Carrots and Sticks

Cingular really wants its customers who are using old analog or TDMA phones to upgrade to GSM phones.

And who can blame them? They don't want to keep running networks based on antiquated technology - or simply a different system than the one they're investing in now - for just 8% of their customers.

Unfortunately, they've decided to encourage those folks to upgrade by force:

About 4.7 million Cingular Wireless subscribers with older phones will have to pay $5 extra each month as the company tries to prod them to get new handsets so it can devote its entire network to one type of signal.

The new surcharge, unique among the major U.S. carriers, will be added to bills starting in September, the company said Monday.

The problem is that nobody likes to be pushed into something, and Cingular has competitors. So if they are trying to make you change, why not change in big ways? Go find out what T-Mobile and Verizon and Sprint are offering. If you've got to get a new phone, why not see if a new carrier will work for you?

Here's the really sad part: these people are Cingular's most loyal (if not biggest-spending) customers. They're stuck with them for years, which is why they have old phones.

Wouldn't a better approach be to tell those customers the truth, and make the change a positive for them? How about telling them this:

We appreciate your business over the years. As technology as changed, we've moved to newer networks that give you better call quality. We'd like you to have the best service possible - and we want to eliminate the older network equipment to reduce our costs.

To thank you for choosing Cingular and help make this change, we're offering you...

And then give them some choices. A free phone (even the cheapest ones have got to be better than what these customers have.) A discount on their rate plan for the first year. A discount on a really spiffy new phone. The ability to change without signing a new contract (which may be what's kept some of these folks on their old phones - sadly, if you look cross-eyed at your mobile carrier in the US, you've committed to another two-year contract).

Cingular gets people off the old technology and can reduce costs. Customers are happy. Win-win.

Save the stick for the last holdouts - when you get to only having 1 or 2 percent of your customers on the old technology because they just won't change, they are costing you more than you make from them anyway. Use the carrot on the rest, and have customers who stay loyal.

Too bad Cingular has chosen the old telecom "charge 'em and charge 'em again" approach. If I were one of the other carriers, I'd be trying to figure out who those people are, and take advantage of Cingular's heavy-handed approach to steal them away.