Is Mobile Account Churn Highest Among Biggest Spenders?

The latest American Customer Satisfaction Index data on U.S. customer satisfaction with mobile service has some findings that require explanation. For the first time, ACSI asks respondents how much they spend on mobile service.

Nearly 70 percent of customers indicate a spending level between $1 and $100 on their wireless bill, accounting for no more than 35 percent of service provider revenue, ACSI says.

If I understand the data correctly, about 18 percent of the customer base spends between $101 and $150 per month, or between $250 and $500 each month. Note that the group in the $151 to $249 range is not enumerated. Nor is data reported for any accounts spending more than $500 a month.

The two groups ($101 to $151; $250 to $500) have lower customer satisfaction and are less loyal than the customers spending $100 or less. “In fact, these customer groups account for about 40 percent of the revenue lost to annual customer churn across the industry,” ACSI says.

ACSI did not provide any further detail that would provide greater insight on churn rates by spending level. Also, since the wording is “wireless bill,” not “per phone,” we must assume the total monthly spending includes multi-device accounts.

There is not enough detail to determine whether the reported expenditures include payments by customers whose mobile spending is part of a bundle with fixed network services.

One possible and logical explanation for the findings is that consumers who pay less are more satisfied than those who pay more. What might not make sense is that consumers who buy multi-user plans--and therefore presumably pay less per line--are less satisfied than customers who buy one-device service.

That perhaps 30 percent of accounts produce 65 percent of revenue might not come as a surprise. Even assuming no enterprise accounts were tallied, we might well assume that higher-spending accounts include users with high international travel and therefore roaming charges.

Perhaps it is the roaming charges that lead to lower satisfaction and higher churn for the bigger-spending accounts.

Customer satisfaction with wireless telephone service is up 1.4 percent to a score of 75 on the American Customer Satisfaction Index’s 100-point scale. That is towards the lower third of industry scores.

But subscription TV and internet access services score dead last among all industries. And satisfaction with fixed network phone service appears to be basically unchanged.

source: ACSI