Cramming Crushes Customer Trust

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I was disheartened - albeit not altogether surprised - when news reports surfaced last week that the Federal Communications Commission (FCC) is proposing new rules designed to make it more difficult for telephone carriers and other companies to tack mystery fees onto customers' phone bills.

I was disheartened - albeit not altogether surprised - when news reports surfaced last week that the Federal Communications Commission (FCC) is proposing new rules designed to make it more difficult for telephone carriers and other companies to tack mystery fees onto customers' phone bills.The proposed rules would require landline operators to provide customers at the point of sale and on each bill the option to block third-party charges on their phone bills, according to PCWorld. The proposed rules would also require both landline and mobile carriers to include notices on their phone bills and on their websites informing customers about filing complaints with the FCC regarding mystery fees.

The FCC's efforts reflect a crackdown on a practice known as "cramming," or the custom of sneaking bogus charges onto customers' phone bills. Many customers don't notice the charges, which can be as low as $1.99. In other instances, customers are thrown by the wording of the charges which they interpret as legitimate fees, such as "voicemail monthly fee."

According to a Wall St. Journal report on the topic, telephone companies place roughly 300 million third-party charges on their customers' bills each year. A high percentage of these charges, for information ranging from horoscopes to diet plans, are unauthorized. A congressional committee that's investigating the practice calculates that cramming costs U.S. phone customers up to $2 billion a year.

Building Trust through Proactive Honesty

Deceiving customers out of money is a sure path to destroying customer trust and eroding loyalty in an industry that's historically been beset by high customer churn. In order to build customer trust and customer equity, Peppers & Rogers Group founding partners Don Peppers and Martha Rogers, Ph.D., recommend that telecom companies use customer information and analytics to identify the most appropriate plans for customers and then share that information with them.

Such analyses may reveal that some customers are paying higher rates for legitimate services they're not using. Although carriers run the risk of decreasing short-term profits and revenues by shifting those customers to less expensive plans, telecom companies also stand to increase long-term customer value by doing right by customers, according to Peppers and Rogers.

A growing number of companies are beginning to grasp the importance of building customer trust as a valuable financial asset, and as a means to differentiate themselves from their competitors as product and price become more commoditized in the eyes of discriminating customers. Telecom companies that separate themselves from deceptive practices and take steps to proactively engender customer trust stand to gain over the long term.

EXPERT OPINION
EXPERT OPINION