Study: Customer Retention in Mobile Industry Driven by Inertia
Retention budgets having little impact, satisfied customers still represent churn risk
In a recent survey of 4,000 mobile subscribers a quarter said they stay with their mobile carrier because it’s too inconvenient to switch, according to a new study by WDS, A Xerox (NYSE: XRX) Company.
The Mobile Loyalty Audit 2014, an annual report coordinated in partnership with MobileSquared and GMI, indicated that carriers are misinterpreting satisfaction metrics, overestimating customer loyalty and, therefore, misdirecting investment in customer retention.
Customer retention budgets have little impact
There is very little evidence to suggest that retention is being driven by proactive investment by mobile service providers, or that current allocated retention budgets are having any meaningful impact, according to the survey which reveals:
- More than a quarter of customers interviewed (26 percent) admit that the only reason they stay with their current provider is that switching is “inconvenient.”
- 15 percent believe that all mobile carriers are the same and that they see no benefit in switching.
- Over a third (35 percent) do not want to risk changing carriers for fear of losing coverage.
- 55 percent of retained customers say that they stay because their current carrier meets their service expectations.
- Just 16 percent of mobile consumers feel rewarded for their loyalty.
“It’s been twelve months since we last ran the Mobile Loyalty Audit and while we have broadened the base to include subscribers from the United Kingdom, United States, South Africa and Australia, many of the issues facing carriers remain,” said Tim Deluca-Smith, vice president of marketing at WDS. “Carriers appear no closer to establishing what customer loyalty actually is, or how to proactively engender it. The data shows that customers avoid switching carriers because of the inconvenience related to technical, social or financial barriers. It has little to do with emotional attachment or loyalty to the brand.”
Satisfied customers still switch
The Mobile Loyalty Audit also underlined a large disparity between customer satisfaction and customer retention. The study shows:
- Almost one fifth (18 percent) of customers who are considering switching, admitted to being highly satisfied with their current provider.
- Less than half of retained customers (44 percent) are highly satisfied.
When customers were asked why they intended to switch carriers:
- 54 percent said they didn’t feel valued.
- 54 percent cited ineffective rewards and loyalty programs.
- 44 percent did not trust their carrier.
These findings reveal that mobile subscribers are simply not loyal. The survey suggests most feel unloved and harbor low levels of trust towards their carriers. This suggests that current efforts to increase customer retention and brand loyalty for the most part are proving ineffective.
“Many in the industry believe that customer satisfaction automatically translates to retention,” Deluca-Smith said. “This is not true. Certainly, customer satisfaction is correlated to retention and a highly satisfied customer is seven times more likely to be retained, but this cannot be relied upon.”
WDS, A Xerox Company, provides multi-channel knowledge management, care automation and analytics to help wireless brands deliver a more effective customer service experience and protect customer lifetime value. Driven by our Technology, Services and Consulting practices, it’s our ability to help our clients improve their responsiveness to customer service threats and design failure out of the customer service experience, that means many of the world’s most recognizable wireless brands now trust the outsourcing of their customer service experience to WDS. To find out more, please visit www.wds.co.
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