Mobile firms face mass defections

mobile fitCustomer loyalty in the UK mobile phone industry is as fragile as porcelain, with even the smallest price rise – let alone a network outage – likely to trigger mass defections to rival operators.
The WDS 2013 Mobile Loyalty Audit, which integrates data from research specialist TNS, reveals nearly two-thirds (57%) of subscribers are already considering leaving their current supplier this year. Only 12% of customers show the level of loyalty required to protect them from competitive offers and service disruptions.
For the first time, the WDS audit uses “stress-tests” to show the impact of price rises or a privacy breach on a customer’s likelihood of defecting to a rival to get a realistic view of the level of loyalty that exists in the UK. When stress-tested, the audit found customers’ positive sentiment towards not switching could be easily reversed. For example, when asked:

What if…your current mobile operator increased prices by 10%?
· 67% of customers who were previously unlikely to switch would now consider leaving.
· 14% of them would switch immediately without further consideration.
· 57% of highly satisfied customers would also consider switching, 13% would leave without further consideration.
What if…another operator could reduce your monthly tariff by 10%?
· Only 34% 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?
· 85% of those that said they were unlikely to switch would now consider leaving.
· 42% of them would switch immediately without further consideration.
· 39% of highly satisfied customers would switch immediately.

The study suggests that the number of customers at risk of churn could be underestimated by operators. Additionally, many existing measures of loyalty, such as customer satisfaction often deliver overly simplistic and potentially misleading results.
For example, the WDS audit found that 17% of customers currently considered a “switch-risk” are actually highly satisfied with their mobile operator.
It also showed that inertia stills plays a major role in customer retention with 20% admitting that they didn’t intend leaving their current operator because they felt that “all mobile operators are the same” and that there is no benefit in switching.
WDS vice president of marketing Tim Deluca-Smith said: “A customer might say that he is satisfied or that he has no intention of switching, but how does that sentiment change when there’s a network outage or his monthly tariff increases?
“Loyalty means more than just a customer’s intent to repurchase – this is only as good as the next handset subsidy or price discount. True loyalty creates customers that are forgiving when things go wrong and resistant to competitive offers.”