IT Musings: Mobile Phone Plans & Customer Loyalty

Ever since SingTel started the trend to downsize the data access from 12GB to 2GB, re-contracting has become a form of mental torture whenever a new phone that takes my fancy emerges (the latest being the Note 3).

Logic dictates that the phone I paid for is the lowest price a telco could get through bulk discount. If not then whatever the Telco has forked out on top of whatever we have paid upfront to re-contract should have ended on the 22nd month.

So strictly speaking, we should have a reduction of our monthly phone bill since the contract would have paid off what we owe to the Telco. Right?

Of course not. We are still paying the same bill even when our contract has ended. So did the ‘subsidy’ happened or not? Did the Telco we support put a constant amount to the value of the contract we signed with them?

Maybe not if you try to use recommended retail price minus the price you pay upfront when re-contracting and then you see that the expensive plans means you pay lesser upfront but in fact you pay more in the subsequent month and lose even more if you don’t re-contract.

What I don’t understand is this – All the major telcos can spend hundreds of dollars (recuperate via the monthly bills) to get us to sign with them using new phones as carrots but they cannot use the same amount of money to reduce our bills to KEEP US with them? What happened to customer loyalty programs?

Ok forget about maintaining the expensive customer loyalty program. Just scrap the program and give us a cheaper bill since the Telco is not paying us any money to buy the new phone too.

Hence we are enriching our Telcos by not recontracting and even if we re-contract just to make sure the money we paid goes into repaying the new handset, we are still at the losing end because of the very much reduced data bundle. Lose-Lose situation for Singapore consumers.

And by the way, since when did a customer has to call in to ask for discount vouchers to re-contract?  Are we so insignificant that we have to BEG the Telco to keep us as their customers? Uniquely Singapore we are!

And how about the expensive international data and call plans? We all have heard of horror stories before when people came back with these huge bills unknowingly. So what do we do? We off the phone totally.

Thanks to T-Mobile I realised that there are companies out there that do take care of their customers!

According to the report by The New York Times (click the T-Mobile link), Mike Sievert Chief Marketing Officer let off the secret that the charges can be as high as 90% profit! 90% percent!!! Yeah why not? Whenever we go overseas we can buy prepaid cards that cost so little and can last so long. The same can never be said for International Roaming and so whatever we see in the open do substantiate the fact that we are overly charged.

Of course we know the base station in the home country has to informed when a certain home SIM card was registered in an overseas network. There are costs involved definitely but does it really need to cost THAT high? I also keep seeing counters selling cards that sells cheaper call and data rate using your own home line. So something is really amiss that our Telcos cannot charge cheaper for roaming services.

Our consumer mobile communication market is seriously in the doldrums. We are not valued as customers and we are given much lesser for the same price we paid. And best of all, M1 and Starhub used to be able to fight tooth and nail for customers with such plans that charged by the minute and then charged by the seconds.

All of a sudden, it has shifted to who can provide the latest iPhone or smartphone to the market with money spent on reservation system for the new phones.

Pray tell what happened to perks to us customers who are still with you?!?! Isn’t there anything Telco can do to make us stay with you? 

SingTel would have an answer for me – recontract as SIM Only Plans and you get an additional 50min of call time BUT you will still get the paltry 2GB Data bundle. Right…as if that would entice me.

According to customerforlife.com, it is 6 to 7 times more costly to acquire a new customer than to retain one. Half of your customers could leave if nothing is done and profits can increase from 5-95% from your current customers.  I firmly believe that the value for the telco will come from those who chooses not to re-contract including being advocate for a brand, they will repeat the purchase, they will pay for the higher plans and will resist competitors’ temptation.

And we go back to the T-Mobile strategy.

  1. They have totally scrapped the 2 year contract plan. Yes they did!!  That means the customer can really leave without any penalties!!
  2. They have given UNLIMITED and…wait for it… FREE (Gasp!) Data and Text messages to 115 countries. Data speed however would be the slower variant but is good enough for Social Media updates and emails.
  3. Calls to any of the 115 countries costs only 20 US cents (or about SGD 0.25) per minute. If everything is TCP/IP in the first place, I don’t see why this couldn’t be done.

Granted friends in the US may say that the coverage by T-Mobile is not great and this is one way to cover up the service gap but they are certainly very generous in covering that gap!!

I have maintained my 12GB data plan and every once in a while I would think if it is viable to re-contract and get a new phone. A fast check on my Telco mobile plan do reveal that if I pay for additional 10GB every month just to have fair comparison, the difference is a whopping SGD200 per month!! That would be SGD4800 for the duration of the contract.

It got slightly cheaper if I sign on and go beyond the allocated data bundle but is still a huge sum – for every 1GB I have to pay SGD10.70 capping at SGD188.00 per month and after 24 months, if I do use the Internet to my hearts content, then it would amount to SGD4512.

Granted there will be unlimited calls and SMSes but how many of you really talked on the phone nowadays? How many of us actually use SMSes since most people have migrated to Whatsapp/WeChat etc?  So these perks don’t entice at all but the fact remains that the data bundle do.

All said and done I would rather save that money and buy a non-contract phone and can use the Internet to my hearts content without ever worrying!

To end this blog post, this is what the CMO of T-Mobile got to say.

“Those other companies sit around trying to figure out what customer charges they can get away with,” he said. “We (T-Mobile) sit around and say, ‘What can we get away with not charging the customer?’”

Can our 3 telcos think the same way? Isn’t this what supposed to happen when there’s competition? I think our Telcos couldn’t be bothered with retaining new customers. If it is not true, prove us wrong.

Oh yes. T-Mobile signed up 685,000 customers in the second quarter of 2013. I hope their network can handle the increased volume!

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