Even Satisfied Mobile Customers Churn, Study Finds

Mobile service providers are said to have hundreds of different customer churn indicators. So how important are “satisfaction” measures, and do they really contribute to customer “loyalty?” The answer could be more difficult than you might think.

A new study by WDS suggests that only about 13 percent of U.S. mobile customers are truly loyal to their service provider, defined as being resistant to competitive price promotions and forgiving of their service provider when things go wrong.

“Satisfaction,” one normally supposed, has something to do with customer loyalty. The notion is correct, but only up to a point. Of those customers currently at risk of switching in the U.S. mobile market, 40 percent are “moderately” satisfied. Only 37 percent of at-risk customers  have “low” satisfaction scores.

The most shocking statistic is that about 23 percent of customers at risk of switching are highly satisfied with their mobile operator. In fact, WDS argues, 19 percent of all “highly

satisfied” customers are considered to be churn candidates.  

The WDS loyalty audit therefore calls into question the conventional notions of how satisfaction relates to loyalty. In fact, even significant numbers of customers who have “low” satisfaction scores are unlikely to churn.

You might easily agree that if a customer has to contact a support channel more than once in a six month period, that customer is twice as likely to become a switcher.

But even “happy” customers will churn. Some 36 percent of those respondents who said they were satisfied with “value for money,” still were churn risks. Some 50 percent at risk of churn were “highly satisfied” with service reliability and 53 percent were highly satisfied with network coverage.

Still, satisfaction remains an important metric. A “highly satisfied” customer is 2.2 times more likely to be retained beyond 12 months than a customer who reports “low satisfaction.”

Typically, a rule of thumb is that customers with long tenure have a reduced risk of churn. But WDS says 25 percent of customers with six or more years of tenure are at risk of switching to another provider.

And satisfaction only goes so far. About 34 percent of “highly satisfied” customers are resistant to switching for a 10-percent price discount. But increase the discount to 20 percent and only 15 percent continue to say they “definitely” would not switch.

All that noted, it might be said that customer satisfaction tends to create conditions for loyalty, but does not assure loyalty.

A customer who reports “low satisfaction” with a mobile service providers service is 3.4 times more likely to be a churn risk than a “highly satisfied” customer.

A customer with “medium” satisfaction score is two times more likely to be a switch-risk than a highly satisfied customer.

In general, a customers’ likelihood to switch decreases with age. For those aged over 60, just 19 percent are at risk of switching, compared to 45 percent of customers who are 25 to 34 year olds.

Of those at risk of switching, 28 percent are high spenders, spending over $120 per month. So you might argue that monthly billing and churn propensity are related in some causal way.

That probably is not the case. About 25 percent of all respondents spend that much. In other words, customers spending more than $120 a month have reported churn sentiment that is in line with their share of the customer base.  

The WDS Loyalty Audit interviewed 1000 U.S. customers.