT&T iPhone windfall customer and about a week after Verizon’s letter that claimed “I made a mistake,” tells the real story:

We miss you already.

• Free BlackBerry Pearl with GPS Navigation
• $100 off any phone of your choice
• Free activation

Call today!

While I’m not privy to the response rate, my best guess is that it’s flat. It might also be causing some brand damage to what once was the network of choice among 1 million subscribers, at least those who recently made a switch.

Messages such as take $100 off, come back and save, and come back to the network you trust are emblazoned on almost every panel of an 8-panel direct mail piece. Most of them, if not all of them, are misdirected, clearly reinforcing that Verizon has no idea why it has to send a “miss me” mailer anyway.

It’s not the network, it’s the phone. But now, looking back, maybe there is something questionable about the service strategy at Verizon anyway. As a former customer, why did I have to quit in order to get offered the best package perks ever?

For all these efforts, they were four months too late. That was the beginning of the end. Four months ago, my second-to-last Verizon phone was damaged during my ”never fly US Airways unless I absolutely have to again” flight.

Naturally, once I returned home, the first order of business was replacing my broken phone. The choices were slim without a contract. So, my company made a Band-Aid LG phone buy. It was the worst phone I’ve ever owned.

Contrary to the mailer’s claim “Your phone is only as good as the network it’s on,” $5 more per month for an iPhone opened my eyes up to what I was missing, starting with unlimited data, something Verizon never wanted to talk about until now, assuming you’re a lapsed customer (ie. unlimited data is now available on select phones, for new and returning customers, with one- and two-year contracts, for about $5 more than AT&T offers with the iPhone). They don’t get it.

“The best time to start missing a customer is before they stop being your customer.”

Sure, no one can say that Verizon is dead, but it’s very telling when a once perceived market leader does more following than leading. While they did pretty well launching the LG Voyager concept copy, a phone that Today’s Paul Hochman called the only viable competitor for the iPhone (I’m less convinced). However, the plan still lacks where AT&T came through. Customers don’t want 2-year contracts because technology is changing too fast to commit.

More to the point, Verizon would be better served by revisiting its marketing strategy from the ground up. They need to invest more on existing customers, recognizing that the recapture rate seems thin if you wait until after a lost customer already signs another contract or are unlikely to use their iPhone as a paperweight. Besides, it costs more to recapture a lost customer than attract new customers. Why? Lost customers already made up their mind once.

Here are a few quick tips for the Verizon marketing department:

• Improve your marketing to existing customers before their contract ends
• Re-engage customers who fulfill their contract with new customer perks
• Keep existing customers engaged, offering opt-ins on new customer perks
• Stop playing games with location rates; a national price plan is long overdue
• Verizon is a prime new media candidate; a presence last year would have went a long way, especially if you could have hinted at Voyage 9 before people bought iPhones

But above all, fix your messages. Touch gets more stylish? Come on. Honestly, the best thing Verizon has going is the geeky phone guy. He’s become a great icon on television but everything with text falls flat. It doesn’t connect to the smart phone market, which by all accounts, is the new market. Even Citigroup knows that. And they’re not even in the phone business.



Anonymous said...

What you're missing is how to market to lost customers. Verizon can't just let them go.

Rich on 1/9/08, 11:48 AM said...

Hey Anon,

I'm not suggesting they abandon lost customers as much as I am suggesting that an incentive-based customer exit interview/survey might be more effective before sending price point mailers. That's too quick of a message shift (from best network to lower price point).

But more so, I'm suggesting that ongoing positive customer engagement could circumvent the need for such research because the company would already have a sense of why they've lost some market share, thereby helping them to craft a better message.

I also understand that Verizon's value proposition is a better network. However, I'm not convinced their customers identify with the network as much as the phone, much like people tend to identify with their cars, but not the roads.

Just a thought. Best,

Anonymous said...

I too made the jump from Verizon to the iPhone. My Palm Treo was stolen so I made a trip over to the nearest Verizon store once it was clear my Treo was never coming back. I specifically told them, unless you can sell me a Voyager for something close to reasonable (about $300 was about as high as I was thinking). The best the manager at Verizon could do was knock $25 off the list of $399, since my contract did not come up again until May 08.

Ok, I said, headed down the street and bought myself an iPhone. Worth every penny and then some.

I then got the same letter you noted, come back and we'll give you $100.

Moral of the story, empower your employees to be proactive. I'd still be with Verizon.

The other moral of the story, life is too short for a cheap cell phone.

Rich on 1/21/08, 12:39 PM said...

Thanks Anon,

Your story is very telling in how companies must meet customer service issues head on as opposed to after the fact, which is almost always too late.

Thank you for the addition.

All my best,


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