CEO Stanley Sigman talks.....

[danny boi]

http://www.businessweek.com/magazine...5/b3958094.htm


Getting Cingular Up to Speed :

CEO Stanley Sigman talks about the challenges of the AT&T Wireless merger and how he plans to catch up with Verizon Wireless

Cingular Wireless CEO Stanley Sigman has little appetite for taking the megaphone and blasting the good word about his company right now. There's simply too much work to do. Since taking the reins at the joint venture owned by SBC Communications (SBC ) and BellSouth (BLS ) in 2002, he has been, well, singularly devoted to turning a good wireless company into a top-notch one. But Cingular isn't there yet. In metrics like customer service, it's still lagging behind Verizon Wireless, a fact that gnaws at the Cingular chief.

Sigman knows Cingular's parent companies are in serious need of revenue growth, and they're looking to Sigman's business to provide a spark. From his office near the Buckhead neighborhood in Atlanta, Sigman took time to talk to BusinessWeek Chicago Bureau Chief Roger O. Crockett about the progress Cingular is making and when it expects, as he says, to become "best in class." Edited excerpts of their conversation follow:

A) How do you feel about your position in the marketplace today?

The reason we did the $41 billion acquisition of AT&T Wireless [in the fall of 2004] is we concluded that we didn't have the assets or the scale to be best in class. Therefore, we did the acquisition to take two good companies and make them into one great company, performing as Verizon is today.

And the merger is on track. We've said this is about taking us to best-in-class metrics by the end of 2007. We've come out of the blocks very quickly around marketing and sales integration. Now, we're into the heavy lifting of integrating the networks and the operating systems and taking all the complexities, costs, and inefficiencies out of the business. We're getting our business simplified like Verizon's is. And there's work to be done with that.

B)How are you doing in key metrics like churn and profitability?

We call the key metrics in this company the Four Rs -- rate of penetration, revenue intensity, return on operations, and reputation. On rate of penetration, we're certainly behind Verizon. We outsell them in gross sales by 20%, but their churn is better than ours, so their net addition of customers is better. In average revenue per user, we were about a dollar better than them -- about $50 vs. $49.

On return on operations, they're the best in class and we're the lowest in class on our margins. And on reputation, they're best in class and we're toward the bottom of the pack.

C)What's your plan to improve?

It's the integration of the company. We have to integrate the networks to get those expenses out of it. That improves your margins. That will give you a better network performance and better customer-service experience. That will reduce churn. If you reduce the churn, then you take cost out of the business.

D)What's the strategy for improving your service and reputation?

I don't think it's time for us to go out touting on a national basis that we have the best network until we do have the best network. I know where our network stacks up. There's absolutely no reason why we can't have as good a network as Verizon has. If we don't, we failed to execute.

E)What's your data strategy?

We have more data customers than anyone else in the market today. We have the most prolific 2.5G data network [which runs at 60 to130 kilobits per second] in the country. We have nearly 47,000 sites.

F)What services do you offer that have given you the No. 1 spot in data?

[The biggest segment] of the data services is e-mail messaging. We're the leader in BlackBerry (RIMM ). Nokia (NOK ) announced a device with a BlackBerry client on it (see BW Online, 9/22/05, "Few Links for BlackBerry Connect").

G)Where are you with the rollout of your super swift 3G (third-generation) network?

We're probably 12 to 18 months behind Verizon today. We will roll out in 15 to 20 markets by the end of this year. And then it ought to accelerate. And we'll be close to being in all the top 100 markets by the end of 2006.

H)How much does being behind Verizon in 3G matter today?

If you believe what researchers say, it doesn't matter today. What the enterprise space wants is broad coverage. They don't want holes. So we have [broad coverage], and so we're winning in the marketplace. But we can't stay where we are.

I)How would you sum up you strategy?

We have four strategic imperatives for the company, and we're executing on all of them. One: Build the best network.

Two: Develop compelling products and services (see BW Online, 10/21/05, "Wireless Goes Boom").

Three: Deliver the best customer service experience.

Four: Have broad, pervasive distribution. In distribution, we've partnered with RadioShack (RSH ), which brings 5,000 additional [outlets] into Cingular beginning in January. RadioShack claims that 94% of the population is within five minutes from one of their stores.

J)How are you improving customer service?

Forty percent of customers are likely to call customer care after their first month of usage. We identified what we can improve in the sales process. We call it the service summary. It explains what your first bill is going to look like, it explains the taxation and the fees, it shows you how to set up voice mail.

Also, when you're a Cingular customer, you can press a button on your phone and find out what you owe and how many minutes you used. You can even make a payment.

K)Will you continue to get exclusives on new phones, like you did with Motorola's (MOT ) Razr and Rokr?

Absolutely. A company of this size gets you scale and leverage. When you have 51 million customers and you're doing more gross sales than anybody else, Motorola and all the stakeholders will listen to you (see BW Online, 10/18/05, "Is ROKR Missing that Special Magic?"). They'll listen and they'll work with you -- and they've been great partners.

[viewfly]

My impression is a very straight forward and honest interview. He know were the problems are and where he wants to go. Refreshing interview from such a large company.

[bobolito]

Doesn't sound like he's doing much to improve customer service, such as improvements in training and better pay to employees.

[Gideon H]

Originally Posted by bobolito

Doesn't sound like he's doing much to improve customer service.

Thats because they make money with their bad customer service... buy not giving any money back . I still havn't got my $80 from them when I bought the Samsung P307 i never got. Like I've posted before, even T-MOBILE gave me a free month of service for how CINGULAR treated me. Now that is a company...

[bobolito]

You are wrong if you think good customer service is all about giving away freebies. The only thing that does is to make customers feel better in the short term, but in the end, customers will defect to another carrier anyway. That's exactly what's happening with T-Mobile. They have excellent customer but their churn is high. This is costing them money. Don't forget that acquiring a new customer is more expensive than keeping one.

Bad customer service is costing Cingular a lot of money. For one, it makes it more costly to acquire a customer because their reputation is down, so Cingular has to spend more in marketing to try and improve their image and lure consumers to buy. In addition, it increases Cingular's churn which decelerates revenue growth. The less net customers Cingular adds, the less revenues go up. It also gets in the way of revenue growth in other ways when potential customers don't get the service features they want and as a result end up lowering their rate plan, removing features, or not getting the features that they could have if the rep knew what they were doing. Bad customer service also generates more phone calls to different departments, getting forwarded to the wrong department and escalating issues that should've been resolved quickly on the first phone call. The more time a CS rep spends with a customer, the less people they can help and the more time other customers spend waiting on hold. So, bottomline, bad customer service is not helping Cingular in any way whatsoever.

[viewfly]

I guess for me C/S part of reputation, which he admits is not good right now.

[Gideon H]

Originally Posted by bobolito

You are wrong if you think good customer service is all about giving away freebies. The only thing that does is to make customers feel better in the short term, but in the end, customers will defect to another carrier anyway. That's exactly what's happening with T-Mobile. They have excellent customer but their churn is high. This is costing them money. Don't forget that acquiring a new customer is more expensive than keeping one.

Bad customer service is costing Cingular a lot of money. For one, it makes it more costly to acquire a customer because their reputation is down, so Cingular has to spend more in marketing to try and improve their image and lure consumers to buy. In addition, it increases Cingular's churn which decelerates revenue growth. The less net customers Cingular adds, the less revenues go up. It also gets in the way of revenue growth in other ways when potential customers don't get the service features they want and as a result end up lowering their rate plan, removing features, or not getting the features that they could have if the rep knew what they were doing. Bad customer service also generates more phone calls to different departments, getting forwarded to the wrong department and escalating issues that should've been resolved quickly on the first phone call. The more time a CS rep spends with a customer, the less people they can help and the more time other customers spend waiting on hold. So, bottomline, bad customer service is not helping Cingular in any way whatsoever.

I dont think that good customer service is giving away freebies... I don't think that at all. But when I am on the phone with Cingular for 2 hours and they cant find out why my order is being cancelled 2 times a day and they cant get it to stop, or just my giving me several differnet excuses every time when I ask about it, there can be room for improvement... and that improvement doesnt need to be giving me something for free. In fact if they tried pulling that with me I would have been even more insulted.

With the good cs I get with T-Mobile, I get my call answered virtually right after I dial the number and make my selection through the automated system, a nice person on the line that can answer my question in a very short amount of time, and someone that lets the company they are answering for take the fall for any problem I am having, not blaming the consumer. Yes, it is nice when you can be compensated for a problem, but that isnt what I base my opinion of good customer service on.

[jones]

If you believe what researchers say, it doesn't matter today. What the enterprise space wants is broad coverage. They don't want holes. So we have [broad coverage], and so we're winning in the marketplace. But we can't stay where we are.

I agree, Most people i know don't want to pay extra for DATA
Services.
In fact they Want the cheapest Plan
with the Most Extensive Coverage,
So if you have Quality/Extensive Coverage
w/ the Cheapest Rates
you can have bad CS
and Still Come out on TOP.

[bobolito]

You wouldn't come out on top for JD Powers and Consumer Reports. Their top carriers are Verizon and T-Mobile and guess which two carriers have the top CS in the industry.

[Matt]

Originally Posted by bobolito

You are wrong if you think good customer service is all about giving away freebies. The only thing that does is to make customers feel better in the short term, but in the end, customers will defect to another carrier anyway. That's exactly what's happening with T-Mobile. They have excellent customer but their churn is high. This is costing them money. Don't forget that acquiring a new customer is more expensive than keeping one.

True, but implying that they aren't attempting to combat churn (which is mainly by increasing coverage) isn't accurate either. TM still adds 3500 or so cell sites per year, and in some areas have significantly increased coverage planning in areas where churn is high. I know of one market where they plan on doubling the amount of cell sites in two or three years (can't remember)

[Fire14]

This is a good article/interview & it's good to see Stan know's where the problems are & the ways to get them corrected, of course CS is a key to retaining customers & keeping churn down which helps ARPU.
As bobolito said it cost's more to get new customers then retain customers so taking care of current customers via good CS and network will help keep churn down & ARPU up.
I have had only 2 instances of poor CS and part of it is the merger & Orange Reps not knowing Blue services or issues, so training between the 2 is an important part of getting CS fixed to make the experiences better, which makes the customer happier & lower churn.

[Critic]

Originally Posted by original article

H)How much does being behind Verizon in 3G matter today?

If you believe what researchers say, it doesn't matter today. What the enterprise space wants is broad coverage. They don't want holes. So we have [broad coverage], and so we're winning in the marketplace. But we can't stay where we are.

As much as I hate to admit it (and give Jones any additional ammo), he's absolutely right on this point. I think the vast majority of VZW users could give a rat's **** about VCast or EVDO services - they just want their phones to work everywhere, and for the service to be reliable and predictable (ie: none of this 'enhanced features may not work' crap). And given the battery life anomolies caused by spotty EVDO coverage, I fully intend to AVOID EVDO for as long as I can. (In fact, I'm tempted to say that the only way I'd stay with VZW long-term at this point is if I can get a non-EVDO, non-VZW UI phone in the settlement swap.)