Archive for February 15th, 2012

MoFoFree: Cell phones update …

February 15, 2012

Punch line: Wireless operators like Sprint Nextel are building a big business providing free cellular service to the poor. Taxpayers pick up the tab.

Ouch

* * * * *

Last year, we blogged about the Feds free cellphone service to low income folks.

You see, chatting and texting is an entitlement that tax payers are morally required to subsidize.

Say, what?

The program started with good intentions: to provide every low income household with a landline for emergency use.  No long distance.  No special service.  Just local calls and 911.

No problem.

Well, then landlines became “so yesterday” and the program morphed to cell phones

And, guess what?

Demand is exploding.

According to Business Week:

Companies like Sprint Nextel aren’t driven by altruism.

Serving cash-pinched customers  can pay off due to federal government subsidies.

And finding new customers isn’t hard.

Now the poor or unemployed form a large pool of would-be customers.

With unemployment at 9.4 percent and one in six Americans living in poverty, Sprint and  TracFone have seen an explosion in sign-ups for the government-subsidized free wireless services. 

Applicants have to be eligible for Medicaid or several other low-income assistance programs, have a family income significantly below the local poverty level (poverty guidelines vary by state), or receive food stamps.

In October, 43.2 million received such food assistance, up 14.7 percent from a year earlier.

Despite the rules, it’s reported to be  pretty easy to get one of these phones – or to get several of them.  Think “no doc” mortgages with fewer controls.

One reported scam is for qualified people to sign up, sell their phones on eBay, and then go back to the government  trough for another phone.

But, not to worry.

Also according to Business Week: “A staffer at the Federal Communications Commission, which oversees carriers, says the agency may consider tightening oversight and cost management of the fast-growing program.”

That’s a relief, for sure.

And, oh yeah … under consideration is extending the program to broadband service.

Gimme a break already.

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Thanks for the good customer service … and, oh yeah, good-bye.

February 15, 2012

Ken’s Take: There’s a marketing classic titled “Why Satisfied Customers Defect”.  The authors say it’s because of something called the “top box effect”.  Keeping a customer merely “satisfied” isn’t enough.  To secure their loyalty, companies have to make them “completely satisfied” — which is often the top possible choice on a market survey.

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Excerpt from AdAge: “Why Brand Love, Satisfaction Aren’t Keeping Shoppers Faithful”

Accenture found that even though consumers are more satisfied with customer service than ever before, they are switching brands at a high rate.

Consumer satisfaction had increases ranging from 5% to 7% in one year, depending on the category.

Consumers are happier, for instance, with shorter wait times; the ability to solve issues without having to speak to someone; and the ability to resolve an issue by speaking to just one person.

About 44% of consumers said they expect more, or much more, than they did last year from the brands with which they do business.

Today’s savvy digital customers expect polite and knowledgeable employees or convenient customer-service hours.

And while they appreciate and are satisfied with those things, it’s not going to stop them from taking their business elsewhere.

Edited by ARK

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