Customer retention has become a top priority among wireless telephone service carriers due to the slowdown in wireless penetration and the forthcoming WNP (wireless number portability) legislation in the US, according to a new study from J.D. Power and Associates.
The 2003 US Wireless Regional CSI Study found that the overall wireless growth rate between 2002 and 2003 among the 27 largest US markets was only 5.3% - considerably lower than the 7.6% overall growth rate between 2001 and 2002. Moreover, some 26% of surveyed subscribers said they had switched wireless carriers at least once during the past 12 months (up from 24% in 2002). The length of time a subscriber stays with a carrier before they switch has shortened a full three months since 1999.
"It's imperative that wireless service providers concentrate on retention strategies as the ability to expand the customer base becomes more difficult," said Kirk Parsons, senior director of wireless services for J.D. Power and Associates.
With the cost of acquiring each new customer ranging from US$300 to US$425, wireless providers are encouraged to make serious efforts to retain customers by providing loyalty programmes and better service.
Satisfaction rules
The study also indicates that achieving better levels of customer satisfaction has become a critical issue for the wireless telecoms industry. Only 7% of current customers of the highest-ranking providers said they were likely to switch carriers during the coming 12 months, compared to 21% for the lowest-ranking providers. And customers of the highest-ranking providers proved 38% more likely to renew with their current carrier than customers of the lower-ranking providers.
J.D. Power measured customer satisfaction based on 42 specific service-related issues, grouped into six key areas that impact overall carrier performance. These are (in order of importance): call performance and reliability (26%); customer service (17%); service plan options (17%); brand image (14%); cost of service (14%); and billing (12%). Carriers were ranked in six regions of the US.
Key findings
Verizon Wireless performed well in the study, ranking highest in five of the six geographical regions (including three ties with other providers). The study suggests that this success is largely a result of demonstrating a competitive advantage in call quality, customer service, and service plan options. Other providers that performed well include Nextel (highest in a tie for three of the four regions covered), T-Mobile (highest in a tie for two of five regions covered), and AT&T Wireless and Cingular Wireless, each tying in one region.
The study also revealed a number of key wireless service usage patterns. For example:
- Users report spending US$52 per month on wireless service, and using 365 minutes of air time per month.
- The average number of 'free' minutes included in a service plan is 1,623. Only 56% of users report using all their minutes on a monthly basis.
- Some 20% of wireless-using households said they have two or more family members sharing service plan minutes.
The study was based on survey responses from 25,429 households across the US.
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