How to Run a Cell Phone Business without Ripping Off Your Customers
Exorbitant activation charges, massive early termination fees (ETF) and overpriced mandatory data plans – it’s pretty clear that we as cell phone consumers get ripped off on a daily basis. Even the FTC thinks so – that’s why they pressured Google into slashing the ETF on the Nexus One from $350 to $150 and launched an inquiry into Verizon Wireless’ high cancellation fees as well. But the company line of most cell phone plan providers is that they have to charge these high fees otherwise they’d lose money. According to an industry analyst at GLGroup.com:
… [C]ontract length and price are set so costs can be recovered before the contract ends. [...] Although some might see ETFs as excessive, we must also recognize how much it actually costs the carrier each time a customer terminates their contract early. Acquiring new customers is very expensive. Keeping customers is how companies earn a profit – including telecom companies.
So, the message seems to be, “Hey, sorry, we’ve got to rip you off. It’s just how you make money in this business.”
Try telling that to John Marick, president of Consumer Cellular. Marick agrees that in order to make money selling cell phones, you have to retain customers. But he disagrees on how a cell phone company should go about doing so. Rather than enticing you with supposedly cheap or free phones and then using what essentially amounts to financial blackmail to keep your business (”Stay with us or you’ll pay!”), Consumer Cellular believes that the best way to keep a customer is – believe it or not – to keep them happy by giving them what they want.
“If we do a great job and we’re meeting the needs of the customer, they’re going to love us and they are going to stick around and tell all their friends about us,” Marick says while explaining his company’s unconventional business philosophy. “It’s critical to our success that our customers are happy.”
That flies in the face of the stance that most cell phone companies take, who make it seem like a magnanimous act of generosity and trust by offering you a subsidized phone. But the thing is, Consumer Cellular offers free and subsidized phones, too. Just like Verizon Wireless, T-Mobile and Nextel, they start off each contract in the hole. The only difference is that Consumer Cellular isn’t afraid to eat the costs if they fail to deliver on their promises. If anything, it further motivates them to offer a better product with better customer service. Isn’t that how capitalism is supposed to work?
Consumer Cellular is a no contract cell phone plans provider that offers plans for as low as $10 a month and phones from Motorola, Nokia and Doro at prices ranging from $0 to $50. Granted, they don’t have quite as diverse of a selection of smartphones and feature-packed handsets as you’ll find at the bigger carriers (there’s still no way to get an iPhone without taking out a second mortgage), but if you’re looking for a phone that does what a cell phone is really made to do – make and receive phone calls – then Consumer Cellular is an excellent choice. And if you are still interested in performing some basic text messaging and web browsing, you have the option to add it on for an equally reasonable fee.
There is a $35 activation fee, however and Consumer Cellular will run a credit check. (After all, they aren’t a prepaid provider – they offer month-to-month plans, just like a utilities service, which also runs a credit check.) But other than that, there’s absolutely no risk. There’s a free 30 day/30 minute trial period and if you aren’t happy, you can get a full refund – no questions asked. They’ll even send you prepaid postage. At the end of the day, Consumer Cellular doesn’t want you to spend more money than you intended – in fact, they are working on a feature that will send you a free email and text alert when you’re approaching your limit on your minutes so you don’t accidentally go over (available this Spring). And when you run out, you’re not left high and dry with a bricked phone – you can still place calls at the significantly (but understandably) higher per minute rate.
Consumer Cellular is also particularly friendly for seniors. The Doro PhoneEasy is specifically designed as an excellent cell phone for seniors and the flexible pricing makes sense for someone who may only use the phone when traveling or for emergencies. The AAA and AARP discounts also make it an obvious choice for silver-haired customers in the golden years.
Obviously, Consumer Cellular isn’t for everyone (at least not yet – Marick says they’ll be rolling out more smartphone features in the future) – but if you’re looking for a no-strings attached relationship with your cell phone provider but don’t want to be stuck with one of those fugly prepaid Wal-Mart phones, Consumer Cellular fits the bill.
(Note: Consumer Cellular phones run on AT&T’s network, for what it’s worth. Be sure to check out the coverage map before signing up. Also, stay tuned for our cell phone comparison of the Doro PhoneEasy and the Samsung Jitterbug, another popular senior cell phone.)
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April 17th, 2010 at 5:12 pm
Been with CC for 3 mos. now and the only thing I think they should do for us customers is to add up the airtime used in seconds instead of whole minutes. Every customer could probably care a lot less about alerts than to have their air time added up seconds or heck, even quarter minute blocks would be nice. Reason is that after a months usage goes by, the actual time the line is used for air time is about half of the total. My phone keeps a running log of how many minutes and seconds of on air time was used. Comparing that usage number to CC’s method of rounding up to a full minute of usage even if that last minute they count had in actuality just one second of air time leaves a fresh scent of the scam it is. We all know they can track usage to the thousanth of a second so why don’t they? B/c they double the minutes used on your bill, scamming the customer and saying it allows them to provide alerts deal, which of course no one really needs if they would bill by the second or at least by the quarter minute. Remember we joined at CC because they don’t have all those extra things we don’t want, need or will even use. So scrap the alert junk and bill used airtime by the second for real customer happiness.
April 20th, 2010 at 9:52 am
matt, thank you for your comment. We are continually looking for ways to better meet our customers’ needs and appreciate receiving specific suggestions. Because it is standard for the wireless industry to bill in full-minute increments, there are some challenges to offering billing in sub-minute periods because of the way we interface with other carriers. We will keep your suggestion in mind as we look for additional ways to improve our service. Meanwhile, please don’t hesitate to reach out to one of our customer service representatives at 1-888-345-5509 to review how we can best optimize your plan based on your usage habits.
August 2nd, 2011 at 9:15 am
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