Cingular Distills Customer Value Into Thermometer Form

A customer service source inside Cingular sends us some interesting internal documents and says the cellphone company has a new policy that’s got the headset set in a bind. He reports that Cingular will, “no longer discount equipment for customers that are not profitable for us, no mater where they stand contractually. I have received several calls from customers attempting to upgrade, only to have to inform them that although yes, they are out of contract, we will not offer them discounted equipment. “

But wait, how does a lowly Cingular rep determine how profitable you are as a customer? Luckily, there’s a handy box on the operator’s screen showing a computerized calculation.

If you threaten to leave Cingular for a wireless provider that doesn’t suck, the degree to which they try to lure you back into the fold will depend on how green your mercury is.

The full three page job aid for Cingular reps, after the jump…

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Related: How Cingular Avoids Giving Discounts to Worthless Customers

Comments

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  1. Ran Kailie says:

    Maybe its just me, but this system makes sense, sorta like a reward system for customers who spend money with the company. Many places already do this, like grocery stores where you get coupons for every X amount you spend.

    The wording on this could be better in some places, but its not really that shady.

  2. Marcus says:

    Yea, I’m inclined to agree. I mean, I cant remember how many times I had a customer say “I spend X amount of dollars every year..” so on and so forth. I think that customers (the smart ones) expect to be rewarded for continued patronage–its like getting a free drink from your favorite bartender every now and then.

    Unfortunately for me, I’m one of those business customers who will never get a break. Now I know why they were anything but cooperative.

    My advice: go into an agent-owned store. They’re usually willing to make quite a bit of concessions, especially if they’re the typical, under-trafficked agent-owned stores.

    –Marcus

  3. something_amazing says:

    I actually think this frightens me a bit. You’re creating a system that encourages CSR’s to discriminate against their own customers. Would this mean that tech support wouldn’t try as hard to resolve a customer’s issue? As opposed to a company doing the “right” thing and trying to make ammends with a customer and help them, they’re instead encouraging the customer to leave, which will leave a sour taste in their mouth.

    Something like this could easily degenerate into a blacklist. The cingular example is deceptive, because what it’s really saying is that the only people who get the discount are people who have already *paid* for the discount– through being a profitable customer. What if your score as a “profitable” customer were to be shared with other companies? What if this “score” evolved into customer relations credit report that the companies would share and sell between eachother?

    I say that this is a bad thing. Companies shouldn’t discriminate between customers. We’re all the same analogous organ that breathes life into these companies and their discrimination is simply to create an upper class of “dumb” customers willing to part with their money easily. The thermometer is like a gambling machine– you may win out in the short term, but in the long term, the house always wins.

    For reference, see this article: “Those customers, they’re smart, and they’re costing us money” — Best Buy

  4. Umm, so what? In an age of number portability, what the hell do I care how much of a discount any particular cell phone provider is willing to offer to RETAIN a customer? I’ll gladly jump ship every year or two if it means (as it recently did for me) a $300-400 Pocket PC for less than $100 if I switch. Number portability has been fun for me; it reminds me of the long distance game I used to play when the various long distance carriers would give you a couple hundred bucks for switching to them.

    Now, if they stop offering great deals to NEW customers and I’ll holler plenty.

  5. Ben says:

    Heh, the reason I’m a cingular customer NOW is that they offered me free phones when another carrier refused to repair or upgrade my outdated phone.

    In fact, Cingular is offering much better deals to new customers (couple hundred dollar incentives on new phones) than existing customers that stay with them and renew their contract, at least that’s how I read it on the web. So I’ll probably jump ship when my contract expires at the end of the summer if I find a better deal.

  6. Ben says:

    After saying all that, I love the “this is for internal use only, we want to make all of our customers feel they are especially valuable” yet here it is plastered on the internet for anybody to see.

  7. This sounds like an incredibly bad idea…Pushing customers to leave Cingular for other providers because Cingular isn’t willing to cut a deal and maintain the unprofitable deal will have a much larger impact than just those individual accounts.

    Communications networks, especially ones that provide free in-network calls, have a sort of economy of scale…The less people in the network, the less value it has for the member…Enough of these unprofitable customers switch to Verizon or Sprint, and Cingular may find that the friends of those unprofitable members will be taking their profitable business elsewhere.

  8. kerry says:

    Ben – I thought the same thing when I read that.

    I’m glad I left Cingular. Screw them if they feel like someone who can’t afford a huge plan and actually controls their usage so as not to go over isn’t worthy of any discounts. They’re basically just saying that they don’t want to keep you as a customer if you’re not willing to bend over for them.

  9. RandomHookup says:

    What they really want are customers who like shiny things but are too stupid/lazy to switch once they are in the system. Maybe they should offer them a billion minutes a month free…

  10. DeeJayQueue says:

    What they want are people who call information 60 times a month, constantly go over their minutes, call during peak times and roam all over the country. Those people make them the most money.

  11. ckilgore says:

    What I want to know is how they get that score. Is it someone who pays their bill on time, gets a new phone every two years and stays within their minutes without overages? or is it someone who gets a new phone every 6 months and pays for over-time minutes every month? I would be in the first category and would hate to find out I wasn’t valuable customer because although I may not spend a great deal of money all the time, I do provide a steady stream of income.

  12. Ben says:

    The whole idea of retention in the first place is that it is (as a general rule) much cheaper to keep a customer than it was to win them in the first place.

    What they are saying seems to be that they have changed their policy, that “lesser” customers aren’t worth spending the coin to keep.

    It might work – some people will try and get a discount phone (for example), and when they are told “sorry,” they’ll just stay anyway. Not everyone is as bright as us Consumerist readers and willing to shop around.

    Same notion that lets a gas station charge 20 cents more a gallon than those down the street – some people can’t be bothered to shop for a lower price. They’ll take it if it’s offered to them, but if not they’ll just pay up. It’ll take a while to see how this affects their business and revenue. I don’t think it’s a very wise move, but I’m not in charge.

  13. Chi says:

    Just got off the phone with Cingular’s CSR folks. Boy I got to hand it to the Consumerist as the CSR was bewildered that I even knew what a LTV was and where she could find it on her screen.

    Granted she wouldn’t tell me my LTV value, but did state that it’s less than half-way full (so a LTV or 2 or 2.5?).

    At least now with Cingular I can get a feel for where I stand in their company.

  14. Magicube says:

    LTV is extremely common, and I’d be shocked if Sprint, T-Mobile and the others weren’t doing it too. Most of my clients track LTV.

    Think of it this way: You own a small music store. You have a customer who you recognize who buys at least $50 worth of music a month. You also have a “customer” who thumbs through the CD racks and listens at your listening station for a couple of hours a week and maybe bought something six months ago. They’re both there at the same time – to whom do you want to give more attention? The only difference in this case between you and Cingular is that they can afford a database to track this value.

    To something_amazing, well, that “score” that’s shared with others is already happening in the returns world – there is a database of customer returns that tracks your returns with certain retailers. Return too much and you’re no longer welcome at certain retailers.

    And read your credit card agreement if you have one. JPMorganChase, for one, reserves the right to raise your interest rate if you’re late for a payment on ANOTHER BANK’S credit card. Seriously.

    I think it sucks, and hopefully there will be a backlash, but that’s what’s going on. You’re measured by your value to the company, not on an egalitarian concept of your value as a human being.

    If you’re in business to be a valuable business to a community, treat your customers all (relatively) the same. If you’re out to make a a lot of bucks, you need to look at your customers individually and figure out how sweet you’re going to be to them to keep them.

    In this particular context, I don’t see it as a big deal. These are discounts – it’s not like Cingular’s shutting the door to these customers; they’re just saying these customers don’t get a bargain like the ones who are paying more money.

  15. Magicube says:

    Oh, and read the “Sponsored Links” at the bottom of this page. Classic.

  16. HawkWolf says:

    cube, to me, the ‘raised interest rates’ thing makes sense, because a late payment dings a credit rating, making you a riskier lendee.

    Makes sense, as in, I see where it makes sense, not that i think it’s Right.

    As for all this talk about cell phone stuff, I don’t quite understand how people can churn so much. Do they have so much disposable income that htey can just break contracts and ditch companies? If i ditch cingular, I pay something over 150 dollars of an early termination charge. If I break my Speakeasy DSL contract, I pay a whopping 300 dollar charge (on the flipside, all I had to do to have a 200 dollar fee when a covad tech couldn’t get into my house, was call speakeasy and ask to have it waived.)

  17. Ben says:

    Hawkwolf, when your contract is up (most are two or one year) then you are free to quit the service and join another.

    The question here seems to be, just how badly will they want to keep you? If you aren’t an A-list customer, they’ll just say “we can renew your contract.” I can get a two year contract ANYWHERE, but if I’m a new customer they’ll usually throw in a new phone and accessories for free to get me to sign up.

    I’m notoriously loyal to places that treat me right, probably to a fault. What irks me is that for the exact same phone I would have to pay $200 more to get it as an existing customer than I would as a new customer, and it seems they would rather me walk (and lose a customer) rather than part with a couple hundred bucks. Which is the retail price anyway, and nowhere near their cost – they crank phones out in factories that are just a little nicer than the tennis shoe sweatshops, it seems.

  18. hardcle says:

    I must have been a ‘victim’ of this policy. A few months after my AT&T Wireless contract ecxpired, I decided I was ready for a new phone. T-Mobile was offering the phone I wanted for free and if I got it at Comp USA I could get a free ipod Shuffle to boot. I wanted to avoid switching if I could, so I called Cingular and asked if they could match the free phone offer. Despite the fact I was willing to spend an extra $240 over the life of the contract, Cingular only offered me $10 off a new phone. I switched the next day.

  19. something_amazing says:

    magicube:

    Wow just got back to this thread. Didn’t realize the thing about the return databases. Is this verifiably true? I don’t mean to doubt the veracity of your claim but is there any other evidence of such a database?

  20. Papercutninja says:

    Images are gone? Or is my browser wonky today?

  21. trixare4kids says:

    Something_Amazing, I’m aware of the return tracking too as I’ve read about it elsewhere. Here’s what I dug up just off the cuff, I’m sure there’s more.

    http://returnexchange.com/
    http://www.cbsnews.com/stories/2004/12/23/earlyshow/living

  22. dominican chick aka riahekans says:

    LTV is a common marketing metric that a lot of companies use to determine the “value” of their customers. Be aware of that next time sign up for a book club, a credit card offer, or buy from a catalog.

    From a business perspective, I don’t see that as a bad thing. In Magicube’s example, nobody would believe the business owner did something wrong for paying more attention to the more profitable customer – people just get outraged if big companies seem to do the same thing.

    I agree that companies in general are much concerned about acquisition – new customers – instead of retention, although the latter is cheaper and sometimes more profitable. You would understand a company that wouldn’t want to give $200 worth of equipment to a customer who’s will bring less than that in profits during the 2 years of her contract but most of the time, I think they take customers from granted and think they will never leave without doing nothing to stop them.

  23. higgins says:

    I’m dining tonigh at a tiny East Village restaurnt where it’s generally tough to get a table, but it’s pretty easy for me because I’m a frequent flyer. What’s the difference?

  24. drewheyman says:

    the system referenced in those forms (telegence) is primarily developed by a company called AMDOCS, and some version of the same is in use at Sprint, TMobile, and several Euro carriers.

    Judging from their website, they also cover CRM systems for retail (home depot is one that i know of) and are moving into financial services.

    just be glad that you now know some details of the basic system being used to measure your worth as a customer across many industries.

  25. jkat985 says:

    Up until very recently I worked for Cingular. Here is the breakdown: They tell you in training that you MUST make an attempt to save EVERY customer. If you don’t you get a bad mark on your record. If you have beedn with the company for a long time, pay your bill on time, never really complain about any problems, don’t constantly call in for credits and the like and all of those good things you are supposed to do, they consider you to be a cust. that will not leave and therefore continue to give cingular money. If you are the ttype of persson that calls in for creditt all the time and complains about problems that don’t exist, you are considered to be more likely to leave and not want to keep service. Those are the customers that no one wants to help. Who would? Its like having two friends. One is always there asking you for money for whatever reason, always complaining about how life is so terrible and all those whinney things. The other iss the friend that is there for you when you need them, that you can just go out and have a good time with and never have to worry about how much of a bill they are adding up, because you know they won’t have to ask you to pay it. I know the analogy isn’t perfect, but you get the idea. Who are you more inclined to “hang out” with? I know who I would pick. Look at it this way, all companies base things on how much you spend, how much you complain to get credits for things that you don’t deserve, things like that. Every company is out to make money. If they weren’t, where would you be? It makes no sense to complain about something that you cannot change anyway. If you don’t like it, switch companies. I can guarantee you that most, if not all, cell phone compaanies do the same thing, even if you don’t knopw about it. I for one don’t care how they look at it. I know that I am a good customer and that I will be treated right. Respect is a great thing. Treat a rep with respect and they’ll usually do the same. If they don’t ask for a supervisor. Its simple

  26. Jobeleca says:

    I’m a current Cingular employee, was on both Customer Relations and Customer Service, a little more info… LTV1 is a new policy that probably started after jkat was trained and left (and yes, I know this is an old thread). LTV1 basically means that the company is losing money on the customer, usually due to three primary factors (1) How many of your minutes used are roaming minutes as a percentage of total minutes used (we don’t charge YOU for roaming, but it’s expensive as hell for the company) (2) Have you received any large credits in the last 6 months. (by getting a large credit, you’ve just wiped out the company’s profit on your account) (3) Do you call more than 4 times a month? (each call costs the company $12.50, 4 calls = $50, average bill $54)

    Due to the unprofitability of LTV1 customers, the ‘save’ attempt is now limited to (1) Would a different plan or feature fix a billing situation (2) Do you know of someone who would like to take over the line? If not on both questions, we cancel them because we don’t want them to stay (i.e. by allowing them to stay, we’d effectively be paying them to use our service, and that just doesn’t make sense)

    I’ve recently spoken with both Verizon and T-Mobile reps, they have the same basic system now as well. Cingular and Verizon are directly equivalent, T-Mobile is more lenient, they’re a smaller company and don’t offer as much for the money, so they’re able to make a profit on more marginal customers.