Wireless TowerA new study from Xerox’s WDS reveals just how tenuous and fragile are the ties between mobile phone customers and their service providers. A full 36% of U.S. mobile customers are considering switching carriers in the next 12 months, according to the WDS Mobile Loyalty Audit 2013.

What’s more, just 13% of mobile phone customers exhibit “the level of loyalty required to protect them from competitive offers and service disruptions,” according to WDS’ report.

Inertia due to the inconvenience of switching mobile carriers continues to play a major role in customer retention, WDS noted: 27% said they would remain with their current mobile carriers 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“We’ve been measuring loyalty in a vacuum; allocating budget based on customer sentiment and an out-of-date notion of loyalty,” Tim Deluca-Smith, WDS vice president, marketing was quoted in a press release.

“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.”

WDS for the first time performed stress tests aimed at determining “the impact of real-world disruptions on a customer’s likelihood to change carriers” in carrying out the 2013 customer loyalty audit.

Customer loyalty could easily be broken according to the results. The 2013 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.”

In fact, according to WDS survey results, “the majority of at-risk customers were actually satisfied with their current carrier’s performance. Just 35% thought they got poor value for money, 18% that network coverage was poor and 15% that availability of devices was inadequate.”

Rather, “failing to create a feeling of ‘value’ and ‘reward’” were the main drivers of flagging customer loyalty, according to WDS: 40% of at-risk mobile customers “felt they weren’t adequately 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,” WDS states.

Posing hypothetical stress-test scenarios, WDS found that 69% of customers who were previously unlikely to switch would consider doing so if their current wireless carrier raised prices 10%. Fifteen percent said they would switch immediately without further consideration. And a full 70% of highly satisfied customers would consider switching, with 17% of them saying they would leave without further consideration.

Carriers cutting customers’ monthly by 10% didn’t have a commensurate positive effect on customer loyalty: only 31% previously unlikely to switch could guarantee they wouldn’t jump ship for such savings.

When asked about the impact a security breach would have:

  • 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.

Positive takeaways for mobile carriers included in the report include:

  • 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,” Deluca-Smith concluded.

“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.”