• May 7, 2007
  • By Marshall Lager, founder and managing principal, Third Idea Consulting; contributor, CRM magazine

London Texting

The average number of weekly calls made by users of mobile phones, both pre-paid and contracted, is decreasing in the United Kingdom, according to a new study from J.D. Power and Associates. The 2007 edition of the company's "UK Mobile Telephone Customer Satisfaction Study," now in its 10th year, reveals that the average number of weekly calls by prepay customers declined from 14 in 2006 to 10 in 2007, a drop of more than 28 percent. Over the same period, contract customers' calls per week shrank from 35 to 27, a decrease of nearly 23 percent. This is not to say that phone use is on the decline; the same study says the number of weekly SMS text messages by pre-paid customers is steady at 27, while the number of text messages by contract customers rose 38.75 percent, from 32 to 46 per week. The study is based on 2,706 prepay and contract mobile phone customers throughout the U.K. As to loyalty itself, Virgin leads the industry on the customer satisfaction index in both the prepay and the contract segments, scoring 724 and 730, respectively, on the J.D. Power 1,000-point scale. This outstrips its closest competitor, O2, which achieved scores of 699 and 683. The industry average in pre-pay is 677; three companies (Virgin, O2, and Tesco) came in above it and three (Vodafone, Orange, and T-Mobile) below. Average satisfaction for contract customers is 675, a number surpassed by four of the five companies ranked in that segment, with only Orange failing to meet the average (Tesco does not appear on the contract chart). Despite this, the study reports that 10 percent of pre-pay customers and 21 percent of contracts intend to change carriers in the next six months. The carriers are combating churn with incentives: the report states 46 percent of all mobile users received an incentive or reward to encourage loyalty, with contract customers more likely to receive them than prepay customers (51 percent versus 44 percent). Prepay customers cited "extra credit for spending a certain amount" as the most common incentive (22 percent), while contract customers cited handset upgrades as the most common (22 percent). "With increasing numbers of consumers reporting their intention to switch providers, it's becoming even more important for providers to reward existing customers for their loyalty," said Caspar Tearle, director of service industries research at J.D. Power and Associates, in a written statement. "One-tenth of prepay customers and more than one-fifth of contract customers intend to change in the next 12 months. Our research also shows that rewarding mobile customers has a positive impact on levels of customer satisfaction and could entice potential customers to switch networks." Of note to marketers is the relatively weak performance of downloadable ringtones. According to the study, 72 percent of mobile phones have a camera, and 69 percent have the ability to download ringtones and games. However, while 66 percent of users actually take photos and 47 percent send them to others, only 23 percent download ringtones. Related articles: Mobile Marketing: A Balancing Act
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