Superior customer satisfaction critical in mobile telecoms

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By: Wise Marketer Staff |

Posted on September 28, 2001

New US Survey shows that falling customer lifetime values make higher customer satisfaction even more important in the mobile telecom sector.

The number of US households using a mobile phone service has increased by an average of 12% per year since 1995, from a total of some 27% of households then to 52% now- an increase of 93%. This was revealed in the new J.D. Power and Associates 2001 US Wireless Industry Services Study.  At the same time, the average cost per minute of calls fell from US$0.56 to US$0.14, a decrease of 75%.

Gloomy picture
Clearly, cheaper calls mean less revenue for the carrier. Average monthly spending on mobile telephone services is falling fast, from $66 in 2000 to $61 in 2001. And the average customer lifetime is also decreasing, from 2.54 years on average in 1999 to 2.40 years in 2001.  It's not a pretty picture. A simple, back-of-the-envelope calculation reveals that a customer spending $61 per month for 2.4 years is worth almost 13% less in total than one who spends $66 per month for 2.54 years.

Satisfaction critical
According to Al Destribats, J.D. Powers and Associates executive director of utility and telecommunications practices, "Providing superior customer satisfaction has become critical in the wireless industry to bolster customer retention and increase revenue potential. Companies with higher overall satisfaction scores not only retain customers an average of two months longer, they also generate approximately $11 more in monthly revenue per customer than do providers that have below-average customer satisfaction."

More problems
Other findings of the survey were that reported use of minutes per month has increased 32% from 2000, to 442 (some 15 minutes per day). Approximately two in three users receive free or discounted minutes. Users are experiencing more problems (mainly questions about phone equipment and operation) than they did in 2000. More worryingly, the number of calls that it takes to resolve these problems has risen by some 11% since 1998. Some 23% of subscribers accessed the internet via a mobile phone in 2001, against only half as many in 2000.

Almost 15,000 households in 25 of the largest US markets responded to the survey.

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