Feature Article

August 13, 2014

Does Mobile Network Quality Lead to Increased Spending, Reduced Churn?

Most observers likely would agree that dropped calls or sluggish Internet access performance will increase user unhappiness and lead to customer churn. On the other hand, most likely would predict that better network performance would reduce churn.

If so, up to 12 percent of the U.K. mobile customer base might be susceptible to churn based directly on network performance.

Some 36 percent of U.K. mobile service customers are highly satisfied with the quality of mobile voice service they pay for, according to a new report by Ofcom, the U.K. communications regulator.

Another 40 percent of survey respondents are “fairly satisfied.” 

But about five percent of surveyed respondents say they are “very dissatisfied” with their voice services.

About 12 percent of respondents say they experience complete loss of signal every day. That happens to 28 percent of respondents in very rural areas.

Dropped or blocked calls that happen on a frequent basis almost certainly increase churn potential for the affected service providers.

Conversely, high availability presumably also increases loyalty or at least reduces churn. High availability also seems to increase the amount of money a customer spends with a mobile Internet service provider.

A study conducted in 2013 by J.D. Power found that U.S. customers with 4G-enabled smartphones are more loyal to their wireless carrier than owners of devices that use other technologies.

The study also found that the amount of monthly wireless spending is considerably higher among customers who experience fewer problems with slower connection speeds.

That study measured overall network performance in 10 areas, including dropped calls; calls not connected; audio issues; failed/late voicemails; lost calls; text transmission failures; late text message notifications; Web connection errors; slow downloads and email connection errors.

Smartphone customers who experience just one problem per 100 attempts (PP100) and 10 problems per 100 attempts with slow mobile web speeds spend an average of  $11 more per month than those who experience between 11 PP100 and 20 PP100 ($140 vs. $129, respectively).

Customers experiencing more consistent network speeds are more likely to be brand advocates, as 31 percent of smartphone customers who experience between 1 PP100 and 10 PP100 "definitely will" recommend their carrier, compared with 24 percent among customers who experience between 11 PP100 and 20 PP100.

Overall, satisfaction is significantly higher among smartphone customers using 4G networks than among those using previous-generation networks (7.3 vs. 7, respectively, on a 10-point scale).

This satisfaction gap is due to the level of problems experienced with network quality, J.D. Power suggests.

On average, 4G LTE smartphone customers experience significantly fewer issues with data than do 3G customers (16 PP100 vs. 19 PP100, respectively).

This in turn translates to higher brand loyalty. Some 12 percent of smartphone customers using 4G LTE service indicate they are likely to switch their carrier within the next year, compared with 15 percent among those using 3G.

Edited by Adam Brandt

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