Ars reports that the FCC has today banned Verizon’s practice of trying to woo back customers who are in the process of switching their phone numbers to other services. Verizon had been customers offering “discounts and American Express reward cards” to keep their Verizon service.
The trouble for Verizon is that the Commission does not want companies to use the fact that a customer has requested her number transferred (or “ported”) to a new service for marketing purposes. Commissioner Michael Copps stated, “There is nothing pro-consumer about allowing Verizon to wait until a customer decides to terminate service before making the company’s best and final offer.”
But this is how negotiation works. If I’m a Verizon customer and I can get a discount and a reward card – two kinds of free money – just by threatening to leave, then every other Verizon customer will threaten to leave as well, costing Verizon a ton and defeating the purpose of the policy, which is to retain customers who were otherwise going to leave. Using the porting data allows Verizon to focus on those customers who have sent a costly signal – those who are really interested in switching.
Moreover, FCC policy still allows Verizon to try to win customers back after they have left for another company. How does it benefit customers to make them waste time and effort switching back and forth between companies? Isn’t it better to allow Verizon to beg customers to stay as they’re walking out the door?
Oddly enough, Chairman Martin disagreed with the other four Commissioners. Martin argued that “customer retention marketing is a form of aggressive competition that has the potential to benefit consumers through lower prices and expanded service offerings.” For once, I can say: right on, Chairman Martin.