Nokia identifies 5 'musts' for mobile network loyalty

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By: Wise Marketer Staff |

Posted on February 3, 2006

The mobile telephone manufacturer Nokia has conducted some research into customer turnover - or churn - and unearthed some of the key factors that drive subscribers in choosing or changing their mobile telecoms service provider.

A key finding of the survey, which covered 3,900 consumers across the UK, US, Germany, Thailand and Brazil, was that regardless of whether operators are trying to acquire new customers or keep existing subscribers, price is only one of many factors behind the final decision.

The study found that there were five essential factors that had the most direct impact on customer acquisition:
·  Calling plans;
·  Operator brand image;
·  Handset aspects;
·  Network quality;
·  Cost aspects.

Cost is not everything
The study showed that the direct significance of "cost issues" is much lower when it comes to retaining customers than when it comes to acquiring customers in the first place. When it comes to keeping customers, factors such as brand image, network quality, and switching barriers come ahead of cost related issues like calling plans.

When it comes to choosing operators, many consumers agreed that they "shop around carefully", "research their options thoroughly", and "visit a number of shops" before deciding. The consumer segments most likely to churn tend to be younger, medium to high income, and recent subscribers; they have higher mobile spend and tend to be contract customers.

Unbalanced strategies
The study also turned up some surprises. For example, contract customers appear less loyal than pre-paid customers, despite the stronger contractual ties they have to their operator. One reason for this could be the fact that contract customers are more receptive to new extended offerings (subsidized handsets, special deals, etc.) which can trigger churn.

Another very significant reason, The Wise Marketer suggests, is that most mobile telcos offer much better deals (either through pricing or package deals) on new handsets when customers take out new contracts than when they upgrade through their existing service provider. This over-subsidised acquisition strategy - which is particularly noted in the UK - leads to a simple decision for most consumers when they want a new handset with better features: swap to a different provider to get the best deal. If the acquisition and retention strategies were more evenly balanced, it is very likely that far fewer customers would churn at the end of their initial contract period.

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