Will Holiday 2022 be the season of churn, churn, churn? — Greenblatt

Industry Voices - Greenblatt

A day may come when we experience a "normal" holiday shopping season. But it is not going to take place this year. Having, for the most part, made it through a turbulent pandemic that punished some (including the hospitality and energy sectors) while rewarding others (most notably wireless service operators and over-the-top content services), the fortunes of these verticals appear to have flipped as we move into Holiday 2022.

Wireless operators, in particular, appear to be headed for a tough end to their year. The period of "Covid Kindness" has come to a close, as the sense of gratitude consumers felt for having access to affordable – and even free – connectivity during the early days of the crisis gives way to feelings of frustration with perceptions of rising costs and complexity juxtaposed with plunging customer service.

The entire picture has been further complicated as businesses and consumers adjust to inflationary pressures that most fear will lead to a significant economic downturn. Concerns about an impending recession have prompted consumers to revisit their current plans and determine how they will move forward in the most cost-effective manner possible.

For their part, wireless providers are scrambling to put together value propositions that current and prospective customers will appreciate. The challenge here is that the definition of "prospective customers" in today's highly penetrated and saturated market means "someone else's subscriber."

As such, the battle is on to poach and pry-away business from competitors.

Initial efforts to retain and attract customers have focused on putting together packages of services that integrate mobile connectivity with access to premium content services. It has led to a rather complex message that has been difficult for many consumers to decipher. 

As a result, customer perceptions about plans currently promoted in the market have declined significantly. According to the most recent J.D. Power U.S. Wireless Purchase Experience Satisfaction Study, customers today are far less likely to agree – much less strongly agree – with the statement that their wireless plan is affordable and meets their needs compared to a year ago. 

In many ways, their concerns are understandable. Heading into this holiday season, comparing apples to apples across service and product offerings is very difficult. Plans are just not easy to understand. The questions and issues that consumers must evaluate before making a decision are many:

  • Do I get a free streaming service with this offer? If so, for how long? What is that value?
  • Do I have unlimited talk and text? Does text count as data? What is the value?
  • Do I really want to pay $1,400 for a device over time? What is the value?

Complexity and lack of clarity are rarely a recipe for success in a healthy economy. It is a major problem for consumers wrestling with the prospects of a challenging economic environment.

Some leaders recognize how their customers' circumstances are changing and are making available more straightforward offerings with lower costs and fewer frills or add-ons. It is a trend that will likely catch on to become a significantly more crucial go-to-market strategy. The question is: will it become a mainstream strategy in the final weeks of 2022?

Customer Service Staffing Remains a Problem

It will be interesting to see how the availability of talent and attitudes toward work play out over 2023. For now, the staffing situation remains exceptionally tight, especially around wireless service providers' on-site, online and contact-center customer service operations.

Staff retention constraints, shorter representative tenure and less training are lengthening the time it takes to complete purchases. They have also elevated the customer's effort to go through the process. The result, unsurprisingly, has decreased satisfaction. According to the J.D. Power study, consumers believe they're paying more and receiving less.

Dissatisfied with their current operators, many consumers are acquiescing to the notion that the grass might be greener elsewhere, which is driving churn up. It has been a while since consumers have been this susceptible to switching service providers in response to the right promotions from a competitor.

Ian Greenblatt leads J.D. Power’s Technology, Media and Telecommunications Intelligence. With in-depth industry expertise, Ian drives market strategy across the rapidly converging landscape, which encompasses the entire communication sector. He is a graduate of Northwestern University and DePaul University College of Law. You can reach him by email at [email protected] and follow him on Twitter at @GreenblattTMT.

Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not necessarily represent the opinions of FierceWireless.