Customer inertia rules mobile marketplace
Customer retention in the mobile industry is being driven by inertia, with over a quarter of customers staying with their mobile operator only because they find it too inconvenient to switch, says a new study by WDS a Xerox company.
The Mobile Loyalty Audit 2014, an annual report coordinated in partnership with MobileSquared and GMI, comprises interviews with 4,000 mobile subscribers which underline that operators are misinterpreting satisfaction metrics, overestimating customer loyalty and, therefore, misdirecting investment in customer retention.
Operator customer retention budgets still having little impact
There is very little evidence to suggest that retention is being driven by proactive operator investment, or that current allocated retention budgets are having any meaningful impact. The study reveals:
· More than a quarter of those interviewed (26 per cent) admit that the only reason they stay with their current provider is that switching is ‘inconvenient’.
· 15 per cent agreed that all mobile operators are the same and that they see no benefit in switching.
· Over a third (35 per cent) simply do not want to risk changing for fear of losing coverage.
· 55 per cent of retained customers agree that they stay because their current operator meets their service expectations.
· Just 16 per cent of mobile consumers feel rewarded for their loyalty.
“It is twelve months since we last ran the Mobile Loyalty Audit and while we have broadened the base to include subscribers from the UK, US, South Africa and Australia, many of the issues facing operators remain,” saysTim Deluca-Smith, vice president of marketing at WDS. “Operators appear no closer to establishing what customer loyalty actually is, or how to proactively engender it. The data shows that operator customers aren’t switching because of inconvenience related to technical, social or financial barriers – not because they feel any 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 per cent) of customers who are considering switching, also admitted to being highly satisfied with their current provider.
· Less than half of retained customers (44 per cent) are highly satisfied.
When interrogating the reasons why customers intend to switch operators:
· 54 per cent didn’t feel valued
· 54 per cent cited ineffective rewards and loyalty programmes
· 44 per cent did not trust their operator
These findings reveal that mobile subscribers are simply not loyal. In fact, subscribers for the most part are feeling unloved and are displaying low levels of trust towards their operators. This suggests that 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,” continues Deluca-Smith. “This is not true. Certainly, customer satisfaction is correlated to retention and a highly satisfied customer is x7 more likely to be retained, but this cannot be relied upon. Satisfaction is no longer a differentiator for mobile brands, it’s an expectation.”