Nextel blows more customer moments of truth...again

A year ago, my family and I considered Nextel's walkie-talkie-like push-to-talk (PTT) a must-have feature. Many people I know rely on PTT for staying in touch with family or for business reasons. For years, Nextel has had the PTT market pretty much to itself. But, by the time 2003 is over, the PTT feature will no longer be a unique differentiator for the carrier. Verizon Wireless and SprintPCS have each announced that they'll be introducing PTT this year. And this week, PTT turned from feature into controversy when Verizon Wireless sued Nextel for improperly obtaining prototypes of Verizon's PTT-based handsets. If the allegations are true, Nextel is apparently worried about the PTT market becoming commoditized and subsequently losing customers to the competition.

But nothing makes a company's customers want to try out the competition as much as poor customer service. Here's what happened:

Two of the four telephones in my family's possession experienced the same failure after their warranty periods had ended. (Both phones suddenly stopped accepting a charge, even when supplied with new batteries.) I called Nextel's customer service to find out what I should do next. This was the first customer moment of truth. I expected to receive the sort of information that would help me get the phones repaired as quickly, conveniently, and inexpensively as possible. The representative on the phone asked what my zip code was. He instructed me to take the malfunctioning phones to a location that was virtually around the corner.

The second moment of truth occurred when I learned, upon my arrival at the specified location, that it wasn't a service center. It was only an authorized Nextel retail outlet.

I had two expectations for this second customer moment of the truth. First, I expected that any person at an authorized retail outlet for anything I buy would have complete and accurate information about what to do when something purchased there breaks. Second, I expected that the retail outlet would be able to send it to a service center for me. Neither expectation was fulfilled. My only option, I was told, was to drive to one of two service centers, each of which was about 40 miles away.

I called Nextel back from the showroom floor of the retail outlet--this would be the third customer moment of truth. The Nextel representative identified a service center that was a bit closer (about 15 miles away) but failed to offer any other options. At this point, I was wishing that fixing a telephone was more like fixing a laptop from one of the respectable manufacturers. If you call IBM, for example, someone shows up at your door within 24 hours with a box. You stick the computer in the box and, for most repairs, the computer is returned to you within two or three days.

Then I remembered driving by a radio service center with Nextel logos on the side of its building--and it was a lot closer than 15 miles. I stopped in and, sure enough, the owner said he could fix the phones. Naturally, with the Nextel signs and collateral materials lying around, I assumed that it was an authorized service center. It wasn't, but I didn't know this until later. The assessment fee per phone was $20, refundable only if I chose to repair the phones. I left the phones behind for assessment. Later that day, I received a call telling me that one unit could be fixed for $70 and the other phone wasn't fixable at all. Seventy dollars to fix a cell phone?

Another customer moment of truth was upon me. Staring at a $70 repair bill (and already out $40 for the assessment fees), my family and I wondered if it wouldn't be cheaper just to buy some new phones. This is when we learned that Nextel treats new customers better than old customers. This is a mistake, in my estimation, especially in the face of stiffening competition and diminishing competitive advantage (the PTT feature). The most important asset to any carrier is its existing billing relationships. In the case of Nextel, new customers (referred to by carriers as "new activations") get special discounts on phones. However, those discounts are unavailable to existing customers. New phones comparable to the ones that broke would cost more than $70 each.

Savvy cell phone buyers understand that those discounts are designed to lure new customers into a billing relationship. I can understand why the discount might not be available to someone who's looking to upgrade their phone to a newer model. But, my expectation is that a carrier like Nextel would want to give the existing customer with broken phone (or phones) a break. At the very least, we should have had access to prices that were the same as those to which new activations had access. But we didn't.

After that failed customer moment of truth, my family and I engaged in what I'm assuming is a carrier's worst nightmare. We started reviewing offerings from the competition. Not only were SprintPCS and Verizon Wireless going to have the PTT feature, but both were offering phones for under $70 that were sleeker and more stylish than those available from Nextel. In short, it would be cheaper for us to start new accounts with a competitor than it would be to fix or replace our phones and keep our existing accounts.

At this customer moment of truth, Nextel was literally pushing us out the door.

Just before pulling the trigger to switch, I decided, to call Nextel public relations-- in my reporter role rather than my customer role--and tell them I would be writing a story about this escapade. Nextel spokesperson Kelly Mullins agreed that the treatment I had received as a customer didn't make sense. She put me in touch with the company's national service and repair program senior director Michael Volante.

Volante contacted me and said, "We ran you over in the process and we want to make good on that." I explained that I didn't want preferential treatment simply because I was a member of the press and that if he was going to make good on it for me, the same option would have to be available to other Nextel customers in the same situation.

As it turns out, on the first call I placed to Nextel, I should have been informed that, for $2.50 per month, I could join a maintenance program (even though my phones were already broken) that allows me to walk into any Nextel service center and get the phones fixed or replaced at no charge. As an alternative, one can call Nextel's Care Center, which transfers the call to Motorola's service center, which in turn sends a shipping box to you; the complete turnaround time on a repaired or replaced phone is 72 to 96 hours, with all shipping costs included. In fact, said Volante, I should have been informed of these options at every customer moment of truth--the phone calls and the visits to two authorized dealers. But I wasn't.

"During your original call to care center," said Volante, "You should have had all of the options, including just joining the maintenance plan for $2.50 per month, explained to you. Most of the time, it works. But we are aware that we have an issue with the tools that our care representatives have access to, and we're working on it. We expect those problems to be resolved in the coming months. You should have escalated your first call."

I asked Volante how I would have known that the call should have been escalated. Volante explained that some customers are aware of all the options because of mailings that go out to them. That's a good reason to read those mailings, which I typically overlook. (Who has time to read that stuff?)

Nextel is now refunding the $90 ($70 for the repair, $20 for the assessment of the unrepairable phone) and is putting the phones on the $2.50 per month maintenance plan.

Despite the happy ending, my experience highlighted too many blown opportunities. Nextel came dangerously close to losing three accounts. When coupled with my previous Nextel experience, it's amazing that I'm still a customer. For businesses, this case study should serve as a reminder of how important it is to list--and then test--all of your customer moments of truth. At the very least, if you're in charge of a customer-facing division or a department, you should be testing all of your department's moments of truth. Ideally, there should be someone with authority whose job it is to inventory and test all moments of truth across the entire company, and then to fix the system where it's broken. Perhaps it's time for a CCSO--a chief customer service officer.

Having one person whose responsibility cuts across the entire organization allows for the opportunity to standardize company-wide on documents, values, processes, and CRM systems. To the extent that your CRM systems can offer the same user experience to customers that your customer service representatives get (via the Web or phone-based interactive voice response), the opportunity to let customer self-help options lower your total cost of customer care exists as well. ASP-based CRM provider RightNow Technologies fits squarely in this niche and its multi-tenancy framework helps to keep its customers' total cost of CRM ownership down.

Have you inventoried, tested, and fixed your customer moments of truth? Perhaps now is a good time. Believe it or not, customer service is  a differentiator. In fact, it could be the one that makes or breaks your business.

Whether as the customer or the provider, do you have a customer moment of truth success or failure story? Share it with your fellow readers using ZDNet's TalkBack. Or write to me at david.berlind@cnet.com. If you're looking for my commentaries on other IT topics, check the archives.