As wireless penetration continues to slow and legislation soon goes into effect allowing consumers to keep their phone numbers after switching providers, customer retention has become a top priority among wireless carriers, according to the J.D. Power and Associates 2003 U.S. Wireless Regional CSI Study released today.
The study finds the overall wireless growth rate between 2002 and 2003 among the 27 largest U.S. markets was just 5.3 percent -- considerably lower than the 7.6 percent overall growth rate between 2001 and 2002. In addition, more than one in four (26%) subscribers say they have switched wireless carriers at least once in the past 12 months -- up from 24 percent in 2002, and the length of time a subscriber stays with a carrier before they switch has shortened a full three months since 1999.
"It's imperative that wireless service providers concentrate on retention strategies as the ability to expand the customer base becomes more difficult," said Kirk Parsons, senior director of wireless services at J.D. Power and Associates. "The issue of number portability, which becomes a reality for consumers in November, removes a major barrier for customers in switching providers. With the cost of acquiring each new customer ranging between $300 and $425, wireless providers must make a serious effort to retain customers with superior service and loyalty programs."
The study indicates that providing superior customer satisfaction has become critical in the wireless industry to bolster customer retention and increase revenue potential. Just 7 percent of current customers of the highest-ranking providers are likely to switch carriers in the next 12 months, compared to 21 percent for the lowest-ranking providers. Furthermore, customers of the highest-ranking providers are 38 percent more likely to renew with their current carrier than are customers of lower-ranking providers.
Customer satisfaction is measured based on 42 specific service-related issues grouped into six key areas that impact overall carrier performance. These are (in order of importance): call performance and reliability (26%); customer service (17%); service plan options (17%); brand image (14%); cost of service (14%); and billing (12%). Carriers are ranked in six regions in the United States.
Verizon Wireless performed particularly well in the study, ranking highest five of the six regions of the country (including three ties), largely by demonstrating a competitive advantage in call quality, customer service, and service plan options. Other providers that perform well include Nextel, ranking highest in a tie in three of the four regions covered; T-Mobile, ranking highest in a tie in two out of five regions covered; and AT&T Wireless and Cingular Wireless, each tying in one region.
J.D. Power is a global marketing information services firm operating in key business sectors including market research, forecasting, consulting, training and customer satisfaction.