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A survey that measures wireless-subscriber loyalty points to a surge in the churn rate when wireless local number portability (WLNP) takes effect.
Although wireless-phone users are very satisfied with their wireless carrier, they're not very loyal to their carrier, according to a survey conducted by Walker Information. With almost half (49 percent) of polled subscribers expressing concern about losing their phone number if they switch carriers (see chart 1), the statistics point to a churn surge when consumers are allowed on Nov. 24 to keep their number when they switch carriers.
"When the barriers [to switching carriers] go down, churn will increase," said Walker VP Bradley Linville. "A lot of customers are satisfied but not necessarily committed to their carriers. Satisfaction is not enough."
A total of 1,240 wireless subscribers responded to Walker's Web survey in August. All were 25 years of age or older.
All told, 73 percent of subscribers said they are very satisfied or satisfied with their wireless provider, the survey found (see chart 2). Seventy-one percent said they were extremely likely or very likely to continue with their carrier.
Nonetheless, responses to other questions underscore a lower level of commitment than these figures would indicate, Linville said. For example, only 58 percent said they were extremely likely or very likely to recommend their carrier to someone, and only 31 percent said they are extremely likely or very likely to increase their spending on their carriers' services.
When Walker analyzed these numbers, it concluded that only 30 percent of existing subscribers can be characterized as "truly loyal." Those subscribers exhibit a high level of commitment to their carrier and a "high likelihood" of continuing to use their carrier's service (see chart 3), Linville said. He described another 42 percent as considering thermselves "trapped," exhibiting a low level of commitment but likely to stay rather than switch. Another 28 percent, deemed "high risk" subscribers, exhibit low commitment levels and aren't very likely to stay.
Overall, "almost 70 percent of the customer base doesn't feel committed to their carrier," Linville said. "Retention by trapping is no longer a reliable wireless strategy as new legislation removes the fear of changing phone numbers," he said.
Compared to other telecom industries, wireless's loyalty levels stand up well, but compared to other industries, including consumer electronics retailing, wireless loyalty is nothing to write home about, Linville said (see chart 4).
To convert subscribers from the trapped and high-risk categories to the truly loyal category, carriers don't have to emphasize price as much as other factors, Linville said. Price ranks fifth in importance in driving loyalty. The top driver of loyalty is customer focus, which Walker defines as caring about customers and being easy to do business with. Brand reputation is next and includes such factors as leadership in technology innovation, trustworthiness and fiscal soundness. Overall quality is third and includes voice quality and experiences with billing, activation, and sales reps.
In other findings, Walker found that:
30 percent agree or substantially agree that there is appeal in a multipurpose device such as a PDA phone or camera phone.
3 percent have already cancelled their residential landline service, and another 10 percent are likely or highly likely to cancel.
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