MANILA, Philippines - Smartphones like the Apple iPhone being more expensive than basic handsets tend to have low churn rates among users. But this is a fact that’s already changing as smartphone users are also likely to quickly change brands and operators when they are unhappy with performance and service quality.
This is one of the findings in the Global Customer Acquisition and Retention study conducted by telecommunication service provider Nokia Siemens Networks (NSN), where it highlights smartphone users as being at the highest risk for churn when they don’t get the best voice and data quality they want.
Churn refers to the proportion of subscribers to a service who cancel it but are replaced by new subscribers over a given period of time. Churn rate is also called attrition rate, which measures the number of subscribers who have moved into or out of a service over a specific timeframe.
In Nokia Siemens’ study, it was shown that customer loyalty to operators is lowest in mature markets with high smartphone and mobile broadband penetration. In countries like the United States, United Kingdom and Germany, one in three smartphone users is ready to swap operators and close to 40 percent of smartphone and data card users are likely to churn within a year, according to the study.
In these advanced markets where smartphones have recently taken off, the study found that customers’ intent to churn are due to dissatisfaction with network quality that has grown significantly since 2008.
“The silver lining in our findings, however, is that price is becoming less critical as a churn trigger. Without a doubt, access to mobile broadband has changed people’s priorities and the expectations they have of their service providers,” said Michael Matthews, head of strategy and business development at Nokia Siemens Networks.
“Now it’s the experience people have — how happy they are with the service they’re getting — that’s key to attracting and retaining subscribers. People are asking: How good’s the coverage? How clear are my voice calls? Do I get a connection when I want one? Are my messaging services simple and flexible? And, increasingly, how accessible and fast is my Internet connection?” added Matthews.
The study reveals that in the UK, 45 percent of the negative experiences people have with their mobile phones can be explained by network quality falling below expectation. The study results were apparently similar in the US and Germany.
Nokia Siemens Networks, which provides telecommunication service to operators around the world, asserts that the recent steep increase of smartphones in the network has the potential to cause network congestion for all subscribers and unless the issue is addressed, it’s only a matter of time before emerging markets around the world have same issues.
Nokia Siemens Networks warns that the global impact of network quality on subscriber retention already stands at 34 percent, far higher than in previous years.
A total of 20,000 subscribers in 17 countries were interviewed for the global study, which Nokia Siemens Networks conducts regularly to provide the world’s leading operators with vital information on consumer behavior across mobile and fixed networks.