Global wireless network operator and mobile satisfaction / customer loyalty survey research white paper June 2010
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This document presents a global study on mobile user experience and its impact on customer loyalty towards network operators, conducted in summer 2010 across 111 countries. Key findings indicate that mobile apps and handsets significantly influence loyalty, while coverage/reliability and customer service remain the top factors for customer retention. The analysis includes metrics for evaluating loyalty, identifying major operators, and consumer insights related to their experiences and preferences.
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Global wireless network operator and mobile satisfaction / customer loyalty survey research white paper June 2010
- 1. The Impact of Mobile User Experience on Network Operator Customer Loyalty Summer 2010 A global study in 111 countries by Mob4Hire and Business Over Broadway reports on the mobile user experience (mobile handsets, mobile apps, app stores and network operators) and how network operators can use this information to accelerate growth.
- 2. 2 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Methodology Business Over Broadway (BOB.; www.businessoverbroadway.com), customer satisfaction and loyalty experts, helped design the survey instrument and research design. This particular study on network operators, which included both loyalty-‐ and quality-‐related questions, was powered by Mob4Hire (www.mob4hire.com) who provided the online data collection and consumer panels. Panel Description Mob4Hire has a proprietary, worldwide sample of over 45,000 panelists (or Mobsters) who represent early adopting, mobile savvy users who live a mobile lifestyle. Mobsters are recruited through an opt-‐in process through the Mob4Hire.com website. Mobsters’ opinions about their mobile experience help us identify factors that predict customer purchasing behavior and revenue growth across the entire mobile ecosystem. All respondents for this study were rewarded with an incentive for filling out the survey. The survey was fielded in Spring 2010, asking a sample of 5000 Mobsters ages 18 or older about their user experience with respect to their current network operator, mobile phones and mobile applications. The survey respondents were primarily male (82%) with a median age of 25 years. A highly educated sample, 57% of the respondents have a 4-‐year degree or higher. The worldwide sample of respondents represented 111 countries, 204 network operators and 179 distinct mobile handsets. All references to “people,” “users,” “respondents,” and “subscribers” in this report refer specifically to this panel sample regarding their mobile phone use. Key Metrics Used in the Study Customer loyalty is a leading indicator of financial growth. This report contains comparative analysis across network operators, identifies top network operators with respect to customer loyalty, customer service, and coverage/reliability quality. Additionally, key drivers of the components of customer loyalty will be presented. The three measures of customer loyalty (and their definitions) are: 1. Retention Loyalty (RLI): The extent to which your customers will remain customers. Will your customers switch to another provider? 2. Advocacy Loyalty Index (ALI): The extent to which your customers will be advocates for your product. Will your customers recommend your products and services to their friends? 3. Purchasing Loyalty Index (PLI): The extent to which your customers will purchase more from you. Will your customers purchase different products and/or increase the amount they purchase from you? These three dimensions form the basis of the RAPID Loyalty Measurement Method; a primer on this research approach can be found in the last section of this report. The RAPID Score indicates the general health of the customer relationship. By measuring all three dimensions of customer loyalty, companies are better able to understand their customers’ loyalty behaviors, manage their customer relationships more effectively and, consequently, experience accelerated business growth through new and existing customers.
- 3. 3 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Executive Summary Mobile applications and handsets are becoming increasingly important factors in network operator customer loyalty. Top drivers of network customer loyalty, however, continue to be coverage/reliablity and customer service quality. Top Wireless Insights 1. Vodafone and Zain are the best network operators in the world, appearing in the top 25% quadrant on all 3 of our measurement grids: Network Performance, Network Customer Loyalty and Mobile App Performance. 2. Sixty-‐five percent of respondents indicated that mobile applications are important in their decision to select a network operator. 3. Respondents are more likely to tell their friends about their network operator than they are to purchase additional services from that network operator. 4. Seventy-‐nine percent of the respondents indicated they are likely to recommend their network operator to a friend. Fifty-‐five percent of respondents said they are likely to purchase additional services from their network operator. 5. Thirty-‐seven percent of respondents think their network operator’s coverage is inadequate. Half of the respondents said customer service is not adequate. 6. Twenty-‐seven percent of respondents said they are likely to switch to another network operator within 12 months. Top Mobile Insights 1. Smartphone users need to see at least a 4-‐star user review rating in an app store before they download / purchase a mobile application. 2. Eighty-‐nine percent of mobile users report they have experienced a mobile app crash on their phone. 3. Smartphone respondents reported higher loyalty toward their mobile device (e.g., mobile device and performance of mobile applications) compared to feature phone respondents. However, there were no differences between phone types with respect to loyalty toward the respondent’s network operator.
- 4. 4 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Table of Contents Methodology ................................................................................................................................. 2 Panel Description .................................................................................................................................... 2 Key Metrics Used in the Study ................................................................................................................. 2 Executive Summary ....................................................................................................................... 3 Top Wireless Insights ............................................................................................................................... 3 Top Mobile Insights ................................................................................................................................. 3 Table of Contents .......................................................................................................................... 4 Figures ........................................................................................................................................... 5 Operator Performance & Loyalty Grids .......................................................................................... 6 Network Operator Performance Grid ....................................................................................................... 7 Network Operator Customer Loyalty Grid ................................................................................................ 8 Network Operator RAPID Loyalty Measurement Rankings ....................................................................... 9 Network Operator Loyalty Insights .............................................................................................. 10 Network Operator Business Attributes ........................................................................................ 13 Drivers of Customer Loyalty ......................................................................................................... 15 Operator Mobile App Performance Grid ...................................................................................... 16 Mobile App User Experience Insights ........................................................................................... 17 Impact of Mobile Applications on Ecosystem ......................................................................................... 20 Mobile Handsets .......................................................................................................................... 21 Smartphone vs. Feature Phones ............................................................................................................ 22 RAPID Loyalty Measurement Primer ............................................................................................ 23 Customer Loyalty ................................................................................................................................... 23 Customer Lifetime Value ....................................................................................................................... 24 References ................................................................................................................................... 25 Who we are ................................................................................................................................. 26
- 5. 5 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Figures Figure 1 Reasons for switching to a different network provider. ........................................................................ 6 Figure 2 Network Operator Performance Grid (Customer Service Quality and Coverage / Reliability) ............... 7 Figure 3. Hayes Loyalty Grid for Network Operators ............................................................................................ 8 Figure 4. RAPID Loyalty Indices ........................................................................................................................... 10 Figure 5. Loyalty Questions ................................................................................................................................. 10 Figure 6. Retention Loyalty Questions ................................................................................................................ 11 Figure 7. Advocacy Loyalty Questions ................................................................................................................ 11 Figure 8. Purchasing Loyalty Questions .............................................................................................................. 12 Figure 9. Product and Service Quality Ratings for Network Operators .............................................................. 13 Figure 10. Customer Service Quality Ratings for Network Operators ................................................................ 13 Figure 11. Coverage and Reliability Ratings for Network Operators .................................................................. 14 Figure 12. Network Operator Mobile Application Performance Grid ................................................................. 16 Figure 13. Star Ratings Needed before Purchasing/Downloading Mobile Apps ................................................. 17 Figure 14. Crash Frequency Ratings .................................................................................................................... 17 Figure 15. Number of mobile applications downloaded in the past three months ............................................ 18 Figure 16. Number of mobile applications purchased in the past three months. .............................................. 18 Figure 17. Number of mobile applications downloaded in past three months. ................................................. 19 Figure 18. Number of mobile applications purchased in the past three months. .............................................. 19 Figure 19. Reasons for switching network operators ......................................................................................... 20 Figure 20. Satisfaction Ratings of Mobile Ecosystem by Handset Manufacturer ............................................... 21 Figure 21. Loyalty Ratings by Smartphone and Feature Phone Respondents .................................................... 22 Figure 22. Customer Loyalty and Customer Lifetime Value ................................................................................ 24
- 6. 6 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Operator Performance & Loyalty Grids Of the respondents indicating they are likely to switch to a different network operator, top reasons cited for switching were Coverage/Reliability Quality and Customer Service Quality. Figure 1 Reasons for switching to a different network provider. For the Wireless Performance Grid shown in Figure 2, we charted two performance indices (Coverage/Reliability Quality and Customer Service Quality) for each network operator. Coverage/Reliability index was calculated by averaging the satisfaction rating of Coverage and Reliability (e.g., few dropped calls) questions. The Customer Service Index was calculated by averaging the ratings of five customer service questions: 1) Timely Response 2) Knowledgeable service agent 3) Courtesy 4) Understanding customer needs 5) Always there when needed 64% 53% 51% 46% 37% 28% 17% 0% 10% 20% 30% 40% 50% 60% 70% Poor value for the price Poor customer service Poor network coverage Unreliable service Does not have apps I want Poor variety of phones Poor reputafon Percent of Respondents
- 7. 7 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Network Operator Performance Grid The Network Operator Performance Grid reflects the relative performance on coverage/reliability and customer service quality. As you can see in the grid, there was considerable variability across the network operators for these two indices. The network operators who received the highest ratings in both coverage/reliability and customer service was Mtel, Tigo, Warid Telecom, Mobitel, and Zain. Figure 2 Network Operator Performance Grid (Customer Service Quality and Coverage / Reliability)
- 8. 8 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Network Operator Customer Loyalty Grid We charted the two loyalty indices, ALI (Advocacy) and PLI (Purchasing), for each network operator to display the different type of growth each provider is likely to experience within one year. Advocacy loyalty helps predict growth based on new customer acquisition due to the effect of word of mouth and viral advertising. Purchasing loyalty predict revenue growth based on additional purchases by existing customers. The Network Operator Loyalty Grid reflects the relative growth potential of companies. The companies in the upper right quadrant are predicted to experience accelerated business growth with respect to customer acquisition and increased purchases from existing customers. Companies in the lower left quadrant are predicted to have slower growth compared to their competition in both customer acquisition and increased purchases from existing customers. Figure 3. Hayes Loyalty Grid for Network Operators
- 9. 9 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Network Operator RAPID Loyalty Measurement Rankings In Table 1, we rank the network operators on their RAPID Loyalty Growth Score (average of RLI, ALI and PLI). Only network operators with a sufficient number of responses to provide reliable results were included. Table 1. Network Operator's Loyalty Scores (ranked by RAPID Loyalty Growth Score) Rank Network Operator Retention (RLI) Advocacy (ALI) Purchasing (PLI) RAPID Loyalty Growth Score 1 Tigo 6.6 7.9 6.6 7.0 2 Mobitel 7.2 7.7 4.6 6.5 3 Sun Cellular 6.2 7.5 5.4 6.4 4 O2 6.6 7.4 5.1 6.4 5 Zain 6.3 7.3 5.6 6.4 6 Globe Telecom 6.1 7.3 5.6 6.3 7 Ufone 6.6 7.3 5.1 6.3 8 Vodafone 6.3 7.3 5.3 6.3 9 Warid Telcom 6.7 7.2 4.9 6.3 10 BSNL 6.1 7.0 5.4 6.2 11 Tele2 6.8 7.4 4.3 6.1 12 Telenor 6.7 7.1 4.6 6.1 13 Indosat 6.3 6.8 5.2 6.1 14 Mtel 6.6 6.8 4.8 6.1 15 Dialog 6.4 6.9 4.8 6.0 16 Smart Communications 5.8 7.2 5.1 6.0 17 Movistar 6.1 6.6 5.3 6.0 18 Airtel 5.8 6.9 5.2 6.0 19 Mobilink 6.2 6.5 4.6 5.8 20 3 6.1 6.8 4.4 5.8 21 Claro 5.7 6.2 5.4 5.8 22 Telkomsel 5.4 6.7 5.2 5.7 23 T-Mobile 6.0 6.6 4.5 5.7 24 Reliance Mobile 5.5 6.0 5.5 5.7 25 Orange 6.1 6.4 4.4 5.6 26 AT&T Mobility 5.8 6.6 4.5 5.6 27 Rogers Wireless 5.9 6.5 4.5 5.6 28 Idea Cellular 5.4 6.3 5.2 5.6 29 MTN 5.2 6.6 5.0 5.6 30 XL 5.9 6.3 3.8 5.3 31 Telcel 5.0 6.0 4.4 5.2 32 Safaricom 5.1 5.8 4.5 5.1
- 10. 10 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Network Operator Loyalty Insights 1. People are more likely to tell their friends about their network operator than they are to purchase additional services from that network operator. 2. Advocacy Loyalty (e.g. satisfaction, purchase same, recommend, choose again) was substantially higher than Purchasing Loyalty (e.g. purchase additional services and purchase more expensive plans). Customers are more willing to sell their friends on the merits of their network operator than they are to spend more of their own money on their network operator. Figure 5. Loyalty Questions 75% 75% 71% 69% 55% 41% 34% 27% 20% 0% 10% 20% 30% 40% 50% 60% 70% 80% Safsfied Purchase Same Recommend Choose Again Purchase Addifonal Services Purchase from Compeftors Purchase More Expensive Plans Switch w/in 12 months Stop Purchasing Services Percent of Respondents 6.0 6.8 5.0 4 5 6 7 8 Retenfon Advocacy Purchasing Loyalty toward Network Operator Loyalty Metric Figure 4. RAPID Loyalty Indices
- 11. 11 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway 3. Churn continues to be an important element in the wireless industry. Survey results show that about 21% to 41% of customers are likely to consider competitors products within the next 12 months. Figure 6. Retention Loyalty Questions 4. Most respondents report they are loyal to their network operators. Although 29% of people are likely to evangelize their network operator, results indicate that most customers (70-‐80%) are advocates (moderate to high likelihood) of their network operator. Figure 7. Advocacy Loyalty Questions 59% 80% 73% 32% 15% 17% 9% 6% 10% 0% 25% 50% 75% 100% Purchase from competitors Stop purchasing Switching Percentofrespondents likelytoswitchproviders Retention Loyalty High likelihood (9-10 rating) Moderate likelihood (6-8 rating) Low/No llikelihood (0-5 rating) 26% 26% 29% 33% 61% 43% 42% 42% 13% 31% 29% 26% 0% 25% 50% 75% 100% Satisfied Choose Again Recommend Purchase Same Percentofcustomers Advocacy Loyalty No/Low likelihood (0-5 rating) Moderate likelihood (6-8 rating) High likelihood (9-10 rating)
- 12. 12 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway 83% of respondents said that they recommended their current network operator to at least one friend/colleague within the past 12 months. 55% of respondents said that they recommended their current network operator to five or more friends/colleagues in the past 12 months. 4. Roughly half of respondents indicated they are likely to purchase additional / different types of services from their current network operator 55% of respondents said they are likely (moderate to high likelihood) to purchase additional/different types of service plans in the future. Fewer customers (33%) are likely to purchase more expensive service plans. Compare this with the 70% to 80% who are likely to recommend their network provider. In other words, more respondents will recommend their network operator than will purchase additional / different services from them. Figure 8. Purchasing Loyalty Questions 15% 8% 40% 25% 45% 66% 0% 25% 50% 75% 100% Purchcase Different Increase Purchase Percentofcustomers Purchasing Loyalty No/Low likelihood (0-5 rating) Moderate likelihood (6-8 rating) High likelihood (9-10 rating)
- 13. 13 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway 63% 58% 58% 51% 20% 30% 40% 50% 60% 70% 80% 90% Products are excellent Services are excellent Best reputafon Good value for price Percent who agreed with item Business A`ribute Network Operator Business Attributes 5. There is more room for improvement in customer service areas than there is for products / services 63% of respondents indicated that their current network operator’s products are excellent. 58% of respondents indicated that their current network operator’s services are excellent. Figure 9. Product and Service Quality Ratings for Network Operators 4. 61% of the respondents said their customer service reps are courteous. About a half of the respondents do not believe that the customer service reps are always there when needed (47%) or have the knowledge to answer questions (54%). Similar findings hold for the remaining customer service rep attributes. “They need to improve their people handling skills and response time” “The customer service is awful.” “They should add more customer service people to answer calls right away.” “Contact with a real person when you have any problem is very difficult.” 50% 54% 61% 53% 47% 20% 30% 40% 50% 60% 70% 80% 90% Timely response Knowledgable Courteous Understand my needs Always there when needed Percent who agreed with item Customer Service Reps A`ributes Figure 10. Customer Service Quality Ratings for Network Operators
- 14. 14 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway 5. Nearly three-‐quarters (73%) of the respondents say that their service provider has good coverage in their area of interest. Fewer respondents (63%) indicate that their service provider has reliable service (e.g., few dropped calls). Figure 11. Coverage and Reliability Ratings for Network Operators 73% 63% 20% 30% 40% 50% 60% 70% 80% 90% Good coverage Reliable service Percent who agreed with item Business A`ribute
- 15. 15 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Drivers of Customer Loyalty 6. The main drivers of the three components of customer loyalty for network operators are: 1) Reliable service (few dropped calls), and 2) Customer service representative attributes (e.g., timely response, knowledgeable, understands needs, always there). Improving these key areas is likely to have a substantial impact on improving customer loyalty toward network operators. 7. Satisfaction with the mobile device and mobile applications also impact advocacy and purchasing loyalty toward the respondents’ network operator. DRIVERS OF LOYALTY Key Loyalty Metrics Business Attribute Retention Advocacy Purchasing Quality of Coverage/Reliability 1 1 2 Quality of Customer Service Reps 2 2 1 Satisfaction with Mobile Phone 3 3 Satisfaction with Mobile Apps 4 5 Quality of Handset Selections 5 4 Numbers indicate order of variable in final model of stepwise regression analysis. Table 2. Drivers of each Component of Customer Loyalty toward Network Operators
- 16. 16 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Operator Mobile App Performance Grid The research illustrates that mobile apps are playing an increasingly vital role in sustained revenue growth by network operators. Those who provide a great mobile app experience for their users are poised to grow faster than their peers. Who are the world leaders when it comes to delivering a great mobile app experience? The two dimensions of Mobile App Customer Satisfaction and Mobile App Stability varies greatly across global network operators; the report ranks 33 of the top network operators worldwide, shown in Figure 12. According to the survey respondents, the network operator providing the best mobile app experience is Zain, serving over 64 million customers in 21 countries in Africa and the Middle East. Seven other operators share the top quadrant with Zain (in no particular order): BSNL, MTN, Vodafone, AT&T, Orange, Claro and Movistar. Figure 12. Network Operator Mobile Application Performance Grid
- 17. 17 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Mobile App User Experience Insights 1. The star rating of mobile applications in mobile app stores determines whether users will download / purchase mobile applications. When considering downloading/purchasing mobile applications, users typically need to see at least a 4-‐star rating before they download/purchase the mobile application. Figure 13. Star Ratings Needed before Purchasing/Downloading Mobile Apps 2. While three quarters (72%) of respondents indicated they are satisfied with the performance of mobile applications on their mobile device, more respondents (89%) report that applications crash on their mobile phone. Figure 14. Crash Frequency Ratings 0% 10% 20% 30% 40% 50% At least 1 star At least 2 stars At least 3 stars At least 4 stars At least 5 stars Percent of Respondents Number of stars needed before downloading/ purchasing apps 0% 10% 20% 30% 40% 50% Never Rarely Somefmes Ojen Always Percent of Respondents Crash Frequency
- 18. 18 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway 3. There were differences between genders in their mobile application experience. More men (72%) were satisfied with the mobile application performance compared to women (64%). More women (54%) regularly experienced mobile applications crashes (57%) compared to men (47%). 4. About 86% of users have downloaded at least 1 mobile application in the past three months. About 42% of users have purchased at least 1 mobile application in the past three months. Not surprisingly, iPhone users are the most active mobile app users. What is surprising, however, is how large the gap is with other handset manufacturers. iPhone users download the most free mobile apps than any other handset manufacturer. iPhone users also download the most paid apps, with over 60% purchasing more than 2, which translates into real dollars for mobile developers. Figure 15. Number of mobile applications downloaded in the past three months Figure 16. Number of mobile applications purchased in the past three months. 0% 20% 40% 60% 80% 100% Percent of Respondents Mobile Phone Manufacturer 0 apps 1 app 2-‐4 apps 5-‐7 apps 8 or more apps 0% 20% 40% 60% 80% 100% Percent of Respondents Mobile Phone Manufacturer 0 apps 1 app 2-‐4 apps 5-‐7 apps 8 or more apps
- 19. 19 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway 5. Users who were more satisfied with the performance of mobile applications on their phone downloaded/purchased more mobile applications than users who were dissatisfied with the performance of mobile applications. Figure 17. Number of mobile applications downloaded in past three months. Figure 18. Number of mobile applications purchased in the past three months. 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percent of Respondents Saesfaceon with Mobile Applicaeons 0 apps 1 app 2-‐4 apps 5-‐7 apps 8 or more apps 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Very Dissafsfied Neutral Very Safsfied Percent of Respondents Saesfaceon with Mobile Applicaeons 0 apps 1 app 2-‐4 apps 5-‐7 apps 8 or more apps
- 20. 20 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway 6. About half (53%) of the respondents used one mobile application store in the past three months. 47% of the respondents used two or more mobile application stores in the past three months. A majority of iPhone users (71%) and Motorola users (63%) typically use one mobile application store while users of HTC phones (56%) and RIM users (55% typically use two or more mobile application stores. Impact of Mobile Applications on Ecosystem 7. When selecting a network operator, respondents say that mobile applications are important to them when making their decision. 65% of respondents indicated that mobile applications are important in their decision to select a network operator. 8. When defecting from their current network operator, 37% of the respondents indicated lack of mobile apps as a reason for their defection. Top reasons for defecting, however, revolve around poor value, poor customer service and poor coverage/reliability. Top reasons for switching network operators were related to poor value (63%) poor customer service (53%) and poor coverage/reliability (~49%). Interestingly, nearly 40% of likely switchers attributed their desire to switch to lack of mobile applications. Also, poor variety of phones played a minor role for customers switching (28%). After primary product/service features, mobile applications play a significant role in churn rates for network operators. Figure 19. Reasons for switching network operators 64% 53% 51% 46% 37% 28% 17% 0% 10% 20% 30% 40% 50% 60% 70% Poor value for the price Poor customer service Poor network coverage Unreliable service Does not have apps I want Poor variety of phones Poor reputafon Percent of Respondents
- 21. 21 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Mobile Handsets Mobile handset manufacturers continue to release mobile handsets with increasingly sophisticated capabilities in the hopes of improving the mobile experience. The figure below includes customer experience ratings for each major handset manufacturer. Handset manufacturers are ranked by satisfaction with the mobile device. 1. Users who use the Apple iPhone report a better mobile application experience (e.g., mobile device and mobile application performance) compared to users using other mobile devices. Apple iPhone users gave the highest satisfaction ratings for their device and their mobile application performance. RIM, HTC, Sony/Ericsson, Nokia and Samsung users gave lower satisfaction ratings to their mobile device and mobile application performance. LG and Motorola users gave the lowest satisfaction ratings. There were no differences among handset manufacturers with respect to satisfaction with their network operator. Figure 20. Satisfaction Ratings of Mobile Ecosystem by Handset Manufacturer 4.00 5.00 6.00 7.00 8.00 9.00 10.00 Saesfaceon Mobile Device Mobile App Performance Network Operator
- 22. 22 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Smartphone vs. Feature Phones Mobile handsets can be categorized into two types: 1) Feature phone and 2) Smartphone. Our definition of a smartphone is a mobile device with computer-‐like functionality. These devices sport complete operating system and have a platform for application developers. A feature phone, on the other hand, is not a smartphone: it has operating system firmware, but third party software support is limited to only Java or BREW applications. Using these criteria, we segmented our respondents into these two groups. Forty-‐one percent of respondents indicated their primary phone was a feature phone while 59% of respondents indicated their primary phone was a smart phone. 2. Smartphone users have a better mobile experience (e.g., mobile device and mobile app experience) compared to feature phone users. Comparing these two phone types, we found that smartphone respondents reported higher loyalty/satisfaction ratings with their mobile device and performance of mobile applications compared than feature phone respondents. However, there were no differences between phone types with respect to loyalty toward the network operators; that is, loyalty toward the network operator was not dependent on the respondents’ phone type. Figure 21. Loyalty Ratings by Smartphone and Feature Phone Respondents Additionally, the frequency of crashes were similar across the two phone types (Smartphone = 2.53; Feature Phone = 2.45 – on a 1-‐5 scale. 4.50 5.00 5.50 6.00 6.50 7.00 7.50 8.00 8.50 9.00 Advocacy Loyalty -‐ Mobile Device Safsfacfon with Performance of Mobile Applicafons Advocacy Loyalty -‐ Network Operator Purchasing Loyalty -‐ Network Operator Retenfon Loyalty -‐ Network Operator Loyalty/Saesfaceon Feature Phone Smartphone
- 23. 23 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway RAPID Loyalty Measurement Primer Customer Loyalty The term “customer loyalty” is typically used to describe positive customer feelings for and behaviors toward a company or brand. There are a plethora of possible types of positive customer feelings and behaviors (e.g., overall satisfaction, choose again for first time, recommend, purchase same again, purchase more often, purchase different products/services, leave, and reduce wallet-‐share). Objective measures of customer loyalty provide a backwards look into customer loyalty levels (e.g., defection rates, number of new customers, and sales). Customer surveys, however, allow companies to examine customer loyalty in real-‐time. Surveys solicit questions regarding expected levels of loyalty-‐related behavior and provide opportunities for companies to “look into the future” regarding customer loyalty. Based on customers’ ratings of their own likely future behaviors, Hayes (2008, 2009) found that these seemingly distinct customer loyalty behaviors can be grouped into three general categories of loyalty behaviors: • Retention: leave, reduce wallet-‐share • Advocacy: overall sat, choose again for first time, recommend, purchase same again • Purchasing: purchase more often, purchase different products/services The corresponding behaviors for these three components were used to create customer loyalty indices that can be used in customer surveys: • Retention Loyalty Index (RLI): Degree to which customers will remain as customers or not leave to competitors • Advocacy Loyalty Index (ALI): Degree to which customers feel positively toward/will advocate your product/service/brand • Purchasing Loyalty Index (PLI): Degree to which customers will increase their purchasing behavior Hayes (2009) found that these three loyalty indices were reliable, valid and useful; each index has excellent reliability (low measurement error) and is predictive of important business outcomes. Additionally, he found that all three components of loyalty are useful for understanding customer relationships that drive business growth in different ways. In a study asking over 1000 customers about their current network operator, Hayes (2008) found that these loyalty indices were predictive of business metrics across several US network operators (Alltel, AT&T, Sprint/Nextel, T-‐Mobile, and Verizon). As expected, the RLI was the best predictor of future churn rate; the ALI was a good predictor of new customer growth; finally, the PLI was the best predictor of Average Revenue per User (ARPU) growth. Because each loyalty index provided unique information regarding the growth of the companies, companies can use these three indices to fully understand their customer relationships to grow their company through new and existing customers.
- 24. 24 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Customer Lifetime Value Customer lifetime value (CLV) reflects the present total value of a customer to the company over his or her lifetime. Customer loyalty and customer lifetime value (CLV) are interrelated. As see in Figure 21 below, three components of customer loyalty each contributes to CLV. Figure 22. Customer Loyalty and Customer Lifetime Value In fact, the calculation of CLV is based on understanding the three components of customer loyalty: • CL: Average customer life (in years) -‐ RETENTION • NC: Number of customers -‐ ADVOCACY • NP: Number of times the average customer make a purchase each year -‐ PURCHASING • PPS: Average profit per sale (total sales revenue – costs)/number of sales While there other elements that are included in the calculation of the customer lifetime value that are not presented here (e.g., future value of the dollar, and risk factors), these four elements are the core at understanding how customer loyalty and customer value are related to each other. Using these elements, we can calculate the customer lifetime value for the entire customer base (or customer segment): CLV = CL x NC x NP x PPS With the creation of the Retention Loyalty, Advocacy Loyalty and Purchasing Loyalty Indices, companies can now use customer surveys to understand each customer component as they relate to customer lifetime value. Using these loyalty indices, we can calculate the RAPID Loyalty Growth Score which measures the health of the customer relationship: RAPID Loyalty Growth Score = (RLI + ALI + PLI)/3 The RAPID Loyalty Growth Score reflects the general health of the customer relationship and the future levels of growth. Because RAPID scores indicate better health of the customer relationship, companies with higher RAPID scores are predicted to experience accelerated levels of business growth.
- 25. 25 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway References Hayes, B. E. (2009). Beyond the ultimate question: A systematic approach to improve customer loyalty. Quality Press. Milwaukee, WI. Hayes, B. E. (2008). Measuring customer satisfaction and loyalty: Survey design, use and statistical analysis methods (3rd ed.). Quality Press. Milwaukee, WI. Hayes, B. E. (2008). Customer loyalty 2.0: The Net Promoter Score debate and the meaning of customer loyalty, Quirk’s Marketing Research Review, October, 54-‐62. Hayes, B. E. (2008). The true test of loyalty. Quality Progress. June, 20-‐26.
- 26. 26 | P a g e Copyright © 2010 Mob4Hire and Business Over Broadway Who we are About Business Over Broadway Business Over Broadway (BOB; www.businessoverbroadway.com) provides consultative services to help companies gain superior customer insight through customer satisfaction and loyalty research. Customer insights help business professionals make better-‐informed decisions to improve customer satisfaction and ensure long-‐term customer loyalty and financial success. Business Over Broadway is Bob E. Hayes, Ph.D., a recognized expert in customer satisfaction and loyalty measurement, and author of the best-‐selling books, Beyond the Ultimate Question, and Measuring Customer Satisfaction and Loyalty. Dr. Hayes has conducted survey research for Oracle, Sophos, Siebel Systems, Agilent Technologies, and Cisco Systems. For more information about Business Over Broadway, please surf to www.businessoverbroadway.com, or contact us at [email protected]. About Mob4Hire With 45,000 mobile users on over 350 operators in 150 countries worldwide, Mob4Hire (www.mob4hire.com) is the largest real world; crowd sourced testing and market research community for mobile apps. By incorporating user feedback and in market testing to developers, we help make mobile apps and websites better. Mob4Hire significantly reduces mobile application testing costs and reduces time to market by connecting developers with eager, lower priced, crowd sourced testers and focus groups. Mob4Hire also provides their unique micro-‐payment crowd-‐sourced MAAP technology (Mob4Hire as a Platform) to developer networks and app stores such as O2 Litmus to allow for private labeled communities to be added to Carrier and Handset Manufacturer enterprise systems. Founded in 2007, Mob4Hire is headquartered in Calgary, Alberta, Canada with offices in Victoria, British Columbia and London, U.K.