What price loyalty?

Mobile operators will tell you that their proactive investment, carefully constructed loyalty programs and targeted allocation of customer retention budgets are helping them retain subscribers and build loyalty. The uncomfortable truth is that these efforts may not be as effective as operators believe them to be.

The concepts of subscriber retention and satisfaction – and the subsequent dream of unshakeable loyalty – have been key themes at mobile industry events for a decade. It was disappointing, therefore, to discover that truly loyal customers remain somewhat elusive for operators.

We’ve just completed the our Mobile Loyalty Audit 2014. It’s an in-depth review of subscriber loyalty, based on primary research among consumers, in some of the world’s major mobile markets. In short, it suggests a chaotic relationship between operators and subscribers, where there is counterintuitive and limited linkage between satisfaction, loyalty and retention.

Don’t mention retention

Over a quarter of respondents said they stay with their operator just because it’s too inconvenient to switch. This finding alone should be a wake-up call to operators that feel they have created a loyal customer base. In a quarter of cases, consumers are not sticking with their providers as a result of feelings of loyalty – it’s just too much hassle to change.

We also found:

These findings point to a fundamental misunderstanding of loyalty, a confusion about what it is and how to go about engendering it. What is clear is that the majority of subscribers exhibit no real emotional attachment, or loyalty, to operators. They tend to stay with them due to a mixture of practical inertia and a general sense of malaise with the alternatives.

Satisfaction distraction

If an operator cannot count on customer retention as a measure of loyalty – how about consumers that claimed they were highly satisfied? This group of users would surely be more likely to display loyalty.

Worryingly, and somewhat counterintuitively, our research found that satisfied customers would still switch provider. Almost one fifth (18 per cent) of customers who are considering switching said they were highly satisfied with their current operator.

Many in the industry believe that customer satisfaction is intertwined with customer retention. Customer satisfaction can be correlated to retention (a highly satisfied customer is x7 more likely to be retained). However, this is no longer an aspect that can be reiled upon. Operator customer satisfaction has hit a low level overall. Less than half (44 per cent) of retained mobile customers said they were highly satisfied with their provider.

Taking subscribers for granted drives churn

Although such a low level of satisfaction is a genuine concern for operators, it is not the main driver of churn. In fact, it was softer issues that our research revealed as the primary drivers of churn: the feeling of being undervalued – being taken for granted – and a lack of trust in operators.

Of the respondents interviewed, 54 per cent of those who wanted to switch their mobile operator said that they did not feel valued. Effective operator driven customer loyalty and rewards could work to reverse this trend. Unfortunately, current operator driven loyalty programs were viewed rather negatively. In fact, 54 per cent of users at risk of switching said they were unsatisfied with their operators loyalty program.

Wake up call 

These figures show that operators have been caught napping when it comes to loyalty – their efforts to promote it appear to be innefective and in some cases, even damaging.

Despite the importance of tust and loyalty, operators continue to reserve the most competitive deals for new customers. Although loyalty goes much deeper than price, a model that discriminates against high tenure customers can only undermine the feelings that boost loyalty and destroy the sense of value. In order to retain existing subscribers, and attract new ones, the industry must take a step change. There must be a drastic overhaul in the way operators go about customer acquisition and retention.

Today, there are significant anomalies in how one would expect subscribers to think and behave. It means that, using traditional methods, operators cannot determine an accurate picture of customer sentiment and behavior. It’s a wake-up call.

Operators can look to these findings as a chance to rise from their slumber and adapt. They are capable of better segmenting their customers in order to create a much more accurate profile of their users. With this knowledge and insight, they have the chance to maximize their retention budgets and create products and services that can actually drive genuine mobile brand loyalty.

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