Global Mobile Customer Loyalty Reaches All-Time Low

Last Updated: August 5, 2020By

The average mobile customer switches service provider every 27 months, more than twice as frequently as a decade ago. According to new research from Strategy Analytics, “Wireless Operator Performance Benchmarking, Q4 2011,” global mobile customer churn – customers switching providers each year – reached 44 percent at the end of last year, its highest ever level.

“Prepaid churn has really been hit by promotional SIM card activity in developing markets, making customer loyalty virtually obsolete in some countries”

Average prepaid customer lifetimes have halved over the last 5 years, to only 17 months, according to Strategy Analytics Wireless Operator Strategies (WOS) research which tracks the operational and financial performance of over 215 mobile operators, accounting for over 75 percent of global subscribers. By contrast, average postpaid customer lifetimes of 67 months have improved from the depths of the global recession in 2008/09, since customers show an increased propensity for upgrading with their current provider instead of switching to better deals elsewhere.

“Prepaid churn has really been hit by promotional SIM card activity in developing markets, making customer loyalty virtually obsolete in some countries,” commented Phil Kendall, Director, Wireless Operator Strategies, and author of the report. “For example, prepaid churn in Asia-Pacific is nearly 100 percent per year. It doesn’t cost much to push new SIM cards into the market, however, operators would still benefit by promoting targeted offers to existing users which build longer-term, more valuable, customer relationships.”

Sue Rudd, Director, Service Provider Analysis, added, “With smartphone subsidies stretching operator resources, it is the postpaid market where churn is more expensive to manage. Operators are finally looking at new device purchasing models, like installment plans or leasing, that can alleviate pressure. Of course, consumers are ‘addicted’ to the discounted handset model—and it will be difficult to change this.”

Source: Business Wire

 

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To achieve better sales and profits, most companies could be doing more to cultivate business from their existing customers. However, enthusiasm for customer-retaining strategies must not endanger sound customer-getting efforts. How companies balance the two is the big question. To intensify reaching old customers while still seeking new ones, for many firms, will mean changes in market analysis, planning systems, management incentives, and marketing and/or operations organization. In the rush toward growth, consumer marketers have tended to regard success as stemming from obtaining new customers while unwittingly minimizing the importance of satisfying old ones. It is time for more companies to distinguish between their getting and retaining functions, to assess the balance between them, and to remedy any deficiencies in customer retention. This process requires management to value the potential of current customers and to treat them in special ways to get them to keep coming back. Several major elements should be part of the new marketing mix for customer retention: Product extras Keeping customers frequently requires giving them more than the basic product that initially attracted them. Product extras for individual customers over time can play a sales-expansive role. Reinforcing promotions Product promotion works better when aimed at existing customers. If a marketer knows who these customers are, benefits can be obtained by giving them reinforcing communications. Sales force connections The sales force can play a decisive role in the customer-retention function. At a retail or service counter the salesperson is the focal point of the company's strategy and is the firm to the customer. Post-purchase communication A company must anticipate that some customers will encounter either minor or serious problems after purchasing. If the firm is not ready to hear and correct these difficulties, the customer may not repurchase  or may cancel the the relationship. Whether company or customer is at fault, standby post-purchase activities can be instrumental in saving these customers.

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