Thursday, January 18, 2007
Wrong Way for Wireless?
Forbes.com has an interesting article today if wireless operators are really going in the right direction: Wrong Way for Wireless?
The carriers' logic: Selling games, songs and text-messaging services is much more profitable than plain-old phone calls. And wireless companies' data service revenue grew 88% year over year, according to research firm Telephia.
Yet Rasmus Wegener and Pratap Mukharji, Atlanta-based telecom consultants for Bain & Company, say wireless companies are headed in the wrong direction. Betting on customers to fatten up their phone bills won't work, they say. Instead, they think carriers should focus on their core business, and spend more time and money building customer loyalty. Dissatisfied customers are constantly bailing out on their contracts, and getting new ones is an expensive proposition. But if carriers cut their churn rates by 20%, they could boost profits by up to 15%.
Wegener and Mukharji recently explained their findings to Forbes.com.
The carriers' logic: Selling games, songs and text-messaging services is much more profitable than plain-old phone calls. And wireless companies' data service revenue grew 88% year over year, according to research firm Telephia.
Yet Rasmus Wegener and Pratap Mukharji, Atlanta-based telecom consultants for Bain & Company, say wireless companies are headed in the wrong direction. Betting on customers to fatten up their phone bills won't work, they say. Instead, they think carriers should focus on their core business, and spend more time and money building customer loyalty. Dissatisfied customers are constantly bailing out on their contracts, and getting new ones is an expensive proposition. But if carriers cut their churn rates by 20%, they could boost profits by up to 15%.
Wegener and Mukharji recently explained their findings to Forbes.com.
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