Loyalty Low Among Wireless Carriers

by Aaron Baar, Mar 18, 2013, 2:38 PM

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Despite what U.S. wireless carriers might think about customer loyalty, there’s a good chance they are underestimating how committed those people are to their brands. 

According to a study from WDS (a division of Xerox that provides customer experience management), 36% of wireless customers in the U.S. said they are considering leaving their mobile carrier within the next year. Meanwhile, only 13% of customers would be considered loyal enough to remain with a carrier despite better offers from others or service disruptions. 

“The wireless industry went through years of acquisition, and now they’re switching to a focus on loyalty,” Tim Deluca-Smith, vice president of marketing for WDS, tells Marketing Daily. “But they’re getting their words mixed up. When they say ‘loyalty,’ they mean ‘retention.’”

Using the company’s “stress test” auditing, 69% of those who said they were unlikely to switch carriers would consider leaving if their current provider increased prices by 10% (15% of them would switch immediately without further consideration). Seventy percent of customers who called themselves highly satisfied would switch in the same scenario (17% would do so immediately.) Similarly, only 31% who were previously unlikely to switch could guarantee staying if a competitor offered 10% savings. 

Competitors are not wireless providers’ only concern. In the event of a privacy breach, 78% of customers who were previously unlikely to switch would consider leaving their current carrier, and 27% of them would switch immediately. (Twenty-nine percent of “highly satisfied” customers would switch immediately.)

The biggest factor for consumers staying with their current carrier: inertia. More than a quarter (27%) said they didn’t plan to leave their current carrier because doing so was too inconvenient. 

“They’re not looking at the fragility of their customers,” Deluca-Smith says. “They think because the customers haven’t churned, they’re loyal. [But] do they really know how many of those customers were close to leaving?”

What the wireless carriers need to do, Deluca-Smith says, is begin beefing up their customer service, creating a feeling of value or reward among their current customer base. (Customers who said they didn’t feel valued were more than twice as likely to switch, according to the study.) And they need to increase their segmentation. 

“The degree of segmentation in the wireless industry is nowhere near what would occur in other industries, like banking,” he says. “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.”

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