Operator loyalty schemes not main driver of user retention, cautions WDS

Mobile operators could be misspending marketing funds on loyalty programmes that have little effect on customer retention, said customer care specialist WDS, a Xerox company.

The company warned operators that most mobile subscribers stick with their provider due to fears they will lose coverage rather than through feelings of affinity, meaning service providers could be focusing their marketing spend on the wrong areas.

A study of 4,000 users in four countries found 35 per cent are afraid to change, 26 per cent believe switching would be inconvenient, and 15 per cent believe all operators are the same, meaning there is little point in changing.

In contrast, 16 per cent said they are staying with their operator because they feel their loyalty is valued.

Tim Deluca-Smith, vice president of marketing at WDS, said the research appears to show operators are "no closer to establishing what customer loyalty actually is, or how to proactively engender it."

The research was conducted for WDS by consultancy mobileSquared and market research company GMI, and involved mobile subscribers in the UK, U.S., South Africa, and Australia.

While casting some doubt on the effectiveness of operators' loyalty programmes, the research also found that 55 per cent of customers who opted to stick with their operator said they are happy with their provider's service.

On the flip side, WDS' research also found that 18 per cent of customers who plan to change operator are highly satisfied with their current provider. Other factors cited by customers planning to switch include not feeling valued, ineffective rewards and loyalty programmes, and lack of trust in the operator.

Deluca-Smith said the research shows customer satisfaction does not automatically translate into subscriber retention. "Satisfaction is no longer a differentiator for mobile brands, it's an expectation.

"Certainly, customer satisfaction is correlated to retention, and a highly satisfied customer is 7-times more likely to be retained, but this cannot be relied upon," he cautioned.

For more:
- see this WDS release

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