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Revealed: The Fragility Of U.S. Wireless Customer Loyalty

Stocks in this article: XRX

A new study of loyalty among mobile phone users in the U.S., released today by WDS, A Xerox (NYSE: XRX) Company, has worrying implications for wireless carriers. The WDS Mobile Loyalty Audit 2013 reveals that 36 percent of U.S. customers are considering leaving their mobile carrier in the next 12 months. The study, which integrates new survey data from research specialist TNS, also finds that only 13 percent of customers show the level of loyalty required to protect them from competitive offers and service disruptions.

For the first time, the WDS 2013 Mobile Loyalty Audit uses “stress-tests” to show the impact of real-world disruptions on a customer’s likelihood to change carriers and delivers a realistic view of the level of loyalty that exists in the US. When stress-tested, the study found customers’ perceived “loyalty” could be easily broken, for example:

What if…your current wireless carrier increased prices by 10 percent?

  • 69 percent of customers who were previously unlikely to switch would now consider leaving.
  • 15 percent of them would switch immediately without further consideration.
  • 70 percent of highly satisfied customers would also consider switching, 17 percent would leave without further consideration.

What if…another carrier could reduce your monthly tariff by 10 percent?

  • Only 31 percent of customers who were previously unlikely to switch could guarantee that they wouldn’t leave for this saving.

What if…there was a privacy breach?

  • 78 percent of those that said they were unlikely to switch would now consider leaving.
  • 27 percent of them would switch immediately without further consideration.
  • 29 percent of highly satisfied customers would switch immediately.

The study suggests that the number of customers at risk of churn could be underestimated by wireless carriers. Additionally, many existing measures of loyalty, such as customer satisfaction and Net Promoter Score (NPS), often deliver potentially misleading results. For example, the WDS audit found that 23 percent of customers currently considered a “switch-risk” are actually highly satisfied with their mobile operator. Likewise, 19 percent are NPS Promoters.

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