App and video streaming experience determine customer loyalty
Published on: 30th Aug 2016
Note -- this news article is more than a year old.
In the business of mobile broadband, customer loyalty isn't what it appears to be. As smartphone users' behavior changes, traditional measurements are no longer enough to determine whether customers prefer their operator, a new report from Ericsson ConsumerLab says.
For all the improvements in mobile networks since 2013, the number of smartphone users facing issues daily has not changed. One key reason for this is new video streaming behavior worldwide: ranging from South Korea, where one-third of smartphone users watch live streamed videos broadcast by other users; to the US, where 14 percent have started to use live video streaming apps.
But while consumer behavior has changed, the widely-used customer loyalty measurements in the telecom industry have not. The report shows that Net Promoter Scores (NPS) fails to determine users' preference for their mobile network operator, chiefly because it takes no account of the changing expectations of network performance as a result of new video streaming app behavior.
The report shows that smartphone users who face 11 or more issues per week are approximately twice as likely to think of switching operators. Alarmingly, two in every five smartphone users claim they face more than 11 issues at least weekly, with video streaming glitches more common now.
The report offers six different loyalty profiles to quantify the different motives and preferences that smartphone users exhibit towards their operator. In many cases, consumers who say they would recommend their operator do so not because they prefer the operator, but because they cannot identify a better alternative, the report states.
The report found that the mobile broadband experience remains the principal driver of smartphone user loyalty to operators. However, it also emerges as a common source of dissatisfaction among 73 percent of users globally.
Smartphone users apply their own set of criteria to judge mobile broadband experience, based on how apps are performing - in particular whether video apps stream without interruption, or how fast users can upload content to share with their social networks. Millennial smartphone users (ages 18 to 24) overwhelmingly prefer to find out from operators how their favorite social media and video streaming apps perform on the network rather than the extent and reach of network coverage, the study shows.
"As new apps emerge and video usage behavior evolves, network performance will matter more than ever and will determine how loyal smartphone users will be to their operators," says Jasmeet Singh Sethi, Senior Advisor with Ericsson ConsumerLab.
The views expressed in the survey are representative of 650 million smartphone users across 14 markets: Brazil, China, Germany, India, Indonesia, Ireland, Oman, Poland, Russia, Sweden, South Korea, Ukraine, the US, and the UK.