Revealed: The Fragility of U.S. Wireless Customer Loyalty
Revealed: The Fragility of U.S. Wireless Customer Loyalty
WDS study finds 36 percent of U.S. wireless customers at risk of churn in the next 12 months; only 13 percent truly loyal
KIRKLAND, Wash.--(BUSINESS WIRE)-- A new study of loyalty among mobile phone users in the U.S., released today by WDS, A Xerox (NYS: XRX) Company, has worrying implications for wireless carriers. The WDS Mobile Loyalty Audit 2013 reveals that 36 percent of U.S. customers are considering leaving their mobile carrier in the next 12 months. The study, which integrates new survey data from research specialist TNS, also finds that only 13 percent of customers show the level of loyalty required to protect them from competitive offers and service disruptions.
For the first time, the WDS 2013 Mobile Loyalty Audit uses "stress-tests" to show the impact of real-world disruptions on a customer's likelihood to change carriers and delivers a realistic view of the level of loyalty that exists in the US. When stress-tested, the study found customers' perceived "loyalty" could be easily broken, for example:
What if...your current wireless carrier increased prices by 10 percent?
69 percent of customers who were previously unlikely to switch would now consider leaving.
15 percent of them would switch immediately without further consideration.
70 percent of highly satisfied customers would also consider switching, 17 percent would leave without further consideration.
What if...another carrier could reduce your monthly tariff by 10 percent?
Only 31 percent of customers who were previously unlikely to switch could guarantee that they wouldn't leave for this saving.
What if...there was a privacy breach?
78 percent of those that said they were unlikely to switch would now consider leaving.
27 percent of them would switch immediately without further consideration.
29 percent of highly satisfied customers would switch immediately.
The study suggests that the number of customers at risk of churn could be underestimated by wireless carriers. Additionally, many existing measures of loyalty, such as customer satisfaction and Net Promoter Score (NPS), often deliver potentially misleading results. For example, the WDS audit found that 23 percent of customers currently considered a "switch-risk" are actually highly satisfied with their mobile operator. Likewise, 19 percent are NPS Promoters.
The audit also showed that inertia still plays a major role in customer retention with over a quarter (27 percent) admitting that they didn't intend leaving their current carrier because "switching was too inconvenient."
"We've been measuring loyalty in a vacuum; allocating budget based on customer sentiment and an out-of-date notion of loyalty," said Tim Deluca-Smith, vice president, marketing at WDS, a provider of Customer Experience Management (CEM) solutions to the wireless industry. "A customer might say that he is satisfied or that she has no intention of switching, but how does that sentiment change when there's a network outage or monthly price increase? Loyalty means more than just a customer's intent to repurchase. Based on our research, this is only as good as the next handset subsidy or price discount. True loyalty creates customers who are forgiving when things go wrong and resistant to competitive offers."
The WDS Loyalty Audit also debunks some of the common myths around customer churn. In particular that customers switch primarily because of price, availability of devices or network coverage. Across each of these, the majority of at-risk customers were actually satisfied with their current carrier's performance. Just 35 percent thought they got poor value for money, 18 percent that network coverage was poor and 15 percent that availability of devices was inadequate.
Instead, it seems carriers are failing to create a feeling of "value" and "reward" among many of their customers. 40 percent of those at risk of switching felt they weren't valued or rewarded. In fact, the data shows that if a customer doesn't feel valued then they are more than twice as likely to be at risk of switching carriers.
The study concludes with many positive take-aways for wireless carriers looking to better manage customer loyalty. In particular the study shows how some service elements are more influential in building, or damaging, loyalty than others.
While a single interaction with customer support is relatively benign in its loyalty influence, customers who have to contact customer support more than once in a six-month period are twice as likely to be a "switch-risk."
Getting right any kind of care interaction is critical. A customer who rates the performance of customer care as "excellent" is over three times more likely to be secured beyond 12 months than someone who rates the experience as "poor."
Basic network support factors remain vital. 75 percent of respondents who rated network coverage as "Excellent" are unlikely to switch.
Emotional factors are just as relevant. 73 percent of respondents who felt valued by their carrier are unlikely to switch carriers.
"Building trust, developing a sense of value and sustaining strong customer service is fundamental to securing long-term loyalty - especially given the level of parity that exists between carriers' pricing strategies and network performance," concludes Deluca-Smith. "Satisfaction alone is no longer enough; in fact it's become little more than a cost of doing business. The WDS Loyalty Audit shows that only 13 percent of U.S. customers have the level of loyalty we deem necessary to insulate them from competitive offers and service failures. Understanding who these customers are will help carriers to better understand how to customize retention programs that build a more emotional and resilient tie between customer and brand."
A full copy of the report can be requested at: http://www.wds.co/enlightened
Study infographic available at http://www.wds.co/enlightened/wds-loyalty-audit-2013/WDS-Loyalty-Audit-US.jpg.
About WDS
WDS, A Xerox Company, is a leading provider of Customer Experience Management (CEM) solutions to the wireless industry.
Our goal is to help wireless brands deliver a more consistent, differentiated and profitable customer experience, shifting attention away from 'managing' customer experience problems and towards mitigating failures that we know have the potential to increase costs and damage end-user loyalty and profitability.
We achieve this by embedding a CEM platform across the "customer lifecycle," from retail through technical support and returns management. This platform powers the solutions that we deploy at key end-user touch-points (retail, on-device, on-line and contact center) with the knowledge needed to dynamically manage how end-users buy, explore, use and maintain their wireless products and services.
It's this ability to help our wireless customers identify preventable issues, improve future products and services and build long-term, profitable relationships with end-users that means many of the world's most recognizable wireless brands now trust the outsourcing of their customer experience to WDS.
To find out more, please visit http://www.wds.co.
Note: WDS cannot accept (and hereby disclaims) any responsibility for loss or damage caused by errors or omissions. All rights reserved © WDS 2013.
WDS, A Xerox Company, is the trading name of Wireless Data Services Ltd registered in England and Wales with company number 01714719. Registered address - Wireless Data Services Ltd, 160 Queen Victoria Street, London EC4V 4AN. VAT number GB 911330278.
XEROX®, XEROX and Design® are trademarks of Xerox in the United States and/or other countries.
To receive Xerox RSS news feeds, visit http://news.xerox.com/rss. For open commentary, industry perspectives and views visit http://twitter.com/xeroxcorp, http://realbusinessatxerox.blogs.xerox.com, http://www.facebook.com/XeroxCorp, http://www.youtube.com/XeroxCorp.
WDS
Tim Deluca-Smith, +44-7957-311189
tim.deluca.smith@wds.co
or
GRC
Toni Leigh/Valerie Christopherson, +1-949-608-0276
wds@globalresultspr.com
KEYWORDS: United States North America Washington
INDUSTRY KEYWORDS:
The article Revealed: The Fragility of U.S. Wireless Customer Loyalty originally appeared on Fool.com.
Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
