Revealed: The Fragility of U.S. Wireless Customer Loyalty

Mon Mar 18, 2013 10:00am EDT

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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 (NYSE: 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,
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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

Copyright Business Wire 2013

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