Telecoms satisfaction 'fairly high', loyalty low

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By: Wise Marketer Staff |

Posted on November 20, 2003

For telecommunications providers in the US to keep pace with the increasingly competitive market, they must be more responsive to their customers' needs and expectations, according to customer loyalty management consultants, Walker Information.

According to Walker Information (WI), telecoms providers are being distracted by industry consolidation, new technology, and changing infrastructure, and aren't always hearing and responding well enough to customer complaints.

WI's national study on customer loyalty in the telecommunications industry shows that the industry's lack of customer focus and errors in after-sales support come at a time when there are new, consumer-friendly federal regulations and a wide array of choices. Ironically, as telecommunications firms work harder to provide more options, they are also enabling higher churn rates and lower rates of loyalty.

Key loyalty driver
The Walker Loyalty Report for Telecommunications, which examined customer loyalty in the targeted sectors of internet service providers, local, long-distance, and wireless telephone companies, asserts that service quality is now a key driver of loyalty in the industry.

According to the study, some 75% of customers said they are satisfied with their current telecommunications providers. However, only 28% (one of the lowest percentages of all sectors including information technology, financial services, retail, and health insurance) can be considered truly loyal. That proportion of consumers represents those who want to continue their relationship and plan to actively continue purchasing services from their current provider. Another 46% of telecommunications customers consider themselves trapped, being less than pleased with their providers but planning to continue the relationship anyway.

The trouble with mergers
"Mergers are running rampant throughout the telecommunications industry and that doesn't bode well for customer service," said Brad Linville, Walker Information's group vice president. "Mergers frequently come at the expense of focusing on customers, as companies concentrate on business integration. While overall levels of service might not decline, promised benefits often don't materialise."

In fact, 62% of customers were positive about the overall quality of service they received from their telecommunications providers. But only 57% were positive about customer support services, and 54% had nothing good to say about their provider's billing processes. Wireless firms had the worst-rated billing process while ISPs had the best, although neither received positive marks above 49%.

Loyalty ratings
Local telephone providers, which are traditionally monopolies in the US, had only 23% of customers indicating positive feelings about their providers. Walker's analysts say the lack of choice presented by the local telephone market will continue to be a major issue for customers.

Both wireless and fixed wire telephone service providers are likely to be adversely affected when the effect of the Local Number Portability Act starts to bite. Customers will no longer be tied to their wireless providers in order to keep their existing mobile telephone number. According to Kan Hyers of In-State/MDR, other markets where portability has been introduced have driven wireless customer churn rates up by as much as 50%.

Other findings
The research report also shows that earning a reputation for being customer focused is the number one driver of loyalty, with only 54% of telecom customers saying they would recommend their current provider. Some 62% of customers also said they would find it appealing to purchase all telecommunications services from a single provider.

The report's findings should prove useful to providers that have so-far focused their marketing strategies solely on price. According to WI, with changes in the industry making it easier for customers to switch providers or drop certain services altogether, the companies that meet their service needs first are most likely to be the overall winners.

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