Distracted by massive industry consolidation, new technology, and changing infrastructure, it seems telecommunications providers aren't getting a clear signal when it comes to customer complaints. While the industry expands options for making connections via the Internet, wireline or wireless telephone service, customers remain open to offers from other providers - a bad sign for telecommunications firms that already face eroding public opinion.
 
A soon-to-be-released national study on customer loyalty in the telecommunications industry shows the industry's lack of customer focus and missteps in after-sales support come at a bad time when there are new, consumer-friendly federal regulations and a burgeoning menu of choices. Ironically, as telecommunications firms work harder to provide more options, they're enabling lower rates of customer loyalty and higher rates of customer churn.
 
The Walker Loyalty Report for Telecommunications, which examined customer loyalty in the targeted sectors of Internet Service Providers, local, long-distance, and wireless phone companies, makes it clear service quality is a key driver of loyalty in the industry.
 
According to the Walker study, 75 percent of customers say they're satisfied with their current telecommunications providers and plan to continue their relationship. However, a mere 28 percent - one of the lowest percentages of all sectors including information technology, financial services, retail, and health insurance - can be considered truly loyal; that is those who want to continue their relationship and plan to continue purchasing service from their current provider. In many cases, loyal customers are likely to increase their use of a product or service and are more likely to recommend it to others.
 
Another 46 percent of telecommunications customers consider themselves trapped - those who are less than pleased with their providers but plan to continue the relationship.
 
Walker has developed and refined its concept of loyalty for both customers and employees since the 1970s. Loyalty goes much deeper than a general measure of customer satisfaction. Truly loyal customers are strong advocates and will commit their purchasing power to enrich strong relationships with their telecommunications providers.
 
"Mergers are running rampant throughout the telecommunications industry and that doesn’t bode well for customer service," said Brad Linville, Walker Information group vice president who heads up the company's telecommunications practice. "Mergers frequently come at the expense of focusing on customers as companies concentrate on business integration. While overall levels of service might not decline, promised benefits often don’t materialize."
 
In fact, 62 percent of customers were positive about the overall quality of service they received from their telecommunications providers. However, only 57 percent were positive about customer support services and 54 percent had nothing good to say about their provider’s billing processes. Wireless firms had the worst-rated billing process while ISPs had the best - although neither received positive marks above 49 percent.
 
Local telephone providers, which are traditionally monopolies, appear to have taken a beating in loyalty ratings with only 23 percent of customers indicating positive feelings about their providers. Walker's experts say the lack of choice presented by the local telephone market will continue to be a major issue for customers.
 
"The local providers are in trouble," said Jeff Marr, loyalty expert and Walker Information group vice president. "It kills you anytime you’re perceived as a monopoly. That's why they’re scrambling to diversify into cable and Internet. They're also in trouble along with long-distance providers because people are beginning to drop wireline and use wireless instead."
 
Both wireless and wireline phone providers are likely to take a hit as the Local Number Portability Act takes effect in November 2003. Customers will no longer be tied to their wireless providers to retain their cellular phone number. According to Kan Hyers of In-State/MDR other markets where portability has been introduced have driven wireless customer churn rates up by as much as 50 percent. In the U.S., those numbers could be as high as an additional 22.2 million churning subscribers in the first full year of portability.
 
If concerns about customer service, billing, and portability issues don’t worry telecommunications providers, then ethics - always a consideration in terms of building loyalty - should. Less than 60 percent of customers believe their providers are companies they can trust, and a mere 44 percent say they consider their providers to be highly ethical.
 
Walker's research questions are designed to collect candid responses regarding customer perceptions and attitudes to find out what they're thinking, why they stay, and why they leave. The Walker Loyalty Report for Telecommunications also indicated:

• Only 54 percent of telecom customers said they would recommend their provider
• Earning a reputation for being customer focused is the number one driver of loyalty
• 62 percent of customers say they would find it appealing to purchase all telecommunications services from a single provider
• Only 32 percent of telecommunications customers say they like the advertising produced by their providers
• Just more than half of customers indicate they perceived their providers as industry leaders