Saturday, July 28, 2007

loyalty study of wireless providers

Bob Hayes, who runs a consulting firm called Business Over Broadway, just released a study of loyalty of wireless providers which is worth noting. Global Market Insite, Inc. provided the data collection and consumer panels. First note the statistics he has compiled from the study of 1000 general consumers in the US that are 18 years or older.
1. 27% of current wirelesss subscribers indicated they are likely to switch to another provider within the next 12 months.
2. 70% of the respondents said they recommended their current wireless service provider to at least one friend/colleague within the past 12 months and 44% recommended to 3 or more.
3. Younger subscribers (18-40) are more likely to switch (30%) than older customers (41+).
4. 69% of respondents indicated their subscriber products are excellent.
5. 66% of respondents indicated their subscriber services are excellent.
6. 61% of Customers satisfied with their customer service rep are more likely to purchase different products and services from their current provider than customers who are not satisfied with their customer service rep (47%)
7. 33% of dissatisfied customers said the most important area for improvement was expanded coverage/better relaibility with fewer dropped calls.

In the executive summary there is a chart which shows the following:
1. 76% of the respondents would recommend their provider
2. 77% would choose the same provider again
3. 77% would purhase the same product again
4. 58% would purchase different products/services
5. 46% would increase the amount of ther purchases
6. 27% would switch within 12 months (noted as item #1 in the preceding paragraph)

I hope I read his chart accurately and interpreted the meanings of the scale properly.

His introductory remark that customer loyalty is a leading indicator of financial growth although unsubstantiated makes sense to me based on a recent article I wrote with my colleague Dr. Darrol Stanley where we showed that a customer focus was one key to financial success and we demonstrated itwith data from 12 industries.

One important aspect of the report is that he descrribes customer loyalty as having two dimensions; namely, advocacy loyalty and purchasing loyalty. He defines advocacy loyalty as loyalty that would lead one to recommend products and services to a friend or colleague. On the other hand, purchasing loyalty has to do with repeat purchases. His conclusion is that one should measure both in order to get a better understanding of your customers.

The good news is that his descriptions of loyalty factors fit very nicely into my four dimension loyalty model (noted in previous blogs). He has identified the loyalty aspect of the products and services as well as the impact of relatioinship. The disturbing news to me is that he has mapped customer loyalty into two dimensions (advocacy and purchase loyalty). By mapping it into two dimensions I think he misses the relationship component, eventhough he identifies it when he describes the impact of satisfaction with the customer service representative. I don't think the relationship component is included in his customer loyalty measures.

The bottom line for me is that this is a worthwhile study but I think the four dimensional model provides a better understanding of customer loyalty.

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