WDS Mobile Loyalty Audit 2013: How mobile customers really feel.

The changing face of loyalty in the US.

Industry briefing
Just how loyal are todays mobile customers? The WDS Mobile Loyalty Audit cuts through industry churn data, talking to over 1000 US customers to understand how they really feel about their mobile operator. Whats creating loyalty, and whats breaking it in todays hyper-competitive market?

WDS Industry Briefing

WDS Mobile Loyalty Audit 2013

WDS Industry Briefing

Contents
INTROdUCTiON . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 STATE OF THE NATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,5 WhOs aT RisK?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Satisfaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 NPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Tenure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Spend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Service Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 From Somewhat to Likely. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Safe. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Satisfaction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 NPS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Spend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Service Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Safe...But how safe?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 TOleRaNCe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Understanding Tolerance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Price Resistance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Customer Experience Failure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Why not leave? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 The ValUe Of LOYalTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 The 13%. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SUMMaRY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Five Top Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 About WDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Introduction
While industry churn data offers a useful benchmark and indicator of customer retention, the numbers typically offer very little analysis into the reasons for customer defection; in particular whats driving it and how can it be mitigated. To better understand these important factors, and provide a unique glimpse into the attitude of todays mobile consumer, the WDS Loyalty Audit 2013 has interviewed 1000 US customers. The audit aims to help mobile industry professionals better understand the drivers for loyalty and segment their customers accordingly. Uniquely, the WDS Loyalty Audit 2013 is the first to stress-test mobile customers loyalty. Many traditional Customer Satisfaction and Net Promoter Score techniques make assumptions based on a customers current (and historical) experience. What they dont do is investigate the possible implications of a customer experience failure between the time of the audit and the time for contract renewal. A customer may say hell repurchase, but just how resistant is he to a competitive offer and will he forgive his mobile operator if theres a network outage? By doing this, the WDS Loyalty Audit delivers a more comprehensive distinction between Functional Loyalty (the customers likelihood to continue using a product or service) and what WDS defines as Ardent Loyalty, the type of loyalty that insulates a customer from competitive threats and increases forgiveness when service dips below expectations. After all, a customers decision to continue using a product or service may, for example, be dictated by external factors (perhaps a switching penalty or poor network coverage from alternate providers), rather than an informed and conscious decision. In other cases, behavior that a mobile operators CRM (customer relationship management) system regards as loyalty is actually little more than inertia. This type of Functional Loyalty is easily broken, particularly when barriers to switching are removed or the customer is presented with an offer so attractive that it breaks the inertia that has anchored them to a service provider for so long. Mobile operators that will succeed in battling a wider, and more competitive, ecosystem will be those that understand the importance of Ardent Loyalty.

About the survey

The survey was conducted on behalf of WDS by market research specialist TNS in Q4 2012. 1000 respondents are included in the survey and represent an accurate spread of the US customer base. Only those responsible for paying their own bill were included. Business users have therefore been screened-out. The WDS Loyalty Audit defines mobile customers at risk of churning if they responded as being Likely or Somewhat Likely to switch mobile operator in the coming 12 months.

WDS, A Xerox Company is the trading name of Wireless Data Services Ltd registered in England and Wales with company number 01714719. Registered address - Wireless Data Services Limited, 160 Queen Victoria Street, London EC4V 4AN. VAT number GB 911330278. While every care has been taken to ensure that the information in this document is correct, WDS cannot accept (and hereby disclaims) any responsibility for loss or damage caused by errors or omissions. All rights reserved. No part of this document may be reproduced without the prior permission of WDS. Copyright: WDS, A Xerox Company 2013.

WDS, A Xerox Company

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Only 13% of US customers are truly loyal to their mobile operator; loyal enough to resist competitive price promotions and loyal enough to forgive their operator when things go wrong. Perhaps that surprises you?

State of the Nation

Perhaps you thought it was higher; that because your high-tenured customers deliver positive satisfaction and NPS results that their loyalty could be relied upon. Think again.

Loyalty

36%
at risk of switching

A customer is x more likely to be a switch-risk if they dont feel valued or trust their operator A customer is x more likely to be a switch-risk if they dont feel they get value for money A customer is x more likely to be a switch-risk if they contact customer support

2.5 2.5 1.6

year olds are the most likely to become a switch-risk

25-34 50%

of those currently at risk spend over $80 p/month

WDS, A Xerox Company, is a leading provider of Customer Experience Management solutions to the wireless industry. Our goal is to help wireless brands deliver a more consistent, dierentiated and pro table customer experience. By getting the customer experience right, and helping end-users get the most from their wireless world, WDS achieves the continued savings and improvements that naturally lower the support burden, improve loyalty and improve end-user pro tability. To download this and other industry whitepapers, or to register for updates, news and knowledge articles, please visit wds.co/enlightened or email marketing@wds.co

are Highly Satis ed

42%
38% Medium, 20% Low

39%
33% Passive, 28% Detractors

are NPS Promoters

19% of highly satis ed customers are thinking about switching 10% would consider switching for a 10% saving 71%
have not had a support issue in the last 6 months.

-34

NPS for those considered a switch-risk

+11

Average US mobile operator NPS

17%
of Promoters are at risk of switching

11%
of Promoters would consider switching for a 10% saving

47%
spend more than $80 p/month A customer with low satisfaction is x3.4 more likely to be a switch-risk than a highly satis ed customer

30%
of Promoters arent in uenced by recommendations when buying

64%
agree that their mobile operator meets all of their needs.
@wdscompany

would leave if their privacy was breached

32%

22%
would switch if prices increased by 10%

5%
would leave as a result of a network outage

Service reliability is most important for consumers when selecting an operator.

wdscompany blog.wds.co wdspodcast

WDS, A Xerox Company is the trading name of Wireless Data Services Ltd registered in England and Wales with company number 01714719. Registered address - Wireless Data Services Limited, 160 Queen Victoria Street, London EC4V 4AN. VAT number GB 911330278. WDS cannot accept (and hereby disclaims) any responsibility for loss or damage caused by errors or omissions. All rights reserved WDS, A Xerox Company 2013

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WDS Industry Briefing

WDS Mobile Loyalty Audit 2013

Whos at risk?
NPS at risk/safe (US) NPS at risk/safe (UK)

Checked
Tenure
Medium Satisfaction 42% 38% 64% 19% Low Satisfaction 18% High Satisfaction At risk -34 +35 Safe

What factors are influencing the switch-risk of US customers and can anything be done to prevent them from leaving? Many mobile operators build their predictive churn modeling around Satisfaction and Net Promoter Score (NPS) audits; is Medium this enough or is there more at play? Satisfaction

The US national average NPS figure is +11. Those who present themselves as a switch risk deliver an NPS of -34. (See Fig 1.5)
66% Low Satisfaction US Average (+11)

Satisfaction
High Low Satisfaction 0 1 2 Extremely Poor 3 4 5 6 Medium 7 8 High 9 10 Excellent

Even though the switch-risk reduces with tenure, the composition of the US market means that over a third (35%) of those customers at risk of switching right now have over UK Average (+5) six years of tenure. (See Fig 1.8)
Tenure (US) At risk 4-5 years -34 6+ years 35% +30 Safe

Fig.1.1: Satisfaction scale

To identify a satisfaction rating, respondents were asked to Satisfaction score their mobile operators current performance. Scores ranged from 0 (Extremely Poor) to 10 (Excellent). This scale is divided between Low Satisfaction (0-6), Medium Satisfaction (7-8) and High Satisfaction (9-10). (See Fig 1.1)

Te

Fig.1.5: Net Promoter Scores for customers at risk of switching and those regarded as safe (against US average of 11). Source WDS, 2013.

18% 17%

Of those customers currently at risk of switching in the US, 40% have Medium Satisfaction and a further 37% report Low Likelihood to churn within 12 months (US) Satisfaction. Surprisingly 23% of those at risk of switching are highly satisfied (High Satisfaction) with their mobile operator. (See Fig 1.2). WDS describes this group of customers as Mercenaries. MeRCeNaRies Satisfaction is by no means a guarantee of retention. In fact, in the US 19% of all highly satisfied customers are considered to be a switch-risk. Many of these customers are what WDS describes as Mercenaries; these are High Satisfaction customers who will happily switch if a better opportunity is presented to them. Mercenaries chase low prices or buy to pursue a trend. It takes effort to keep this segment satisfied but they show little, to no, loyalty in return. When asked if they would leave their current mobile operator for a 10% savings, 30% of Mercenaries said yes, almost double the national average of 15%.
40% Medium 23% High
Fig.1.2: Satisfaction rating of customers currently at risk of switching. Source WDS 2013.

Likelihood to churn within 12 months (UK)

Of those customers at risk of switching in the coming 12 months, the majority (53%) are Detractors. Passives account for a further 28%.

37% Low

NPS Average (US) areMedium NPS Promoters. (See Fig 1.6)

US AVG +11 Safe +35 Like satisfaction, a positive score doesnt always correlate 34% to retention; 19% of customers currently Low At Risk -35 at risk of switching 49%
17% NPS Average (US) High
Passives 28% 19% Promoters

UK AVG Safe At Risk

NPS Switch Risk

2-3 years

12% 18% <1 Year

Fig.1.8: Tenure of those currently at risk of switching. Source WDS, 2013.

+5 1-2 years +29 -43

Checke
<1 year 1-2 2-3 4-5 6+ Detractors
60% 53% 40% 28%

Likelihood as % of being a switch rish by satisfaction (US)

Passives 28% Likelihood as % of being a switch rish by satisfaction (UK) 53%

Detractors

Somew hat Likely Unsurprisingly, customers intent to switch rises in likely NPS Switch Risk two-year contract the months prior to the average 351 276 75 renewal period. A customer 32 with less than two years 11 43 <1 year of tenure is1-2 x1.3 more likely 47 to be a switch-risk than 16 63 a Passives customer with years or more 47 of tenure. 14 (See Fig 61 1.9) 2-3 636%

19%

Promoters

4-5 (US) Churn by Tenure

60%

6+
Promoters

49% 53 Passives
97

A customer with Low Satisfaction is x3.4 more likely to be a switch-risk than a Highly Satisfied customer.

A customer with Medium Satisfaction is x2 more likely to be a switch-risk than a Highly Satisfied customer. However, even a Highly Satisfied customer is at risk. 19% are a switch-risk.

Checked
High Satisfaction Medium Satisfaction 19% Low Satisfaction

53% Detractors Safe (81%) High Satisfaction Medium Satisfaction Low Satisfaction 18% Fig.1.6: NPS typology Safe (72%) of customers currently at risk of switching.
Source WDS, 2013.

52% 15%

Detractors 10 63 36% 24 121 49%

12 <1 y 18 1-2 17 2-3 18 Churn by Tenure 4-5 34 6+

40% 34% 20%

15% 38% Promoters 40%

38%

Safe (62%)

42%

Safe (58%)

20%

63%

Safe (37%)

66%

Even NPS Promoters are at risk. 17% will become a switch-risk. (See Fig 1.7)
Safe (34%)

0% 1-2 0-1 NPS Switch Risk years year

tenure). Source WDS, 2013. Promoters 18%

0% 2-3 years 4-5 years >6 years 0-1 year

Fig.1.3: Percentage of customers considered to be a switch-risk (by satisfaction). Source WDS 2013.

NPS Detractors are x3.4 more likely to be a NPS Switch Risk switch-risk than an NPS Promoter.
17%

Promoters

NPS Switch Risk Safe (83%) Promoters 17%

Safe (70%)

Fig.1.9: Percentage of customers to be a switch-risk (by NPSconsidered Switch Risk

Safe (72%)
2-3 years 4-5 Safe years(72%) 6+ years 53 10 97 24

NPS

Safe (83%)
Passives

0-12 Promoters 18% 1-2 years months

NPS Average (US)

NPS Average (UK)

Passives

30%

38% 32
11

Safe (62%) 47 47
16

Detractors

28%

39%

Promoters

Net Promoter Score (NPS) remains an important metric within the mobile industry. The methodology involves asking respondents a single question, How likely are you to recommend the service / product to a friend, relative Passives 29% Detractors or colleague? and rates the response from37% 0 (not at all likely) to 10 (extremely likely). A segments score (which can range from -10034% to +100) offers an Promoters indication of current satisfaction levels based on the level of advocacy that exists. The score is calculated by subtracting the percentage of Detractors (scoring 0-6) from the percentage of Promoters (scoring 9-10).

Passives
Detractors

30%
66% Safe (34%)

Safe (70%)

Detractors

Switch Risk Switch Risk

Passives

34% 34%

Detractors

66%

Safe (34%)

Detractors

0-12 months

1-2 years

65%

53% 53%

38%

14

2-3 years

Safe (35%)

40% 40%

38%

Safe (62%)
6+ years

28%

Switch Ris

4-5 years

65% 38%

Safe (35%) 28%

Switch Ris

Passives

33%

Fig.1.7: Percentage of customers considered to be a switch-risk (by NPS typology). Source WDS, 2013.

Fig.1.4: NPS typology: Breakdown of US customer base. Source WDS, 2013.

High NPS 15% 1%

Medium NPS 27% 3%

Low NPS 45% High NPS Medium NPS 22% 15% 27% 67%

High NPS

Medium NPS 33% 5%

Low NPS 43% High NPS Medium NPS 22% 15% 33% 65%

Low NPS 45% 22%

15% 3%

Low NPS 43% 22%

16%

30%

18%

38%

1%

3%

3%

5%

16%

30%

67%

18%

38%

65%

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WDS Industry Briefing

WDS Mobile Loyalty Audit 2013

Age

Checked
Free phone Available Device Range Network Coverage 19% 30% 40% 45% Service Reliability 45-59 Customer Care 35-44 Data Speed Payment Methods 25-34 16-24 Trust

Criteria rated by satisfaction (US)

Criteria rated by satisfaction (UK)

Service Performance
58% 26% 16%

In general, a customers likelihood to switch decreases Likely to churn by age (US) with age. For those aged over 60, just 19% are at risk of switching - compared to nearly half (45%) of 25-34 year olds. (See Fig 1.10)
60+ 45-59 35-44 25-34 16-24

Respondents were asked to rate the performance of several Likely to churn byFig age1.13) (UK) key elements of service. (See
57% 53% 52% 50% 33% 43% 43% 42% 40% 36% 36% 33% 32% 28% 29% 30% 28% 26% 42% 34% 15% 18% 18% 22% 31% 23%

Available Device Range Network Coverage

Instead, it seems operators are failing to create a feeling of value and reward among many of their customers. Free phone 58% the study 26% 16% When asked if they felt valued, found 38% of those at risk are not satisfied with their current mobile operator. Likewise, 52% feel that their operators rewards and loyalty program is not adequate. (See Fig 1.13)
53% 34% 13% 52% 27% 21%

switch-risk are satisfied that they get value for money.

36% of those considered a

High 60+Voice Quality 20%

Reliability If a customer doesnt feel valued Service 46% 35% or trust 19% their
Value For Money High Voice Quality Trust Data Speed Customer Care 44% 39% 17%

mobile operator they are x2.5 more likely to be 45% 30% 25% a switch-risk.
40% 37% 36% 35% 41% 35% 25% 22% 29%

Fig.1.10: Customers intent to switch reduces with age. Source WDS, 2013.

Spend

Checked
38%

34% 49% 24% 32% 37% 29% 29% 37% 35% 20% 28% 49% 27% 35% 38% 31% 34% 52% Low

Innovation

Value For Money

US Of those at risk of switching, 28% are high spenders, spending over $120 per month. Although this reflects the Count of Likelihood Likelihood to to change change composition of the market with 25% of all respondents falling within this monthly spend bracket, it does highlight a Age Not likely somewhat likely likely At Risk by spend (US) costly threat to US operators. (See Fig 1.11) 16-24 62% 25% 13% 25-34 $40-59 35-44 45-60 $60-79 18% 60+ 15%
23% $80-119

Makes Me Feel Valued Recommended by Family & Friends Oers Something Dierent Loyalty Rewards

36% 41% 23% Payment Methods Recommended by 31% 34% 35% Family &this Friends Within study, customers considered at risk of switching 29% 41% 30% Innovation

From Somewhat to Likely

include those that stated they were Likely or Somewhat

29% the coming 38% 12 months. 33% WDS Oers Something Dierent Likely to switch within

country

UK

31%

considers those that answered Somewhat Likely as 26% 31% 43% Loyalty Rewards
Makes Me Feel Valued

28%

High Medium Count of Likelihood Likelihood to to change change

the swing-voters. These whose 26% are customers 34% 40% potential to switch can be reversed with the right activity, or even High activity. Medium Low accelerated by the wrong As such, the study looked to discover some of the factors that would push them further to defecting (price was not included in the possible responses). One of the greatest temptations for the swing-voters is a better Loyalty Program. The data has already shown us that 52% felt that their operators rewards and loyalty program was not adequate and now we see that 43% of swing voters could be tempted away for the promise of a better program. 57% of swing-voters would be pushed further to defecting

Fig.1.13: Satisfaction with key service elements among customers currently at Age Not likely somewhatlikely likely Tenure (UK) risk of switching. Source WDS, 2013.

55% 60% 70% 12% 81%

35% 34% 25% $20-39 16%

5% <$20 28% >$120

Checked
Unsatis ed At Risk by spend (UK) 35%
Somew hat likely

9% 7% 6% 3%

16-24 51% 39% 10% 25-34 35% 14% 10-14 51% Is iT JUsT aBOUT PRiCe? 35-44 32% is 10% For any customer, feeling they get58% value for money 45-60 67%debunks 26% vital. However, the notion 7% 23% Audit 15-19the WDS Loyalty <10 driver for 14%single most that pricing alone influential 60+is the 80% 15% 5% 14%
switching. While 35% of those at risk of switching in the 6% >40 coming 12 months dont feel that they get value for money 26% 17% from their current mobile operator, 36% are actually Highly 20-29 30-39 Satisfied and feel they get [Excellent or Very Good] value for Performance VFM (US) money. (See Fig 1.14)

Performance VFM (UK) network coverage and 54% for a better data by better Criteria rated by satisfaction (US) plan. The promise of better customer service would also be Unsatis ed enough to pull 31% of swing-voters. (See Fig 1.15) 25% Better Network Coverage 45% Better Data Plan Satis ed Better Data Speed 30% Rewards/Loyalty Program Cheaper Device Better Customer Service Device Availability Better Brand 8% Other 7% 19% 35% 31% 43% 43% 57% 54% Better Network Coverage Rewards/Loyalty Program Cheaper Device Better Data Plan Better Customer Service Better Data Speed Device Availability Better Brand Other 8% 3% 18% 38% 36% 32% 32% 50% 48% Criteria rated by satisfaction (UK)

Fig.1.11: Monthly spend of those currently at risk of switching. Source WDS, 2013.

At Risk by spend (US)

A customers monthly spend has little influence on their likelihood Somew to switch (see Fig 1.12). hat Likely At Risk
<10 >$120 10-14 15-19 $80-119 20-29 $60-79 30-39 >40 $40-59
$20-39 <$20 16%
likely

13 35 51 42 61 74

4 7 11 11 19 23

5% 12% 39% 18% 36% 15% 37% 23% 28% 37%

37%

At Risk <10 49 4 14% 47% >40 10-14 67 21 29% 23% 15-19 41 14 14% Passive 48% 30-39 20-29 76 23 26% 56% 20-29 Fig. 1.14: Are those at risk of switching satisfied get value for money? 30-39 45 21 that they 17% 36% say>40 they are. Source WDS,14 2013. 7 5% 15-19 36%
10-14 GeTTiNg The BasiCs RighT 37%

36%

Satis ed

Passive

Fig.1.12: Percentage of customers regarded as a switch-risk, by monthly spend. Source WDS, 2013.

<10 21% In general, even switchers are satisfied with basic network US Service Reliability and Customer hygiene factors such as VFM Care. 43% of those at risk are Highly Satisfied with the Sased Passive Unsased quality of Customer Care and half (50%) are Highly Satisfied At Risk 36% 28% 36% with Service Reliability. (See Fig 1.13)

UK VFM At Risk

Fig.1.15: Which factors would push swing-voters to switch? Source WDS, 2013.

Sased Passive Unsased 45% 30% 25%

Less than 10

10-14

15-19

20-29

30-39

40+

Less than 10

10-14

15-19

20-29

30-39

40+

SL L Risk

13 4 16%

35 7 37%

51 11 37%

42 11 37%

61 19 36%

74 23 39%

SL L Risk

49 4 21%

67 21 37%

41 14 36%

76 23 56%

45 21 48%

14 7 47%

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WDS Industry Briefing

WDS Mobile Loyalty Audit 2013

Safe
Satisfaction
Over half (52%) of customers who state they are Unlikely to switch in the coming 12 months are Highly Satisfied. A further 36% reported medium satisfaction. 12% of those Unlikely to switch are actually Poorly Satisfied with their current mobile operator. WDS calls these customers Captives.

A customer is x3.6 more likely to be retained beyond 12 months

customer is x2.2 more likely to be retained beyond 12 months

A Highly Satisfied

CaPTives

In the same way that positive satisfaction scores are by no means a guarantee of retention (see At Risk section), a negative satisfaction score doesnt always present the customer as an immediate switch risk. Captives are either inert or, more likely, prevented from switching because of a lack of competition or a high cost to switching. While captives may not present themselves as an immediate switch risk, once the barriers to switching are removed theyll leave.

Checked
Detractors

if they are highly satisfied with Customer Care, or x2.3 more likely if they trust their mobile operator.

Service Performance
Respondents were asked to rate the performance of key service elements. Those Unlikely to switch overwhelmingly feel they get great value for money. 60% are Highly Satisfied; only 11% are Poorly Satisfied. (See Fig 2.4)
Reliable Service Network Coverage High Voice Quality Available Device Range 79% 77% 73% 71% 68% 68% 67% 60% 57% 56% 54% 51% 48% 48% 33% High 4% 34% Medium 17% 4 18% 5 23% 4 25% 24% 25% 26% 29% 32% 26% 37% 35% 40% 37% 4 8 7 7 11 11 18% 9% 14% 12% 15% 33% Low

Safe...But how safe?

HOW EASY IS IT TO BREAK LOYALTY? At its most basic, loyalty can be defined as an end-users willingness to continue using a product or service. We call this functional loyalty and its this that existing loyalty measures such as CSAT (Customer Satisfaction) and NPS (Net Promoter Score) seek to measure. Functional loyalty simply doesnt do the definition of loyalty Reliable Service 72% justice. As we have already seen, a customers decision to Free Phone 68% continue using a product or service may, for example, be Trust 65% dictated by external factors (perhaps a switching penalty Value For Money 63% or poor network coverage from alternate providers), rather High Voice Quality 63% than an informed and conscious decision (ie: Captives). Available Device Range 62% In other cases, behavior that a mobile operators CRM Customer Care 57% (customer relationship management) system regards as Payment Methods 56% loyalty may actually be little more than inertia. This type Data Speed 52% of loyalty is easily broken, particularly when barriers to Makes Me Feel Valued 47% switching are removed or the customer is presented with Innovation 46% an offer so attractive that it breaks the inertia that has Recommended by 45% Friends & Family anchored them to a service provider for so long.
Oers Something Dierent 42% Network Coverage 73% 20% 7 21% 7 18% 14% 26% 27% 29% 27% 31% 33% 36% 33% 38% 37% 36% 36% Medium 10 10 8 11 12 11 12 20% 16% 18% 22% 24% Low

NPS
The US national average NPS figure is +11. Those Unlikely to switch in the coming 12 months deliver an NPS of +35. (See section Whos at Risk? Fig 1.5) The majority of customers Unlikely to switch are Promoters (50%). However like satisfaction there are Captive customers who, despite their retention beyond 12 months, declare themselves as NPS Detractors. (See Fig 2.1)
Detractors 15% 50% 35% Passives
Fig.2.1: NPS classification of customers Unlikely to switch (safe). $40-59 $20-39 Source WDS, 2013.

Data Speed
16%

Customer Care Trust Promoters Value For Money 46% Payment Methods Free Phone Innovation

Promoters 38% Passives

Spend
$60-79

16% 14% 22% $80-119

11% 14% <$20 10-14 25%

Makes Me Feel Valued Recommended by Friends & Family Oers Something <10 Dierent 32% Loyalty Program

The majority of customers that are Unlikely to switch (45%) spend over $80. (See Fig 2.2)

$40-59

$20-39 <$20

$60-79

23% 16% 11% >$120 14% 14%

15-19

<10 >40 Fig.2.4: 16% 11%Satisfaction with key service elements among customers Unlikely to switch (safe). Source WDS, 2013. 32% 12% 10-14 25% 30-39 4% 20-29 >40 Of those 16% Unlikely 11% to switch in the coming 12 months: 12% 68% are Highly30-39 Satisfied with the performance of 15-19

Mobile operators that will succeed in battling a wider, and 40% Loyalty Program more competitive, ecosystem will be those that understand High the importance of Ardent Loyalty. Ardent Loyalty is the reason why consumers forgive brands and continue to do business with an organisation even if it becomes financially or functionally inconvenient to do so; it insulates a customer; building a higher degree of resistance to competitive price-based offers and tolerance to customer experience failures when service dips below expectations. To achieve this level of loyalty, satisfaction alone is no longer enough. Indeed, creating a base of satisfied customers is today little more than a cost of doing business. The problem with many traditional loyalty measurement techniques (such as CSAT and NPS) is that they only measure a customers intent. The customers sentiment at that time is based on their current (and historical) experience and doesnt factor any disruptions that may occur between the time of the audit and the time of contract renewal. The next section will look at how easily a customers likelihood to be retained can be broken.

22% $80-119

23% >$120

Customer Care. 20-29

Fig.2.2: Monthly spend of those Unlikely to switch (safe). Source WDS, 2013.

Of those that spend under $20 per month 84% state that they are Unlikely to switch. A customers monthly spend has little influence on their retention (See Fig. 2.3). Only those spending less than $20 show an increase in retention potential.

67% are Highly Satisfied with the level of Trust that had developed between themselves and their operator.
52%

>$120 $80-119 $60-79 $40-59 $20-39 <$20

61% 64%

>40 30-39 20-29

44%

79% are Highly Satisfied with Service Reliability.

53%

>$120 $80-119 $60-79 $40-59

63% 63% 63%

61% 64% 63% 84% 63%

15-19 10-14 <10

>40 30-39 20-29 15-19 10-14

Fig.2.3: Percentage of customers Unlikely to switch (safe), by monthly spend. $20-39 63% Source WDS, 2013.

A customer is x3.6 more likely to be retained 64% 52% beyond 12 months if they are Highly Satisfied 63% with Customer Care, or x2.3 more likely if they 44% trust their mobile 79% operator, (over someone with 64% Low Satisfaction).
63% 79%

53%

<$20

84%

<10

10

11

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WDS Industry Briefing

WDS Mobile Loyalty Audit 2013

Tolerance
Understanding Tolerance
Average 46% 38% 16% Average 48%

US National Average Customer Experience Failure 36% 16% Network Outage 10% Price Increase 28% 12% First Call Resolution Failure Billing Mistake

High Tol. 7% 3% 3% 5% 4% 15% 23% 4% 42%

Medium Tol. 53% 24% 35% 49% 43% 54% 49% 17% 37%

Low Tol. 40% 73% 62% 46% 53% 31% 28% 79% 21%

little to improve the situation; in both categories 17% would want to switch. Across most other problem types, the percentage of customers regarding the issue as a driver for switching is low (typically under 10% and as low as 1% for NPS Promoters faced with a Network Outage or Device Recall). However, a Privacy Breach is universally abhorred. Even with a High Satisfaction, 29% of customers would look to change mobile operator, this is 28% for High NPS rating.
% Respondents who rate the problem severe enough to switch Network Outage

The WDS Loyalty Audit adds a unique component to the evaluation of customer loyalty; stress-tests. These are designed to test customers sentiment and understand a) the level of resistance a customer has to a competitive price-based offer and b) how forgiving he is when service dips below the expected level of quality. Together, these stress-tests help to understand the level of tolerance that a customer exhibits. The greater the tolerance, the greater the level of Ardent Loyalty that has been created within the customer. Essentially, stress-testing offers a unique way of understanding whether a customers sentiment (regarding his retention) will translate into real-world action. Tolerance is graded as follows: High Tolerance: Competitive offers and/or customer experience failures have a minimal impact on the customers sentiment. Medium Tolerance: If compounded by other issues, competitive offers and/or customer experience failures may negatively affect the customers sentiment. Low Tolerance: Theres a high probability that competitive offers and/or customer experience failures will negatively impact the customers sentiment.

High Satisfaction

60%

30%

10%

High Satisfaction

60%

High NPS

60%

29%

11%

High NPS High

63% Support hold time 26% 11% too long

Product Recall
High Medium Low Medium Low Desired Phone Unavailable
Fig.2.5: Does High Satisfaction or being an NPS Promoter improve price resistance? Only marginal improvements over the national average are observed. Source WDS, 2013.

Privacy Breach Friends and Family Switched

% Avg. 5% 22% 11% 7% 8% 4% 6% 32% 5%

% High Satis. 4% 17% 9% 5% 7% 2% 4% 29% 4%

% NPS Promo. 5% 17% 8% 6% 7% 3% 5% 28% 4%

A 20% saving proves even more compelling. 59% of those Unlikely to churn showed a high level of tolerance to a 10% saving. This decreases to 38% when a 20% saving is available. Likewise (while still showing a greater degree of resistance than the national average) only 40% of High Satisfaction customers and 42% of NPS Promoters, show a high level of tolerance for this saving.
High Satisfaction Customer Experience Failure Network Outage 10% Price Increase First Call Resolution Failure Billing Mistake Support hold time too long High Tol. 10% 3% 4% 7% 5% 20% 25% 3% 50% Medium Tol. 54% 27% 37% 52% 44% 53% 48% 16% 32% Low Tol. 36% 70% 59% 41% 51% 27% 27% 81% 18%

10% Price Increase First Call Resolution Failure Billing Mistake Support hold time too long Product Recall Desired Phone Unavailable Privacy Breach Friends and Family Switched

Customer Experience Failure

The second stress-test looks to understand whether a highly satisfied customer is more resilient to customer experience failures. Respondents were presented with a list of nine common problems types and asked to score them in terms of their inconvenience. Is a network outage more damaging to long term loyalty than a billing error or device fault and does satisfaction and NPS improve tolerance? High levels of satisfaction, being an NPS Promoter or simply stating an unlikelihood to switch, all make the customer more tolerant and forgiving of customer experience failures. However, the increase over the national average is marginal. A price increase, failed Customer Care enquiry (First Call Resolution Failure), lengthy Customer Care hold time or a Privacy Breach are the least tolerated failures. 73% of the US shows low resistance to a price increase. Not even a high satisfaction score helps; 70% of Highly Satisfied customers demonstrate low tolerance levels when presented with a price increase. (See following tables)

Product Recall Desired Phone Unavailable Privacy Breach Friends and Family Switched

THE IMPACT OF CUSTOMER SUPPORT ON SATISFACTION AND SWITCHING Despite mobile operators best efforts to improve customer service through their care channels, the WDS Loyalty Audit shows a clear correlation between the number of support interactions and the likelihood to switch. Of those Unlikely to leave, only 31% had interacted with a support channel over the last six months. This is less than the national average (36%). By comparison, 48% of those regarded as a switch-risk had interacted with a support channel at least once. (See Fig 2.6)

Price Resistance
Customers who stated that they were Unlikely to switch in the coming 12 months were asked if theyd change their mind if offered a 10% price saving from a competitor. 59% exhibited high tolerance. 8% showed low tolerances levels and (regardless of their initial sentiment) could be expected to switch if presented with such an offer. A further 33% showed a medium level of tolerance. This puts a third at risk of switching if compounded by other customer experience failures. On its own, a customers stated retention, and even his current level of satisfaction, is not enough to build immunity to such price-based offers. (See Fig 2.5) 10% of Highly Satisfied customers have a low resistance to price-based offers and would likely switch for a 10% saving. 11% of NPS Promoters have a low resistance to pricebased offers and would likely switch for a 10% saving.

NPS Promoter Customer Experience Failure Network Outage 10% Price Increase First Call Resolution Failure Billing Mistake Support hold time too long Product Recall Desired Phone Unavailable Privacy Breach Friends and Family Switched

High Tol. 10% 5% 4% 8% 4% 19% 26% 4% 54%

Medium Tol. 55% 27% 40% 56% 49% 57% 48% 16% 31%

Low Tol. 35% 68% 56% 36% 47% 24% 26% 80% 15%

Safe

69%

19%

9% 3

Safe

IT WOULD MAKE ME WANT TO SWITCH In addition to a low tolerance classification, respondents were also given the chance to state whether a failure would be severe enough for them to switch without further consideration. Again, a price increase is not tolerated. Just over a fifth (22%) of US customers rate a 10% Price Increase from their current mobile operator as damaging enough for them to want to switch provider. High Satisfaction and NPS does

Switch Risk

52%

21%

12%

15%

Switch Risk

customer support, they are x1.6 more likely to be a switch-risk.

If a customer has to contact

None

Once

Twice

3+

Fig.2.6: Number of support interactions (in last six months). Customers at risk of switching vs those unlikely to switch (safe). Source WDS, 2013.

High

71%

17%

10%2

High

Medium

61%

24%

10% 5

Medium

12
Low 53% 18% 12% 17%

13
Low

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None

Once

Twice

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WDS Industry Briefing

WDS Mobile Loyalty Audit 2013

The Value of Loyalty

If a customer has to contact Customer Support in any given six month window, they are x1.6 more likely to be a switch-risk.

Why not leave?

Respondents who stated that they were Unlikely to leave were asked for their reasons for not wanting to switch (price was not considered). By far the most popular answer was that my [current] mobile operator meets all of my Safe 68% expectations. 53% agreed with this statement. 38% agreed that they feel they get value for money and 27% agreed that they trust their mobile operator more than the Switch competition.
Risk 49%

Early practitioners of the satisfaction and quality movement postulated that if a product or service met customers functional specifications and fulfilled their requirements, it was enough to ensure that the customer would continue to use and/or repurchase the product or service. Today we know that this simply isnt sufficient and that meeting functional expectations has become little more than a cost of doing business. Indeed, the WDS Loyalty Audit calls into question the loyalty of almost a fifth of all Highly Satisfied customers; their satisfaction simply does not translate into a contract renewal. Likewise, a sub-set of those with Low Satisfaction remain Unlikely to switch. These two simple examples demonstrate how basing loyalty and retention decisions solely on the output of CSAT and NPS scores has become entirely insufficient in todays mobile ecosystem. Thats why greater segmentation is necessary; in particular segmentation that understands the motivations and historical context of a customer. None of this is to say that Satisfaction or NPS arent valid loyalty measures. Indeed they remain useful markers. However, their effectiveness is reduced when we want to measure something more than the customers sentiment. Posing realworld challenges to customer sentiment, in the form of a stress-test, is a vital component in truly understanding the current state of loyalty as is stands within an operators business and against existing competitive threats and operational challenges. For example, in our original measurements, it was observed that 19% of High Satisfaction customers were considered a switch-risk. Offer the potential of a 10% price saving from a competitor and only 34% could categorically declare that they wouldnt switch. While this is above the national average (23%), High satisfaction alone is clearly not enough to insulate a customer from the competition. Introduce a 20% price saving from a competitor and only 15% would definitely not switch.
% of respondents who agree improvements in the following would contribute to a switching decision Better Network Coverage
3+ 8% 5

If a customer has to contact Customer Support a six month period, they Safe more than once in 69% 19% 9% 3 are x1.9 more likely to be a switch risk than someone who has contacted support once (or less).
52% 21% 12% 15%

20%

7% 5

Switch Risk

19%

18%

14%

Satisfaction scores follow a similar trend. 47% of Low None Once Twice 3+ Satisfaction respondents had engaged with a support channel at least once on the last six months. The figure Safe 69% 19% 9% 3 drops [marginally] to 29% of those rated High Satisfaction. (See Fig 2.7)
Switch High Risk

However, inertia still plays a role in retention. 27% agree that switching is too inconvenient, 14% agree that all None Once mobile operators are the same, and 37% dont want to risk losing coverage by switching to a different network.
Safe 68%

Twice 20%

3+ 7% 5

Rewards and Incentive Programs appear less effective with only 12% agreeing that they feel adequately rewarded for remaining loyal.
Switch High Risk 49% 63% 19% 18% 23% 14% 8% 5

52%

71%

21%

12% 17% 15% 10%2

Medium

None

61% Once

24% Twice

10% 5 3+

Respondents that agree with statements for Percentage not switching. Medium 62% 19% None Twice My current mobile operator meets all my service Once 53% expectations Im confident I get the best value for money 38% Low 55% 13% 15% I know my provider offers coverage where I need 37% it, I dont want to risk switching None Once Twice I trust my mobile operator more than its 27% High 63% 23% competitors Switching is too inconvenient Safe 57% All the mobile operators are the same, I don't see Medium 62% the benefit to change I feel adequately rewarded for remaining loyal Low 55% At Risk 36%
None

12% 3+ 7

Avg

High Tol. 24% 19% 13% 11% 10% 9% 7% 5%

High Satis. 37% 36% 26% 23% 22% 18% 12% 7%

NPS Promo. 40% 34% 27% 26% 20% 18% 12% 7%

Low

53%

18%

12%

17%

17%

46% 41% 32% 30% 25% 24% 14% 8%

None

Once

Twice

3+

High 71% (in last six months), by 17% 10%2 Fig.2.7: Number of support interactions satisfaction rating. Source WDS, 2013. Safe Medium 68% 61% 24% 25% 7% 10% 5

Better Rewards/Loyalty Program The phone I want is cheaper Better Data Plan Better Customer Service/Care Better Data Speed

27% 14% 12%

13% 35% 15% 17% 29% 3+ Low 31% 12% 31% 12% 19% 12% 7

Of course the frequency of interaction is compounded by its quality. When asked to rate the performance of their Low interaction(s) 53% 12% 17% support those at risk of 18% switching are highly At Risk 43% 31% critical of their mobile operator. 31%26% rank the performance of their contact as Low. (See Fig 2.8) 3+ Nonecenter interaction Once Twice
High Safe 68% Medium 25%

Desired Phone Unavailable Better Company Image

Low 7%

High Medium Customer Care performance as Safe High are Unlikely to57% switch in the coming 12 months.

74% of customers who rated

Once

Twice

Those displaying a high tolerance to competitive price offers display much wider loyalty benefits to the mobile operator. When respondents were questioned about other factors (beyond price) that a competitor could use to tempt them away, those with high (price) tolerance remained notably passive towards any promised benefit. This is either the result of the customers expectations already being met across all of these factors or, more likely, that the risk of a switch, and breaking a trusted relationship, far outweighs the benefits. This is seen in the table below; which shows the percentage of respondents that agreed an improvement in key areas of service would be considered as a reason for switching. Those with high (price) tolerance were far less likely to agree with the statements and, notably, outperformed Highly Satisfied customers and NPS Promoters. (See table)

At Risk

43%

26%

31%

At Risk

36%

35%

29%

High

Medium

Low

High

Medium

Low

Fig.2.8: Performance of customer care interaction, rated by those at risk of switching and those unlikely to switch. Source WDS, 2013.

14

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WDS Industry Briefing

WDS Mobile Loyalty Audit 2013

WDS LOYalTY FRaMewORK Such is the important of such stress-tests, that they are used in the WDS Loyalty Framework to segment customers. A variation of the traditional Apostle Model, the WDS Loyalty Framework uses a stress-test multiplier (based on the response to questioning) to determine the validity of their retention sentiment. This model segments mobile customers into one of four principal segments. (See fig 3.1)

The 13%
While Loyalists represent an above-average, and acceptable level of loyalty, they may still present themselves as a switch risk. The WDS Loyalty Framework therefore sub-classifies the Loyalty segment to identify the most loyal crop of customers. These are called Enthusiasts. Enthusiasts display the characteristics that WDS defines as being necessary to willingly resist a competitive offer or service failure; they have Ardent Loyalty. 21% of Loyalists can be sub-classified as Enthusiasts; (this is 13% of the total US subscriber base).
Mercenaries Loyalists

Satisfaction

Loyalists: Customers that show high satisfaction and a high inclination to continue in a relationship with their mobile operator. They are more tolerant of customer experience failures and resistant to competitive price offers than the national average. Mercenaries: High satisfaction but will happily switch if a better opportunity is presented to them. This segment chases low prices or buys to pursue a trend. It takes effort to keep this segment satisfied but they show little, to no, loyalty in return. Defectors: Customers who are dissatisfied and show little inclination to continue in a relationship with their mobile operator. They are less tolerant of customer experience failures and less resistant to competitive price offers than the national average.

% High Satis.
Defectors Captives

% NPS Promo.

% with low tolerance to a competitive 10% saving 15% 0% 7% 30% 11% 38%

Ardent Loyalty Score* 9 4 6 15 6 17

US Average Enthusiasts

41% 100% 58% 33% 0% 0%

38% 88% 54% 27% 2% 2%

Likelihood to repurchase
Fig.3.1: WDS Loyalty Framework. Customer typologies. Source WDS, 2013.

Loyalists Mercenaries Captives Defectors

Captives: High chance of continuing in a relationship with their mobile operator but with little satisfaction. Captives may be prevented from switching because of a lack of competition or a high cost to switching.

* Ardent Loyalty score (price resistance and problem tolerance) on a scale from 2 (best) to 31 (worst). This score is used to determine the likelihood of repurchase and is part of the WDS Loyalty Framework.

When applied to the data within this study, WDSs Loyalty Framework segments the US market as follows: (See fig 3.2) US lOYalTY COMPOsiTiON
US 61% of the US market. Loyalists comprise

ChURN aNd lOYalTY segMeNT 100% of Defectors are at risk of switching in the coming 12 months. Only 7% of Loyalists are at risk. Captives, by their very nature are typically unable to switch provider and despite their low levels of satisfaction only 10% present a switch-risk. Mercenaries represent the swing voters. While 100% represent a switch-risk, 85% of these deliver a Somewhat Likely response to switching, suggesting the opportunity to reverse their sentiment. By comparison, of the 100% of Defectors at risk, only 61% deliver a Somewhat Likely verdict. WDS LOYalTY FRaMewORK COMPaRisON The WDS Loyalty Framework delivers a more granular level of segmentation. In particular it allows the most loyal subset of a customer base to be identified. Once this group (Loyalists and Enthusiasts) have been identified, their value must be secured. While many criteria, including High Satisfaction and having more than six years of tenure, can have a positive impact on customer retention, none match the retention rate and Ardent Loyalty delivered by true Loyalists and Enthusiasts. (See Fig 3.3)
Enthusiasts Loyalists 100% 93% 81% 83% 72%

19% Merc.

60% Loyalists

Mercenaries represent the next largest group with 17% of US customers. Captives are the smallest segment, with 9% of the market. Defectors comprise 12% of the market.

9% Capt.

17% Merc. 12% Def.

61% Loyalists

12% Def.

9% Capt.

Fig.3.2: US Loyalty Composition. Source WDS, 2013.

High Satisfaction High NPS

Checked
16 WDS, A Xerox Company

6+ years

Fig.3.3: Percentage that will be retained beyond 12 months. Source WDS, 2013.

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WDS Industry Briefing

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Summary
Many mobile operators will have their own methodologies and frameworks for measuring and managing loyalty. The purpose of this paper is to supplement these existing frameworks and highlight the importance of improved segmentation (as above) beyond many of the traditional approaches. In particular, the data makes clear that no single satisfaction measure is enough to fully understand the loyalty profile of a customer. For example, directing retention budget to a homogenous group of Low Satisfaction customers does not differentiate between Captives and Defectors, two segments with very different requirements. CRM systems must reflect such complexity. Profiling customers simply by their satisfaction, NPS or repurchase scores risks alienating a significant percentage of the subscriber base whose loyalty is potentially being misinterpreted.

mobile operator they are x2.5 more likely to be a switch-risk.

If a customer doesnt trust their

Five Top Findings

1. 2.

Customer Support is a key influencer in customer retention and satisfaction. If a customer has to contact a support channel more than once in a six month period hell be twice as likely to become a switch-risk. Even those at risk of switching are satisfied with basic network hygiene factors, and even pricing. 36% of those at risk of switching were satisfied they got value for money, 50% were highly satisfied with service reliability and 53% were highly satisfied with network coverage. Building a sense of value and trust is vital in securing customers loyalty. If a customer doesnt trust his mobile operator they are x2.5 more likely to become a switch-risk. 38% of those at risk of switching said that they didnt feel valued and 52% said that their operators rewards / loyalty program was not satisfactory. Satisfaction remains an important metric. A Highly Satisfied customer is x2.2 more likely to be retained beyond 12 months than someone rated as Low Satisfaction. But dont take the basics for granted. 19% of Highly Satisfied customers are a switch-risk. Likewise, a quarter of customers with six or more years of tenure. Stress-test customer sentiment. Offer the potential of a 10% price saving from a competitor and only 34% of Highly Satisfied customers could categorically declare that they wouldnt switch. While this is above the national average (23%), High satisfaction alone is clearly not enough to insulate a customer from the NPS High competition. Introduce a 20% price saving from a competitor and only 15% would definitely not switch. Promoter
6+ Years Tenure

3.

The importance of creating and maintaining a loyal base of customers has never been greater. Given increasing parity across data speed, quality and price its becoming harder for mobile operators to differentiate on core network assets alone. Instead, differentiation must come through the customer experience; the operator can then build value-based relationships outside of price. When questioned about the advantage of using their existing mobile operator over a competitor, only (30%) of US customers saw any tangible and real benefit. 34% were passive to any advantage and the majority (36%) actually stated that there was low/none advantage to support their choice of mobile operator. This alone shows the fragility of todays mobile operator relationships where, following a legacy of NPS High price cutting and device subsidies, US consumers associate Promoter Satisfaction 6+ operator value with price.
Competitive Advantage

4.

5.

Satisfaction
Competitive Advantage

Where high levels of satisfaction and Ardent Loyalty existed, feelings of competitive advantage increased. 60% of High Satisfaction customers (and 65% of NPS Promoters) saw strong competitive advantage in using their existing mobile operator. These results simply werent matched by tenure where, even after six years, 33% saw little/none advantage. Instead, in a saturated market, with network and pricing parity across much of the industry, feelings of competitive advantage are today delivered through the service and customer experience. (See fig 3.4)

Average 30% 34% 36% High

60%

65%

Years Tenure 33%

Average

62% 57% 27% Loyalty Audit 2013, including mobile operator comparisons, is available to WDS 25% Further data and insight from the WDS

customers.
35% 40% High

28% 12%

28% 7%

34% 33%

For further information please email tim.deluca-smith@wds.co 7%

11% 37%

32%

31%

36%

Passive

Low

About WDS

Passive

Low

Fig.3.4: Percentage of customers that see high competitive advantage in their current mobile operator. Source WDS, 2013.

WDS, A Xerox Company, is a leading provider of Customer Experience Management solutions to the wireless industry. Our goal is to help wireless brands deliver a more consistent, differentiated and profitable customer experience. By the time an end-user experiences a problem and has to interact with a support channel, the damage to end-user profitability and loyalty has been done. Thats why WDS looks to shift attention away from managing customer experience problems and towards mitigating failures that we know have the potential to increase costs and damage end-user loyalty and profitability. We achieve this by embedding a CEM platform across the customer lifecycle, from retail through technical support and returns management. This platform powers the solutions that we deploy at key customer touch-points (retail, on-device, on-line and contact center); sharing data between them to better manage how end-users buy, explore, use and maintain their wireless products and services. As end-users progress through customer lifecycle and interact with our platform we capture, analyse and manage their transactions, adjusting, in real-time, any systemic issues or customer experience problems that they may be experiencing. By getting the customer experience right, and helping end-users get the most from their wireless world, WDS achieves the continued savings and improvements that naturally lower the support burden, improve loyalty and improve end-user profitability. Its this ability to help customers identify preventable issues, improve future products and services and build long-term, profitable relationships with end-users that means many of the worlds most recognizable mobile brands now trust the outsourcing of their customer experience to WDS.

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WDS, A Xerox Company

www.wds.co

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WDS, A Xerox Company is the trading name of Wireless Data Services Ltd registered in England and Wales with company number 01714719. Registered address - Wireless Data Services Limited, 160 Queen Victoria Street, London EC4V 4AN. VAT number GB 911330278. While every care has been taken to ensure that the information in this document is correct, WDS cannot accept (and hereby disclaims) any responsibility for loss or damage caused by errors or omissions. All rights reserved. No part of this document may be reproduced without the prior permission of WDS. Copyright: WDS, A Xerox Company 2013.