Consumers Choose, Churn From Mobile Service Providers for Very Different Reasons

U.S. mobile service providers tend to lose customers for different reasons, a new study by Consumer Intelligence Research Partners has found, and the reasons are congruent with each firm’s positioning in the market.

AT&T and Verizon tend to lose customers because of the cost of service. That would make sense, as Verizon has a reputation as the “most expensive” carrier. AT&T does not hold quite that position in the market, but might generally be seen to be more expensive than Sprint and T-Mobile US.

Over half of consumers who switched from Verizon or AT&T said cost was the primary reason, compared to less than 40 percent for other deserting customers of Sprint or T-Mobile US.

On the other hand, customers leave Sprint and T-Mobile US because of perceived problems with network quality. That also might make sense, given the broader network coverage of the Verizon and AT&T networks.

Almost 40 percent of Sprint and T-Mobile departing customers say “network quality” is the reason they switched.

But customer churn also is less an issue than often is believed, the survey indicates. “Mobile phone customers are very loyal to their carrier,” CIRP argues.

Almost 80 percent of customers stay with their current mobile phone carrier when they buy a new phone, far more than stay with their operating system or brand of phone.

That 20 percent churn rate, spread over a two-year period, implies a churn rate less than one percent a month, at least when phones are replaced.

Loyalty varies somewhat among customers, with AT&T and Verizon maintaining the most loyal customers, and Sprint and T-Mobile have somewhat lower loyalty rates, CIRP notes. That is congruent with churn rates, which are lower at AT&T and Verizon than at Sprint and T-Mobile US.

As a generic, consumers arguably switch carriers for many reasons. Lower price, high cost, network quality, plan structure, device exclusivity or perhaps customer service quality might drive a change of service provider. But the survey shows the concrete reasons vary by carrier.

As you might guess, consumers also choose new carriers for different reasons.

AT&T and Verizon tend to appeal to consumers based on network quality, even though consumers think they cost more.

Consumers think that T-Mobile provides a lower-cost service, at the expense of network quality.

Sprint draws customers based on plan features, such as friends and family pricing or unlimited data.

Consumers do not appear to switch carriers based on the quality of customer service received from their old carrier or anticipated from their new carrier.
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