AT&T forsakes current customers to generate new business

Customer retention is now a meaningless concept; it's all about funding low-cost phones for new customers.
Written by David Chernicoff, Contributor

I’ve been an AT&T Wireless customer since before the company was called AT&T. I selected them, originally, because they were the only provider that actually had service that worked at my home and where I most often traveled. But over the last decade  I've stuck with them primarily because of good customer service and reasonable prices for the services I need.


But apparently AT&T has decided that customer loyalty no longer needs to be rewarded.

The most obvious sign of customer loyalty being rewarded was that AT&T was always willing to waive their $36 activation fee when I upgraded phones or added additional lines. After all, I was a customer with a long history and was extending my services with them, so waiving that fee was a way to help retain that loyalty and at least tell me that my business was appreciated.

So when I upgraded a line to a new phone and added a new tablet last month I was a little surprised when the AT&T corporate store manager told me he was no longer allowed to waive the fee and that I had to call customer service directly.

It was an annoying additional step, but not as annoying as the conversation I had with customer service when they told me that they would no longer waive fees for existing customers. In my conversation with a customer service rep, I was now told that while they used to waive the fee, the decision had been made that the money was critical to the operation of the company and necessary so that low-cost phones could be offered to new customers.

Furthermore, I was told that if I wanted to save the activation fee expense when my contracts expired, I could move to the “AT&T Next” plan — which would allow yearly updates with no activation fees. When I pointed out that the “Next” plan would actually cost significantly more money, I was ignored and the pitch continued for the potential future plan change. The customer service rep seemed to believe that saying “Yes, it will cost more, but you won’t pay a separate activation fee” was a reasonable statement.

If you’re not aware of how the "Next" plan works, here's one example: A Galaxy S4, which would cost $199 with a 2-year commitment, will instead cost $27/month for 20 months.  You could trade the phone in for a new one after 12 months, but if you kept the phone until you owned it outright it would cost you $540, so the premium for the ability to trade in your device every 12 months is a hefty one, given that you would have paid $324 for the device and have to surrender it for the next one.

And that, of course, doesn’t touch on the fact that I have eight lines for phones and tablets, for both business and personal use. With that many devices I would be looking at a device rental charge of over $200/month; basically the cost for a new device plus activation fee every month, using the 24-month contract model.

So it’s easy to see why AT&T and the other carriers want to drive customers to these plans; the customers pay a fixed percentage of basically the full retail price of a device forever, but don’t actually own the device (unless they break it, in which case they keep paying, anyway, as far as I can tell).

Now if I had called customer service and been told something like “to standardized our practices we no longer offer that waiver” or simply “we don’t do that anymore” I would have been mildly annoyed, but gotten over it. While I would have liked the waiver, the extra cost itself wasn’t a deal breaker. But to be told that they no longer do it so they can fund low-cost phones for new customers and then be given a sales pitch to move me to a significantly more expensive service model is just insulting and incredibly arrogant.

I will definitely be taking AT&T's advice

This change has accomplished one thing; as my contracts end with AT&T there will no longer be an automatic continuation or upgrade.  AT&T will have to compete for my business with other carriers. And this story will provide a good example to my clients as to why they need to regularly re-evaluate their service contracts with their mobile providers; especially those who went with AT&T on my recommendation.

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