Alex Clark knows the cell-phone industry's dirty little secret, and he has used it to his advantage.
Clark, a publicist in Los Angeles, knows the industry is in the midst of a price war and is doing everything it can to keep customers.
So when his contract with Sprint PCS expired in October, he called the company's customer service line, demanding an upgrade to 350 night and weekend minutes, 2,000 anytime minutes and free long distance -- all for $35 a month. Even though he was pleased with Sprint's service, he threatened to take his business elsewhere if the company did not meet his demands.
"After some mild haggling with a low-level rep who wasn't going to budge -- he insisted that he couldn't give me a plan other than those offered to new subscribers -- I asked to speak to a supervisor, who immediately offered me 500 anytime minutes, unlimited night and weekend calling, free long distance and $100 toward a new phone, all for $35 a month.
"Needless to say, I gladly agreed to another year-long contract," Clark said.
Faced with increased competition and pending legislation that will help customers switch carriers more easily, cell-phone companies are offering all kinds of perks, like generous rate plans and free cell phones, to keep their existing customers and to entice new ones.
Clark isn't the only one who has cracked the code for a cell-phone deal. Susan Stewart, a publicist and actor in New York City, said she has received so many perks and promotions from Verizon Wireless that she was identified in the company's database as a "matrix."
"Recently I went into a store, and when the rep looked at my record, he said, 'Oh, you're a matrix.' 'What's a matrix?' I asked. 'It's a person who threatens to leave,'" she said.
Verizon denied it uses labels like "matrix" to describe its customers.
"I have never heard of that," said Verizon spokeswoman Brenda Raney. "It's not a standard part of how we do business."
But as Stewart has learned, being a matrix -- or whatever the industry calls a haggling customer -- has its perks. The company has convinced Stewart to stay on for the last six years, even though, to her dismay, she has racked up a $300 phone bill on more than one occasion.
"One time my contract perks had expired -- without any warning -- and because I didn't know that could happen, I was in for a sorry surprise," she said. "Verizon has usually found a way to convince me to stay on."
Verizon, perhaps because it is the largest carrier in the country, is least inclined to negotiate for customers. "We are not in the business of bartering for customers," Raney said.
"Our goal is not to be the low-priced carrier," she said. "Our goal is to provide the best-quality service."
The other major carriers, though, said they invest a lot of resources in retaining customers.
"Cingular has always put a lot of effort into retention programs, and even has an area within our organization dedicated solely to retaining and acquiring customers," said Cingular Wireless spokeswoman Jennifer Bowcock.
T-Mobile said it reaches out to its customers when their contracts are up. "We may offer them special promotional offers that reward their loyalty," said spokeswoman Kim Thompson.
Clark, the Sprint customer, said that Sprint seemed to be the most generous of the major carriers. His friends who use Verizon and Cingular Wireless -- the No. 1 and No. 2 carriers, respectively -- "got good deals, but not to the extent that Sprint was willing to go."
Sprint spokesman Dan Wilinksy said his company has gone out of its way to improve customer service. Wilinsky admitted that in the last two years Sprint ranked low in consumer surveys because it provided automated service to customers -- rather than a live operator -- and then charged them for those calls. Since then, Sprint has canned the automated voice called Claire and overhauled pricing in a big way.
"We want to turn ourselves around to become the American Express of the wireless industry," Wilinsky said. "Membership has its privileges, and we value you. (Claire) is in the federal witness protection program." he joked.
But some customers have better luck than others in scoring deals.
Dr. Harold Sock, a retired psychologist in Framingham, Massachusetts, said he recently switched service from AT&T Wireless to Sprint after the company stopped offering the pricing plan he was on and then refused to replace a faulty phone.
When Sock called AT&T, he said they offered little to get him to stay. "They also were not friendly and not very helpful," he said.
AT&T spokeswoman Alexa Kaufman expressed surprise that the company hadn't done more to keep Sock.
"AT&T Wireless is really focused on retaining our customers -- especially the high-value customers," Kaufman said. "After all, from a business perspective it is harder to get back a customer that you've lost than to keep one."
While all this haggling works to customers' advantage, industry experts worry that it is eroding companies' bottom lines.
For the first quarter of this year, all the major carriers reported higher revenue than a year ago and sharp increases in new customers. But customers' average monthly phone bills, a key performance measurement for wireless companies, have fallen since the fourth quarter of 2002. Sprint (PCS), which gained 199,000 new customers in the first quarter of this year, is still in the red with a loss of $182 million. The company also saw its revenue per user slip from $62 to $59 a month.
The carriers should target their extra perks to higher-revenue customers, according to Al Schuetz, director of marketing for Teradata, a business intelligence company. "If it's a customer on a reduced plan rate who calls the calling center three or four times a month, unless they show a growth potential ... they may cost you more money than you are making," Schuetz said.
Still, other experts say, the carriers' efforts to retain customers may be necessary to thwart increased competition, especially if an FCC rule allowing customers to keep their phone numbers when they switch cell-phone carriers takes effect in November. Verizon and the trade group Cellular Telecommunications and Internet Association are challenging the FCC mandate in federal court, although industry experts doubt they will be successful.
"Basically, you will be able to take your number with you if you change carriers," said Allan Keiter, president of comparison-shopping site MyRatePlan.com. "This is probably the biggest single item that keeps churn (customer turnover) from being even higher than it is today.
"That in mind, carriers will do whatever they can -- and it will really get pronounced as the year goes on -- to lock people up under contract."
